Fundraising 101: How to Get Started

There’s no doubt about it—raising money for your startup is difficult. Ask any entrepreneur and they’ll agree to that. Not only is it a daunting task, it’s also an uncomfortable one for many entrepreneurs. After all, it’s not easy asking strangers (and sometimes friends and family) for money! Plus, it’s especially hard to do when you can’t promise that you’ll be able to repay them.
Before you begin to hit up investors for funds, make sure you check these critical to-dos off your list. Thinking through these items will set you up with the right framework for a smooth [as possible] process, and the best chances for achieving success.
Never stop networking
This may seem obvious, but you’d be surprised at how often this concept is lost on entrepreneurs, especially first timers. Networking effectively is not something that you can start tomorrow, with the expectation that doors everywhere will open for you in a matter of weeks. Truly effective networking takes time. It’s a continuous cycle.
The most effective networking relationships are driven by more than exchanging contact information. You’ve got to build relationships and drive value. Start your networking early on. Stay in touch with the people in your circle. And talk about your goals and what you’re up to, so that your network can tune in for how to help.
And remember, a lot of networking is about showing up. Really, just show up! Go to demo days. Apply to pitch events. Join meetup groups and startup organizations. Put yourself in situations where you’ll most likely meet others who can support you, including investors.
Get your pitch deck together
There’s no need to overcomplicate this—skip the 100-page, snooze-inducing business plan and craft a concise and exciting pitch deck instead. Take your research, financial projects, team bios and lump them together in an appendix. Your pitch deck shouldn’t be longer than 10-15 slides. It should include only the most critical information about your startup: what problem you’re solving, how you’re going to solve it, and why it’s such an enormous opportunity. You should also include elements like proprietary technology, industry experience and your key milestones to date.
Consider your milestones
Speaking of milestones—you should be strategizing the next ones of your business. How are you going to launch? What does your Phase I product experience look like versus, say, Phase III? Who are the next team members that you’ll need to hire?
Milestones are critical because achieving each milestone costs money. Milestones will help you detail out financial projections, so you can intelligently speak to investors about how much money you need—and why.
Do your homework
When it comes to investors, there’s a lot of fish in the sea. Do your research first so that you can save time, and avoid wasting their time, too. You’ll want to target investors who have a focus in your industry.
Take some time to see what deals investors have previously made, which industries they focus on and what types of technologies they gravitate towards. Take note of what stage companies they tend to invest in, what issues they care about and what reputation they hold. All of these tidbits will help you whittle down your target list.
Practicing your pitch presentation is a no brainer. You will quickly see which parts of your presentation need polishing. Also, practicing your pitch presentation will help you anticipate questions. You may want to re-work your messaging if you continually get hit with the same question time and time again. (Practicing will increase your confidence, too!)