You came up with an idea. Started a business. Built an MVP and attracted users to the platform. You now need funds to scale. It’s time for your seed round. The success of your seed round will determine the success of the business. Follow these tips, to make sure you get it right the first time.
1. Have a Plan
When you’re raising seed funding it’s very difficult to stay organized. You’re often taking on the responsibility of CEO, fundraiser, office manager, marketer…and so much more. With all the chaos, startup owners often forget to pull together a plan. Investors want to know your vision. What are your goals for the next 6 months, 1 year and even 5 years. How can their investment help you get to where you need to be? Even if you’re running on fumes, make sure when presenting to investors it appears that you are organized and have a plan.
Next Steps: Create a product roadmap for the next 6 months, 1 year and 5 years. What resources do you need to accomplish these goals?
2. Know Your Fundraising Options
There are several fundraising options available to entrepreneurs looking to raise capital: Traditional VC or angel investors, equity crowdfunding or rewards-based crowdfunding, business loans, friends and family? There are many factors to consider when deciding which option will work best for your startup. Sometimes startups benefit from utilizing several options in tandem. Look for entrepreneurs working in a similar space and see where they’ve found success.
Next Steps: Connect with other entrepreneurs that have completed seed rounds. Research the pros and cons of different fundraising options.
3. Get Comfortable Selling
Sales gets a bad rap and people are often uncomfortable selling. Don’t be. If you believe in your product, you’re doing investors a favor by giving them early access. Part of being an entrepreneur is becoming comfortable in the uncomfortable. You should always be selling your business, whether at the office or at a cocktail party.
Next Steps: Familiarize yourself with the ins and outs of your product. When you are comfortable with the details, you will feel comfortable telling others about it.
4. Nail Your Elevator Pitch
You never know when you’re talking to a possible investor. Practice your 30 second pitch of WHO WHAT and WHY? Pitch to your mirror, your dog, your significant other, your mom, the waitress…everyone. The word “pitch” is often intimidating to entrepreneurs. Think of it as your story. What does the product do? Why do people need it? How big is the addressable market? Who are you and why are you qualified to make this happen? Starting a business is a crazy leap of faith. Make sure, you can convince others that it’s justified.
Next Steps: Practice makes perfect.
5. Identify Key Users
Know your customer inside and out. They are your most valuable asset. Early adopters are the best source of information for developing your product. Make sure to empower your users. Garner their feedback and take it seriously. It’s crucial to identify users that will serve as brand ambassadors early on. These are the folks that will help to scale your platform. Make sure they feel valued.
Next Steps: Identify key early users and connect with them. Conduct quarterly user feedback sessions.
6. Know Your Numbers
It’s always surprising to see the amount of entrepreneurs that stumble over their numbers. In the mind of an investor, numbers are the most important thing. How many users do you have? Any revenue? What are your projections for the next year, two years, five years? Bottom line: how are you going to make their money back?
Next Steps: Compile a cheat sheet for yourself. Post it on your laptop, on your mirror, in your car.
7. Utilize Your Network
Warm intros are always best. Have a list of investors you want to meet? Send it out to your network and ask for intros. You raise your chance of success tenfold by entering a situation through a referral. More likely than not, your network will want to help. Use this to your advantage. Remember, favors go both ways. If you’re a person that always volunteers to help others, you are more likely to receive help when you need it.
Next Steps: Create a list of 50 potential investors. Conduct a network assessment and identify possible intros.
Make sure you are laser-focused on that single thing that you do best, and why the world can’t live without it. As super angel, Ron Conway, said, “While you’re talking to me in the first minute I’m asking myself: ‘Is this person a leader? Is this person rifle-focused and obsessed by the product?’” Investors want to know that you are dead-set on a target, and that you’ve selected the right target.
Next Steps: Quit thinking about the other startup ideas you have on the back burner and become intimately familiar with all the details of your current product and industry.
9. Follow Up
Investors are busy. Be sure to follow-up with them regularly. Most likely, they aren’t ignoring you on purpose. Make sure to be top of mind but not annoying. Your follow-up should add value. Whether that be an article that relates to your sector or a company update. Make it worth their while.
Next Steps: Keep a list of investors you are in discussions with including the status of the conversation. Make sure you are reaching out monthly to each point of contact.
10. Be Yourself
At the seed round, investors are investing in the founding team as much as anything. Even if they believe your company is the next Uber, they must also believe you are the person that can execute that plan. Transparency is key. In early funding rounds, the investor and entrepreneur must be able to work together on both a personal and professional level. Don’t hide who you are and make sure to build a strong relationship with your early investors.
Next Steps: This one speaks for itself. Be yourself!
The seed round is arguably the most crucial stage to a company’s success. At Crowdfunder, we love serving as a resource to entrepreneurs. If you are raising a seed round and considering an equity crowdfunding campaign, reach out to our customer support team. We’d be happy to answer any questions you have. Best of luck!