Last updated on June 23rd, 2023 at 07:56 am
Fundraising is an essential activity for businesses, especially the small and mid-sized, but it’s also one that too many founders and executives struggle with to do effectively.
The following are generally considered and universally acknowledged the best ways to accelerate a fund-raising process:
Commit Fully
First and foremost, you must be 100 percent committed to fundraising. Avoid the temptation to dip your toe in and “test the market.” Successful fundraising will require your 100% focus on raising and closing the round in addition to a solid process to execute. Prepare your team for you fundraise and delegate any tasks that not only you can do.
Research the investors in your pipeline properly to find the right investors
Not all investors are created equal: some are truly passionate about the cause or problem you’re trying to solve, while others will be sceptical and never be convinced that your idea is worthy investing into. The key to fundraising success is to figure out how to tell the former group from the latter. If you’re just starting out in the fundraising process, it is actually better to first approach those investors who you think will be more sceptical about your idea. This will give you the chance to get valuable feedback, iron out the chinks in your pitch so that you can improve your pitch to the investors who you really care about your idea.
Prioritize and structure your investor pipeline and your outreach
You have to create momentum and scarcity in order for your round to be a success. So, compressing your meetings in as short a time as possible will help facilitate this.
Prepare the right pitch to tell the right story
Prepare a pitch that will help you make a good first impression. A good pitch includes telling the right story about your company: the vision you have as a founder, as well as the trajectory you want your company to follow.
Your pitch should incorporate information such as:
- The sustainability of your business model, including your long-term plans for generating revenue.
- The growth potential of your company. This includes fact-based arguments about your customer base, the projected demand for your goods and services, and your opportunities for expansion across different sectors or geographical regions.
- Your competition and the distinguishing features that gives your company a competitive edge.
- Make a list of expected objections and how you will respond to each.
Work with mentors
To a large extent fundraising depends on the reach of your network and community. If you don’t have previous experience with fundraising, it’s best to get advice from a knowledgeable and experienced mentor. It can be invaluable. Reach out to industry leaders and other contacts in your circle to see if you can find someone willing to serve as your confidant during this process.
Set up a Virtual Data Room
Investors will want to perform due diligence by looking over more sensitive documents about your company and its financials. However, sharing this information over email is insecure, fraught with many dangers as you have no control over how the files are shared beyond your conversation. Use Virtual Data Rooms instead. They secure your databases as it is hosted in the cloud for storing and exchanging confidential information during financial transactions. By using a VDR, you’ll have complete visibility and can keep a track of who accesses which files and when, as well as enjoy advanced features such as watermarking and electronic signatures for added security. Setting up a VDR ahead of time will mean that you can move quickly to the due diligence process as soon as investors express interest.
Have All Due Diligence Items Ready
Before you get into conversations, make sure you have all the standard due diligence documents prepared. Some common examples include pitch deck, company financials and projections. That said … provide as few due diligence items as possible. Remember: Every due diligence item you send has the potential to raise more questions and derail the process. Only send files that the investor has specifically requested. If you receive general, nonspecific requests, do not upload every document you have available, but pick and choose.
Listen to feedback
It’s never easy to hear “no” in response to a fundraising pitch, but listening to the feedback and the reasons for that “no” can help you improve and get to a “yes” the next time around. Listen to the feedback you receive from potential investors. What were the reasons for them declining, or what reservations did they express towards your business idea and more particularly about funding? Take this feedback positively and use it as an opportunity to collect more data and run more focus groups to prove the worth of your concept.
The path to acquiring funding is very challenging and time-consuming, but adhering to the above time-tested tips by most industry experts will surely help you navigate the process more efficiently and accelerate it vastly.
Wait for the Wire
Relaxing once an investor has given you a verbal “yes” is a natural instinct. Avoid doing this at all costs. Investors can and will get cold feet, even after they have confirmed their participation. Continue to push for the close until you can see the cleared wire in your bank account.
The Confiex team specializes in providing premium virtual data room solutions tailored for businesses. With their vast experience in working with document sharing platforms, they have been actively supporting the Virtual Data Room community since 2015 by offering valuable information to users free of charge.