Top Tips on Getting Investment from Founders Who Have Been Through the Process.
Cashflow and capital - two words that are all too familiar to any founder. Two words that can incite excitement if they're abundant, or incredible stress if they're not. Usually, in the startup space, most businesses are launched without funding and thus, the latter is more often the case. Stressing about runway, cashflow and funding is an incredibly common occurrence amongst founders.
These stresses often lead to the desire to seek out funding or investment. Going down this path can be incredibly exciting, but also can be daunting, overwhelming and time consuming. It's been told by many a founder that the path of raising investment requires full time work, for 6-12months. A huge commitment for any founder, who is also trying to run and grow a business.
We spoke to 4 SBE E3 Alumnae who have secured investment in their companies. These founders all went through our E3 program, which helped them hone their pitches, learn about the minds of investors and how to speak to angels and VC's.
We asked each founder their top 3 tips and pieces of advice for any founder embarking on a capital raising journey.
Joanna Downer, CEO and Founder of Kitl.
1. Balance the investor noise with customer feedback
When you start talking to investors, you need to be prepared for them to pick your business apart from every angle. It's brutal, soul-destroying and it's hard to listen to - but that's their job. To weed out the weaknesses and assess the risks. Which is why you need to balance out their dialogue with the feedback your paying customers give you. If you are solving a pain point for someone, and they are paying for your product/service that is 100% validation that your business is worth fighting for!
2. Drive your own agenda
One of the best pieces of advice I ever had was from an Australian Founder who has raised a lot of capital. At the time of our chat, I had a few investors starting to pay my pitch deck some attention, but I really needed someone to step up and lead. He dropped a few F-bombs, and in no uncertain terms advised, "Don't wait for them - go get your own damn Term Sheet drafted and put it in front of them." Whilst it felt like a really forward move at the time, it turned out to be a great piece of advice and helped build momentum.
3. Have good people in your corner
There is no guidebook to raising capital and honestly, from my experience, it seems no two raises play out the same. Which is why it's so damn confusing for a first-timer to navigate! Beyond the pitch deck and warm intros there are so many questions you need to answer along the way (how much to raise? what legals do I need? which lawyer should I use? how do I establish a valuation? how do I bring this all together? should I keep on going?) So, having good people around you that you can ask all these questions of makes all the difference. Lean on those people that you trust, who are ahead of you on their business path and have stood in your shoes. They are invaluable. And if you ever find yourself on the end of a curly question don't hesitate to reach out if you think I can help - happy to pay it forward :)
* An incredibly generous offer from Jo - please email firstname.lastname@example.org if you'd like us to put you in touch with her.*
Susie Jones, CEO and Co-Founder, Cynch Security.
1. Get organised before you start.
You'll need to track all of your conversations, who you've sent what to etc, so make sure you set up a system for that before you start talking to investors because it will get out of control quickly otherwise.
2. Research and find warm introductions.
LinkedIn really is your best friend, research the investors and find a common contact and ask for a warm intro. You really won't get far without it.
3. Trust your gut.
If an investor you speak to gives you the wrong vibe then cut your losses and move on. Life is too short to deal with people you can't trust, and investor relationships can last longer than most marriages so don't take money from a jerk!
Ana Ouriques, Director and Founder, Land Insights Resources
1. Be yourself.
No one can be you and that's your power. I had many people telling me "you should present this way" "you should be better at this" but at the end of the day what works for me is being myself, trying to 'become that' different person just seems fake and not natural. And I am not a good actor.
2. Believe in what you do.
Investors want to see that you will stick to it even in hard times. There are going to be many difficult times at the beginning and it is important that you don't give up (of course, as long as you still have your mental and physical health to keep going) it gets better later.
Meet a lot of people in the same industry, in different industries, learn from them. Talk about your business to everyone, you never know where your next investor is coming from.
Ana's parting advice, as many startups, there were many ups and downs but I always believed that it would work. And this is one of the things I believe investors want to feel from you, resilience, that you are not going to give up at any little problem or big that may arise. And to show that, you must like what you do because it is not always an easy journey.
Ainslie Williams, CEO and Co-Founder, Qualie
1. Nothing speaks louder than video.
It’s known to be the most persuasive form of content, along with be an exceptional way to share the story of your product and its power. It’s really memorable. Being a video platform, it’s expected of us and we always show video in our pitch decks; video from our platform users. It’s these authentic human stories that help set-up why our product is worth investing in.
2. Don’t be intimidated to ask questions of investors.
Understanding what drives them to invest reveals what type of investor they might be for your business ie silent or hands on. If hands on, I always want to work out how they can fill in the gaps that we have in the business, beyond capital!
3. Don’t hide your personal life.
This comes from my experience closing my last round of funding at 8.5 months pregnant. It was too hard to hide. I never experienced any overt misogyny and I’ll never know if we missed some investment because of it… if so, perhaps they weren't investors for a female-led business. I believe investors are investing in you, the founder(s) along with the product so a little bit of lifestyle banter never goes astray. If you want to leverage their smarts as well as their capital then you want to know you can get along with them as people.
You can follow Joanna's journey on LinkedIn here. Learn more about Kitl here.
You can follow Susie's journey on LinkedIn here. Learn more about Cynch Security here.
You can follow Ana's journey on LinkedIn here. Learn more about Land Insight Resources here.
You can follow Ainslie's journey on LinkedIn here. Learn more about Qualie here.