Startups Interactions with Investors while Fundraising

In the VC investing ecosystem, startup investment opportunities are aplenty, and so are startup investors. In theory, startup funding is simply a network of people looking to invest in startups and those looking for to raise money. Although things these days are a bit tricky. Investors are more dynamic and more opinionated than they ever were before. This is why, to raise money, founders need to be more direct, persuasive, and factual. As a startup founder, you don’t just want to focus on getting the cheque in hand after every investor meeting, but also to build deeper relationships with them that help in the long run. With that being said, before you fill up your calendar scheduling back-to-back meetings with the hope of securing start up venture capital, you need to lay the groundwork up first.

Understand where you are in the business lifecycle

Simply doing this puts everything into perspective, and helps you laser-focus on the things you really need to achieve. More often than not, startup owners quickly jump all too quickly onto the start up venture capital boat and end up being lost half the time. A lot of founders make the mistake of chasing fundraising while working on the product simultaneously. You need to work on one thing at a time. Start with your product first. Focus, develop and build a customer base. Test your product out. Investors want to see evidence of you doing all the things you claim to do in the future. Number two, company founders almost always overestimate how much money they need, fund for four to five-year runways and end up being over-capitalized. Access your needs and expenses, and have a figure in mind backed by factually correct data.

Choosing your Investor

Although most company founders don’t have the privilege of being able to select investors right at the start, always try and be on the lookout for the ideal investor who can help you navigate the rough times of your business. Choose the space that you’re in and pick a start up venture capital firm that specialises in your space and is looking to actively invest in it. This will help you gain a competitive advantage that you didn’t have previously because expertise and advice in that space are now at your disposal.

Once you have all the numbers and you’re backed by the confidence that your product will do even better down the line, it’s time to connect with startup investors.

Emailing Your Potential Investor

Your email shouldn’t be too short with little or no information, or else too long with way too much information than needed. Balance it out. Don’t add any lengthy pitch decks unless asked for. If you’ve already laid out the groundwork earlier, you know what it is you need exactly. Although your email should be polite, it should also be eye-catching. Have a clear ask. See if the investor is willing to help you out and if you can indeed, arrange a meeting at some point down the line. 

Meeting with Investors

If you’ve followed the advice given to you before about focusing on one thing at a time, then you already have a finished product and now have the time to focus fully on fundraising.

The networking between startup investors is massively interlinked, and word of mouth spreads quickly. This means that the pitch you have today with an investor will quickly be discussed with another investor looking to invest in startups within the same network. This then multiplies rapidly. To be the ‘buzz’ and to be the ‘happening’ startup, you must arrange as many meetings as possible with venture capitalists so that one positive pitch has a ripple effect on the rest of the network. Obviously, arrange meetings and pitches knowing your limit since they can be very tedious and stressful.

Your Interaction with Investors

While being in the same room with them, here are a few pointers that will help you secure your startup funding:

• Don’t bombard them with data:

Although numbers are important, having too many of them can often be confusing and redundant. Focus on the numbers that tell a story of where the business is going.

• Your Narrative:

Building a story around where you’ve been, where you are right now, and where you want to be in the future is very important. Share your desired milestones – try to get the investors excited, and convince them that your business is the best out of all the startup investment opportunities out there.

• Be Chronoligically Believable:

Don’t jump from a difficult current situation to a point in the future where you see your business having offices all over the world, and making it a Fortune 500 company. Have a sequencing to your timeline; how you intend to go from where you are now, to where you want to be down the line. Your projected progress must be believable.

Final Words

VC investing and startup funding can be a brutal sport, but one that can polish your negotiation skills and help you realize things about your business you didn’t know yourself. Brush yourself off if any pitches haven’t gone your way. Remember that your business is still young and is here to stay. Investors can sometimes be difficult because they ask the tough questions, but remember; their objective is growth and so is yours. Your interactions with them from the start and right up to the end are very important. Look to build deeper and more meaningful relations and learn from them to be in it for the long term.