Raising Your First Round: Finding the Right Investors & Preparing for the Pitch
1. Raising Your First Round:
Finding the Right Investors &
Preparing for the Pitch
2. Raising your first round is a daunting
process, especially for 1st time entrepreneurs
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- Developing a fundraising plan
- Determining what types of investors to target
- Optimizing how you approach investors
- Doing your homework for investor pitches
However, planning ahead can (hopefully) make the process
go a bit more smoothly; I recommend the following
3. I’ve launched my business and want to
raise capital – what do I do?
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If you answer “YES!” (not “yes?” but “YES!”) to the above, then:
1. Do I know why I’m raising money?
1. Do I want investors involved in my business (i.e. am I OK giving
up control)?
2. Do I know how I would spend the money?
Determine if your ready to raise outside capital by asking
yourself 3 key questions:
Step 1
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2
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Develop a fundraising planStep 2
4. Developing a fundraising plan
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Your fundraising plan should include:
Raise Details Target Investors
Fundraise Timing Investor Outreach Strategy
• Gaining access to target investors
• Communication and storytelling
• Cadence and relationship building
• Type
• Focus, expertise, or thesis
• Stage and check size
• When to start the process
• Target close date
• Drop dead close date
• $ Amount
• Target valuation
• Key terms
• Use of funds
1 2
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5. Determining raise details
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• Ultimately “the market” (aka investors) will determine many of the key
characteristics/terms of your fundraising
• However, every fundraising entrepreneur should have their target term sheet
(not just amount and valuation) planned out beforehand
Example framework for how to evaluate select key decisions
Key decision(s) Key factors
Raise
Amount
• How much should I try to raise?
• How much do I need to raise?
• Milestones needed to raise next round
• Use of funds - resources/cash & time needed for
milestones
Valuation
• What is my target valuation range?
• What is the lowest price I’d accept?
• Comps in the market / macro factors
• Team, market, progress, tech, etc.
Financing
instrument
• Debt vs. equity • Size of raise and investor preference
• Cost & speed vs. “cleaness”
Other key
Terms
• Control, preference, and governance • Investors, company needs, what’s
“market”
6. Evaluating potential sources of capital
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There are many different types of investors
Description
Motivation
Typical
Check size
Friends &
family
Stage
Individual
Angels
Angel
Groups
Venture
Capital
Crowd-
funding
• Friends, family,
colleagues
• Digital platform
aggregating
angels
• People investing
their own money
• Angels that
aggregate
capital
• Dedicated fund
investing others’
money
• Financial return• Financial return;
get involved
• Get involved;
have fun;
financial return
• Have fun• Support the
founder
• $100K-$1M**• $100K-$500K• $10K-$100K• Up to $500K*• $0-$100K
*Assumes a syndicate ** For seed rounds
• Seed to
Series A
• Seed to
Series A
• Pre-seed to
Series A
• Pre-seed to
Series A
• Pre-founding to
pre-seed
7. Which type of investor is right for you?
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Have you
launched the
business?
Do you have
prior startup
success?
Do you have a
completed
product?
Do you
customers?
Are they
paying you?
NOYES NO
YES
YES
YES
YES
NO
NO
NO
= Friends
& family
= Angel
group
= VC= Angel
ILLUSTRATIVE
8. Which specific investors to target
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Key investment decision factors
Finding the right angels Finding the right VC
Key investment decision factors
• Past experience with founder
• Strong referral from trusted
source
• Subject matter expertise / feeling
they can help the company
• Experience investing in similar
companies
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The potential non-starters
Investment
Theses
HPVP Example
Midwest based, tech
Stage Seed, Series A
The factors that drive “fit”
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Partnership
expertise
5 Working styles
3
Competitive
investments
Various
B2B SW, GTM,
marketplaces
Tenacious, responsive,
accountable, etc.
9. Connecting with target investors
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Descendingorderofvalue
1 Current / past portfolio company CEO
Example introduction sources
2 Trusted colleague, partner, friend of investor
3 Another investor in the current round
4 Advisor / mentor from founder’s network
5 An investor who’s not investing
Cold outreach6
10. Building the investor relationship
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Build
relationships
Active
fundraising
Adjust terms /
strategy
Target
close
Drop dead clo
Timing
Activities
Messaging
Key players
• 3 months
• Start 6 months before
target close
• 3 months
• Start 3 months before
target close
• 3 months
• 6 months before out of money
• Informal meeting with target
investors/ funds
• We’ll be raising in 6
months, think you/your fund
is a good fit and want to
introduce ourselves
• Angels, groups, VCs
(Associates and higher)
• Formal investor pitches
• Deal structuring
• We’re raising
• We’re awesome, here’s
why
• Angels, groups
• VCs, include full
partnership
• Reconnecting with interested
parties not yet committed
• I know you were interested
before
• We’ve adjusted terms,
reconnect?
• Angels, groups
• VCs, include full partnership
11. Preparing for the pitch
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Build relationships Active fundraising
Meeting prep
• Learn investors’ bios, expertise, and past
investments
• Craft your message, have key metrics top
of mind, and clear fundraising plan
During meeting
• At minimum, be prepared for - how the
business got started current commercial
progress where the business is going
• Listen to feedback and questions
• Articulate near-term goals to achieve
before active fundraising
Follow up
• Add interested investors to regular investor
updates
Meeting prep
• Have up-to-date key metrics, historical and
forward-looking financials
• Prepare to address prior questions /
feedback from investor(s)
During meeting
• Be prepared to walk through deck and also
“go off script”
• Bring all key team members to meeting
• Develop clear & concise pitch deck =
problem solution market traction
team raise details
• If new investors in room, likely need to
retell much of the story don’t assume all
knowledge shared amongst partnership
