Read Full Story Here – By Rafe Furst
- Hacking the Startup Fundraising Matrix
- How to Leverage Social Currency
- The Eightfold Path to Investment
- The Five Hindrances to Getting Funded
Knowing when to start looking for investment and how to go about it is one of the most critical points in a startup’s life. There are several factors to consider in this process. Review this guide to better understand each step that is necessary when looking to secure investment.
- Right Motivation — If you want investment because you value having new partners who can help you build the company bigger and faster than you could without them, then this is Right Motivation. Many entrepreneurs seek investment as a validation of their idea/company/self. If your motivation is to be validated, then you are on the wrong path.
- Right Plan — Have a plan (or at least a plan B) that doesn’t require investment capital to succeed. If you don’t need investors’ money, you will have a much easier time getting it. Let’s face it, what partner in a healthy relationship is attracted to neediness?
- Right Timing — There are times in your company’s lifecycle when investment will flow naturally. If the timing is not right, then your energies are better spent building the business. Building a business creates Right Timing for investment.
- Right Audience — Many founders make the mistake of pitching investors their product or their idea. Your Audience is a person who wants a return on their investment (as soon as possible).
- Right Message — The Message you deliver to that person is always the same: “Invest in me because I will return you significantly more money than you are investing.” Your entire investment pitch and diligence documents can be boiled down to that one Message.
- Right Story — The way you deliver the Message is through your story. But which one? There are many true stories to be told about you and your company. And it takes time and countless tellings for the right version to emerge, the one which resonates most with your investor audience. Tell your story to people you trust, people who will give you tough love feedback; then keep refining the story. You will know it’s Right when someone you asked for feedback actually writes you an investment check as their answer.
- Right Methodology — You are undoubtedly following Lean Startup methodology in building your Minimum Viable Product and achieving Product-Market Fit before scaling. The same principles apply to fundraising. What’s the Minimum Viable Investment that gets you to a significantly higher valuation once you’ve spent the investment? Failure to attract a lead investor is valuable market feedback: pivot and iterate before you proceed with your campaign.
- Right Closing — If you’ve done everything Right, you will be oversubscribed and have more investors/investment than you can (or want to) close. It is important that you choose investors who you want as business partners. And while this may seem counterintuitive… if you tell investors that you are vetting them, they will often times pitch themselves to you and close quicker as investors. But don’t forget: this is likely not your last round of funding; how you treat investors as they are closing — and how you turn away the unlucky folks who won’t get to invest now — all this matters as you look towards your next round.