How to Get Meetings with Investors and Raise Money by Aaron Harris
30 Oct 2023 (11 months ago)
Investor Meetings
- Successful investor meetings need a clear understanding of the investors' motivations and desired outcomes.
- Investor meetings involve identifying who the investors are, scheduling meetings with them, and successfully convincing them to invest in your venture.
- The presenter outlines a series of steps to be followed to secure funding.
When you need to raise money
- Not every business needs external funding, and timing is critical for those that do.
- Funds can be raised at different stages: during the idea phase, the prototype phase, or when users are already present.
- Rather than focusing on raising funds, startups should focus on building their product and company until they absolutely need the money to grow the business.
Why they need to raise money?
- Startups often consider hiring and user acquisition as the primary reasons to raise money.
- However, hiring and paying for user acquisition through channels like Google Ads can be cash drains and may lead to unprofitable customer acquisition.
- A better reason to raise money is to enhance customer service as good customer service enhances customer satisfaction and product/service uptake.
Types of Investors
- Various types of investors include friends and family, accelerators, angels, seed funds, VC funds, and crowdfunding platforms.
- Understanding who these investors are, their motivations, and how to approach them is key.
Accelerators
- Accelerators come with an associated education program aimed at helping startups avoid mistakes.
- However, some accelerators can hurt startups and may not have the necessary expertise to guide startups effectively.
Friends and Family
- Friends and family are a common source of funding for early-stage startups.
- It's important not to exploit their goodwill and only accept funds if they can afford to lose it.
Angels
- Angels are rich individuals who invest in startups often as a sporting venture.
- They are relatively easy to approach as they like to invest in innovative companies but one should be cautious of angel groups that waste founders' time without investing.
Seed Funds
- Seed funds are similar to angels but on a professional level.
- They are aggressive in finding good deals and have quick processes.
- Their goal is investing for a significant return to raise their next fund.
VC funds
- Venture capital funds range in scale, with some investing million-dollar checks, others investing billion-dollar checks.
- Each VC fund has to compete with all other investment options to attract funding from their limited partners.
- VC funds usually follow a systematic process for investment, including various rounds of meetings with one or multiple partners.
- If you’re considering your first check, you might not want to approach these guys until later in the process.
Crowdfunding websites
- Syndicate crowdfunding involves a lead investor who attracts other investors to back a particular venture.
- Crowdfunding websites allow companies to list their businesses after certain checks to prevent fraud.
- This option is viable if investors are not readily available in your locality, or you want to avoid spending time meeting investors.
- Be cautious, as managing multiple small investors can be challenging.
Cold emails
- Investors generally respond to cold emails, provided they are good emails.
- Sending investors cold emails that offer relevant information can be effective.
- Personalized emails that reference the investor's interests and specific knowledge, and offer concise, intriguing information about your company, are most likely to get a favorable response.
Meeting types
- Initial meetings involve introductions and are conducted by all investors except crowdfunding websites.
- This is usually followed by a follow-up meeting where the business's metrics and progress are discussed in depth.
- A decision meeting involves deeper discussion with multiple partners mainly on the VC side.
- Subsequently, a diligence meeting may occur, which could involve the investor team, the company team, or their lawyers.
- The goal is to progress to a closing dinner where you can gauge the potential investor's personality and assess if they would be a good fit for your company.
Intro
- The introductory meeting requires a clear explanation of your idea or product.
- A demo of the product is also highly beneficial in this stage.
- A professional appearance can leave a positive first impression.
Follow-up
- A follow-up meeting will require a deeper understanding of your business metrics.
- You should be prepared to explain your progress until now and provide insights into why you're doing what you're doing.
Decision meeting
- The decision meeting is most important for professional investors, as they need to understand your vision and trust in your potential to realize it.
- A pitch deck for your product is vital, but it should be simple and succinct, focussing on the opportunity, the team, and the product.
- Founders should be very familiar with their metrics and be ready to discuss them on demand.
Diligence
- These meetings focus on the legal and financial aspect of your company.
- It's critical to have legal documents and rational financials at hand.
- A comprehensive metrics dashboard can display your company's performance and potential effectively.
Fancy dinner
- This event signifies the end of the formal process but isn't always necessary.
- The aim of the entire process is to secure funds to grow your company.
- It's always advisable to be open to unorthodox processes of securing an investment, for instance, an investor willing to invest without a physical meeting.
Things to remember
- Meetings with investors do not directly equate to progress.
- One should only start meeting with investors when they are sure that they need to raise funds.
- The only valid confirmation of a successful investment request is a definitive "yes" followed by signed documents and wired money.
Warning
- Beware of investors who waste your time, over-impress with personal wealth or connect, and demean your ideas.
- Investors should not use a meeting to gather information for a competing business.
- Watch for any form of harassment or bigotry.
- In case of any inappropriate behavior, leave the meeting and report to authorities.