Takeaways from the Book
- Do your best to exude self-assurance and compassion.
- Gaining donations requires a well-timed push.
- Unfortunately, most potential backers who promise to invest ultimately fall short of their promises.
Topics Discussed in Fundraising
Author and payment processing startup founder Ryan Breslow penned the book Fundraising. The book outlines the mindsets and guidelines that will facilitate successful fundraising for your organisation. In order to raise the most money in the least amount of time, I discovered that it is crucial to network with potential investors and venture capitalists in advance.
It was a good read, although a lot of it was obvious. To see how money was raised was still a fascinating subject to study.
The synopsis is provided below.
Fundraising Overview from Ryan Breslow
Remember where you are in the story.
- Regarding when to read it, know that it is a book about raising money for seed and pre-seed round.
- Our strategy involves minimizing the amount of money we leave up to chance.
- The most crucial part is that you make it your own, so be genuine. Be wary of taking others’ word as gospel.
- Ability, not chance: avoid the counsel of the fortunate.
- Put this manual through its paces; read it multiple times.
- Fundraising is one of your most crucial duties, right up there with establishing the organization’s culture, so relax and enjoy yourself. Raising capital forces you to refine your pitch, so you can attract more investors.
Fundraising requires a certain mindset
One that is both self-assured and empathetic. You will inevitably fail if you ever start to question your own value.
Stay away from investors with big egos. They might start to feel envious if you do well.
Picture yourself in the role of an investor. What exactly are you trying to find?
- Relentlessness
- Unique founder
- Optimism and generosity
Being memorable increases your chances of getting a donation.
Show that you are serious, responsible, and competent.
Remember these things:
- Vision
- Problem-solving based on careful analysis and reflection
- Warrior, if you want to win, you’ll have to break down barriers.
- Authenticity
Momentum is Key to the Process
Acceleration is the key to successful fundraising. As a result, you’ll need to construct it in three stages.
- One, plant the seeds; two, prepare the soil (build a network)
There’s no way around it if you don’t know anyone: you’ll have to get names. It’s best to network with other founders.
The author met most of his network by hosting gatherings of interesting people.
- Sow the seeds (casually meet investors)
You can’t have a farm up here. The following are the advantages of meeting with investors outside of a fundraising context:
- You’re demonstrating that you value the connection.
- It’s a sign of rivalry for you.
- This is a great way to meet new individuals and decide whether or not you want to work with them.
- You can’t get no’s
- Possibly, you will hear positive responses.
Create your own social network to meet potential backers. It’s a good idea to compile a list of your contacts and then see whether any of them are already acquainted with the investor you’re targeting. When that’s done, you should request to be introduced.
The First Meeting
When pitching to a venture capitalist, first impressions are crucial. Walk around like a confident, real person. Instead of using decks to communicate with them, try talking to them directly. They aren’t buying shares in a company; they’re buying a piece of yourself.
Tell them it’s too soon to make a choice if they press you for an answer to a query you don’t have yet. A 30-minute meeting is plenty of time. Ideally, you’d like to set up a second meeting.
When the meeting is over, you might write a quick email expressing your gratitude for the opportunity to meet with them.
The Second Meeting
Introduce the idea that you want to know more about them as people in addition to discussing your business. Inquire as to their preferred investment avenues and past investments.
Before committing to a certain fundraising goal, suggest conducting additional research into the company’s viability.
If they are still interested, tell them how much money you want to raise and from whom. Either they will say it went well but not invest or they will ask you to invest when the meeting is over. It’s appropriate to express thanks and appreciation when something occurs. Don’t rush to agree or make things too simple.
Ascertain that you have a firm grasp on who they are and what drives them; if not, extend an invitation for further discussion. Inquire as to their fundraising goals and extend an invitation to meet with a team member.
- Fundraising
You’ve met with multiple investors at this stage, and you’re becoming better at your pitch. You have received investment offers and may have even started collecting on them. You’ve reached full velocity. It’s time to send out that mass email announcing your fundraising efforts.
At this stage, your goal should be to raise as much money as possible as quickly as feasible. We’ll assume a $6,000,000 initial market cap.
References
Your references can help you learn more about your investor, demonstrate your thoughtfulness, and introduce you to other pioneering thinkers in your field.
Send an email or give a call to discuss the investor.
If you call the references and learn something that makes you uncomfortable, you shouldn’t let the investor in.
Once you have completed your due diligence on an investor, give them a call to let them know you welcome them in. Remind them that their proposed investment of X can be increased to Y.
Understanding a No
Recognizing Investors who flat-out reject your proposal and provide an explanation is invaluable. There are hardly any in existence. Some people may delay investing if they feel the procedure is taking too long.
Most people who reject you will not explain why. Make sure you get a straight answer by asking them to elaborate. Then, try not to stress, and keep in mind that even the most successful firms of today had a hard time securing initial seed capital.
Understanding a Yes
Even if you get the yes, that doesn’t guarantee you’ll get the money. Before you deposit the money, you have no reason to celebrate. There is a 10% possibility of getting funded if investors think your business is fantastic and you’re a fantastic entrepreneur.
The probability that they will really invest is half if they express an interest in doing so. Last but not least, there is an 80% likelihood that they will send the money soon after they have read the terms, agreed that they are fair, and indicated that they intend to write a check.
Difference Between a Good and Bad Investor
Connecting with investors should be a top priority. Good investors will back you up and step aside when necessary. You can’t afford to have a terrible investor.
The telltale symptoms of poor investors:
- Big head
- Disrespectful
- Questions that lack sophistication
- Invent creative means of investment (such as a personal introduction to one of their “friends”).
- Having failed to meet a deadline
- Lack of clarity in investment criteria
- Negative vibes
- Put the person first, not the name or company he represents.
You’ll be entering into a binding agreement with a person you barely know if you don’t verify that the investor has decision-making authority within their company (the person pulling the strings).
Board Seats and Control
An investor’s right to a board seat as a preferred shareholder is irrevocable (until you go public). In other words, once they have it, they will always have it. Don’t hand them out to random strangers. Rather, you shouldn’t give them to anyone. Avoid giving up a board seat in the seed round under any circumstances.
Best Practices and Pitfalls
The first is a group of co-founders pooling their resources to secure funding. If there are multiple founders, one should take the lead in fundraising while the others provide support. Utilize an Excel spreadsheet to keep tabs on progress.
Remember to record:
- Firm
- The Intended Audience
- The Final Interaction
- Amount of Interest, Next Step
- Recordings of Past Discourse
Investors already on board should always come first when raising capital.
If you had to turn down potential investors, just say that you had to prioritise working with people you already knew. Damage to investor relations should be avoided at all costs.
Don’t accept early funding from a fund.
If you are trying to raise money, it’s best not to let the cat out of the bag too soon.
Be careful to give the pay increase adequate attention.
You shouldn’t tell them who the other investors are until after they’ve wired their money.
The Framework
Convertible notes and safe haven notes are recommended by the author because of their adaptability.
Don’t put too much faith in your lawyers and insist that they negotiate conditions that are favorable to the company’s founders.
The Pitch
You, the founder, play the role of primary narrator. Initially, you are the only one who has faith in the tale. So then more people will. When that happens, your clientele will follow suit. The success of any fundraising campaign depends on your pitch. A great pitch begins and ends with expert knowledge.
The most effective sales pitch is the most casual. To impress potential backers, you must provide a flawless explanation of your work. Before making your presentation, practise your pitch at least 20 times. You need to have thick skin.
A Perfect Sales Pitch
The following is the format that they use:
- This is how things are done in the modern world.
- Here’s how things in the future ought to operate, but they don’t because x is lacking.
- The following explains why nobody has found a solution to this issue thus far. Anyone who figures out how to fix this issue will be paid handsomely, but only after they put in a lot of effort (X, Y, and Z).
- What follows is the key to unlocking the solution to the issue at hand. It may take the form of an idea, a device, or an invention….
- This is why we are the most qualified to carry it out:
The Supplemental Tales
Don’t respond with a simple yes or no when someone asks you a question. Please provide an explanation, and feel free to include examples.
Ahead in the Later Rounds
For the following rounds, you’ll need a data-filled deck. Ensure that it is relevant and accurate.
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