So… honestly, it is never an easy or straight forward path when raising money, unless your surname is Collison (and your first name is John or Patrick). But no matter what your name is, right now we are clearly in a different world than we were a few months ago…
I have worked with companies at different stages for the better part of 15 years and still assist many with the fundraising process. Over this period I have invested my time, money, advice, effort, network, very little blood (but some), buckets of sweat… and a tear or two. Some of these companies have gone very well, others I’d prefer to forget about (but I obviously can’t as my annoying brain thinks it’s funny to taunt me with random unpleasant memories)!
Neuroses aside though, the common factor with these businesses, and the experience that has brought me to write this post, is that most of them have had to raise money at some point and each raise is challenging in its own special way.
With that front of mind, as well as the strange pandemic-driven reality we are all currently living in, there are 3 (and ½) things I have noticed about successful fundraisers over the years which elevates them to a different playing field… or even a different game all together. In a time when companies need some help, I’d like to share these traits with those who might like to listen (or read).
Thing 1. Fundraising superstars are excellent explainers
That doesn’t mean they lecture or information-dump on the person they’re speaking with…(the aim is to ‘explain’ not ‘over-explain’)… it means they have mastered the art of transferring their ideas or knowledge (whether complex or not) in a simple, easily understood and compelling way.
Ideally, the audience will firstly be able to absorb the content, then remember what has been said, and lastly be able to effortlessly re-explain it themselves — which almost all potential investors will be doing.
This is easier said than done and there are two elements in my experience a good explainer needs to have;
A. Be a master storyteller
This is not an easy skill to acquire, and you don’t really need to get to Ernest Hemmingway’s level. But we are storytelling animals, hardwired to tell, absorb and learn from narratives — so your audience is by default primed and waiting to be taken on a journey. Though it can’t be accomplished overnight, with practice and having the courage to dive into the metaphorical deep end (or literal if you want to tell stories at a pool party) storytelling is an ability which can be significantly improved and mastered over time.
On the surface a good story involves a mixture of structure, content, delivery and timing.
According to Chip and Dan Heath, co-authors of Made to Stick (a book I highly recommend) your story should be simple, unexpected, concrete, credentialed (credible) and emotional. These principles are overviewed nicely here.
Often stemming from a thorough, no-shortcuts-taken, in-depth knowledge of the subject matter being spoken about.
Selling the value proposition of your company to an investor and getting them excited to know more (and want to be involved) is a key aspect of fundraising. Which is why accelerators and incubators focus so much on pitch training. If after telling your tale the investor wants to be a part of it, then you have done the first part of your job. Now you have to do the same thing with every other investor you speak with while maintaining the same level of enthusiasm and authenticity… every time.
Then of course, you have to convince them all that you can walk the walk and execute on your amazing plans like a man (or woman) possessed…. and then actually do it.
Thing 2. An ability to execute
Every founder is passionate about their business idea — that’s what my dad would call a ‘gimme’. But once that’s been established, what most investors care about (and are in-fact continuously assessing), is whether you can truly deliver on the grand plans you are talking so excitedly about. If you can show a pattern from past performance that is a solid bonus, if not you have to earn that trust through your actions.
You need to be able to succinctly explain, and ideally display, that you and your team have: — the forethought to make well-considered strategic plans — the organisational skills and cohesion to stick to a delivery schedule (time management) — the hustle to adapt & overcome obstacles — the humility to learn — the grit to accept failures and keep going — and above all, the ability to just get ‘er done.
Questions to ask yourself:
What are the key tasks your company has planned?
Were they adapted since they were first set? How? Why? Outcome?
Can you refer to your plans to show that you have actually done the work or explain why you haven’t?
How do you intend to show/tell your plans, achievements or learnings to investors both initially and on an ongoing basis (without overwhelming or overloading them with information)?
Who are the advocates/references you can lean on to support your claims of success (mentors, other investors, customers, partners)?
Throughout this process, you should leave yourself nowhere to hide: — make sure to own whatever has happened, whether it was a huge success or a mistake that was learned from, if it was your fault or not, or if it was inside or outside of your control. Be real, be upfront and be honest. Investors will notice and appreciate it, and it will build trust.
Thing 3. Do your homework.
Excellent fundraisers have done the work. They don’t just know everything about the business opportunity they are selling, they know every detail surrounding it and have the answers ready.
State of the Company — They know the numbers of the business, inside out, without checking or referring to any documents. They know COGS, revenues, CAC, LTV, current growth, projected growth, staff numbers, strengths and weaknesses of each employee including themselves. They know the customers and their needs intimately. In short, they are fully aware.
Wider Landscape — they know the size of the opportunity, the competition and the key players — from the largest to the smallest up-and-comers, they’re aware of significant (and insignificant) transactions, industry politics, policy discussions relevant to their business or customers, emerging services and technology… I think you get the picture.
Concise & Humble — They deliver these answers comprehensively, concisely and with a spoonful of humility… It is easy to come across as arrogant when you are highly skilled and knowledgeable about a topic (or so I’m told), and a little self-awareness and consideration of your audience and how you’re being perceived goes a long way.
I am not saying you have to be Rainman but you love your company and for many founders, it is your life — getting that passion across to investors is important. Spending some time to prepare and commit important facts about your company and industry to memory, so you can deliver them instantly and concisely can be very positive.
The final ½ thing. An openness and passion for learning.
There is a skill to learning and surprise surprise….it can be learned. Being open to absorbing new information on a regular basis about different topics to maintain a broad, diverse perspective, using meta-learning techniques, and never being content with your current level of knowledge are all traits of learners and skilled fundraisers.
It is also difficult for some people to learn from those who are not as intelligent as them or know less about a subject. Skilled fundraisers have the self-awareness to realise that there are things they don’t or can’t know yet and are open to learning from all available sources — competitors, colleagues, customers, and investors alike. If they find something they don’t know, they actively learn it.
The Wrap Up:
Investors are at the end of the day all human beings (well maybe not Peter Thiel who may be an alien from planet Makemoney) and are therefore inherently different. They all look for different things and have unique criteria which gets them to YES. But there are some common factors which make that yes easier to achieve. In my experience as both a fundraiser and investor, those founders who have been most successful have all excelled in each of the above skills.
In essence, these capital raising wizards are all perpetual learners able to tell a compelling, believable, informative yet concise story about why their idea is a unique winner, and why they are the ones to ensure its success.
You needn’t go into a panic if you don’t possess all these traits. I have seen many founders who have raised money without exhibiting all of them, though you would struggle with none. They can all be learned though, so it may pay to do a self assessment and see where you’re at. If you think you’re lacking in one or more area, and you’re struggling to raise
funds, then working on some of these aspects may be worthwhile.
I will leave it there. I hope this was helpful to some of you.
Happy fundraising and congratulations to those of you who’ve been courageous enough to get in the arena and try to build something!
Thank you for reading. Don't hesitate to get in touch!