Estimated Time

• Reading: ~10 minutes
• Video: ~32 minutes
• Activities: to be completed prior to the next week

Insights

• Find investors that align with your goals
• Investors will require due diligence on your company - you should perform due diligence on your investors
• Keep investors (and potential investors) updated on your progress monthly

Be able to pitch your startup effectively and concisely

• So much of raising a fundraising round depends on how well you can tell your story
• Use Jason's Rules for Pitching and “The Pitch” module to build out your deck
• Being able to describe your startup in one simple sentence is a superpower when talking to investors
• Investors see hundreds of investment opportunities each week - make it easy for them to understand what you do right away
• Do not use jargon or marketing-speak - explain what you do simply
• Get the team involved in the deck
• The founder should not make this deck alone
• Include employees that have important insights into specific parts of the company
• For example,
• Have individuals on the sales team provide input on the sales slides
• Have your engineers provide input on the product slides

Do you know how to find investors?

• We are talking about the specific investor, not just the firm
• Some investors (and firms) are stage-specific, some are vertical-specific, and some are geo-specific
• While others are agnostic to stage, vertical, and geography
• Do your research... be credible!
• You don't want to try and pitch a growth-stage firm if you're raising a seed round
• Learn how they invest
• Some investors only lead, some investors only follow, and some do both!
• Some who follow will only follow if there is a lead, and some will be okay if it is a party round
• It might not be clear until you start to have conversations with them and that is fine
• Asking these types of questions will help you build credibility, and understand when you should reengage if you are not a fit right now
• A few tips for finding the right investors:
• Who has invested in companies in your space?
• Note: It is recommended that you avoid investors of direct competitors
• Crunchbase and NFX Signal are good resources.
• Once you identify firms that meet your requirement you should look at the firm’s team page for individuals you want to meet
• Based on the background provided for each investor (and their LinkedIn page) you can usually pinpoint an investor's focus and previous investments
• Research their background
• Where have they selected winners in the past
• What is their background? Were they an entrepreneur?
• Follow them on social media
• Retweet them, add them to lists, engage with them when appropriate
• Learn what they care about, read their blogs
• Then begin to tailor your outreach accordingly
• Explain why are you targeting that specific investor
• Do not "spray and pray" - be very specific and targeted in your approach
• When you find an investor that fits your stage and vertical you should do a few things:
• Research when they raised their last fund
• If they've recently announced a new fund
• They are looking to deploy capital
• This is a good sign
• PitchBook will often list "Dry Powder" for VC firms
• This is an approximation of how much capital they have to invest

Do you know how to build a fundraising pipeline?

• Now that you know how to find investors
• Identify how many of them you need to pitch to get a term sheet
• Here is an estimate on what a typical fundraising funnel could look like:
• Large list: ~150 investors
• Curated list: ~125 investors
• First meetings on Zoom: ~50 investors
• Second meetings: ~25 investors
• Go into diligence: 10 investors
• Term sheets: 1 to 3 investors
• So those 150 top of funnel investors could net you 1 to 3 term sheets
• This varies greatly from startup to startup
• This Week in Startups: Scaling Your Startup has a ton more info on fundraising strategies
• Specifically, check out episode 1210 "Fundraising" - Season 2 with Andrew Farah of Density and Dejan Pralica of SoleSavy

Follow Jason's "perfect cold email" template

• Keep your cold email extremely short and to the point
• Just like in your pitch, examples matter
• Include a short, personalized intro as to why you are reaching out and who you are
• This should be done in 1-2 sentences
• The more personal you make it for the reader the better
• “Your point about [insert example] from your recent blog “[blog title]” really resonated with me as a first-time founder building [product description].”
• And then these numbers:
• We currently have ## of customers/users
• We make money by [simply explained business model]
• Here are our last three months of revenue
• Charts are always nice and are in line with the “show don't tell” rule
• Include a quick product demo (less than 3 minutes) via Loom
• The wordier your email gets, the less likely it is that it will be read

Nailing your first meeting

• Be confident and know that you belong in the meeting
• Having a positive, exciting, and contagious energy from the start goes a long way
• Most investors are placing early bets on the founder
• A first impression and being someone they want to work with is important
• You should have two decks ready to present
• A short (3-7 minute) version
• A longer (10-15 minute) version
• That way you are prepared for either request from the investor
• If they don’t specify how much time they want to allot to the pitch, you can simply ask them
• “I could do a quick presentation and product demo, or a more detailed presentation. Which do you prefer?”
• If you have a preference you can lead them to answer in the way you prefer but be prepared for both just in case
• If you are using a short version, you should have an appendix that goes into more detail
• That way you can just click to the end and not have to pull up your “longer deck”
• Things to include in the appendix may be:
• A more detailed financial model
• A more in-depth analysis of the competition
• Data on cohort analysis
• The market breakdown
• And similar types of information
• At this stage in your journey, you may not have a lot of this yet
• Speak to your strengths
• Be honest about where you are at today and tell a clear story of how you will get to where you want to be
• And lean into “why now?” and “why you?”
• In other words, why is your product going to be successful?
• Why are you the founder to bring it to market?
• Your deck should evolve as your company matures and your raises become bigger
• If you have an appendix in your deck but don’t get to it in the meeting you can point to it in your follow up email when you thank the investor for their time
• “Thanks so much for your time today. I’ve included the deck we went through, you’ll notice the appendix at the end that goes into more detail on XYZ...”
• Prepare answers to questions that you believe the investor may ask
• When answering investors questions you want to do so accurately and concisely
• If your answers get too wordy or don’t directly answer the question this hurts your credibility
• For example, if an investor asks what was your revenue last month
• Do not launch into an explanation on the vision of how quickly you plan to grow revenue
• Own your early traction, even if modest
• Jason uses the metaphor, “if I ask you what time it is... do not build me a watch. Just tell me what time it is so we can move on”
• Keep track of the questions that you get most often
• Is a question getting asked frequently enough that you need to clarify it in your deck?
• Are you satisfied with the way you answered the question or should you tweak the response so you are more prepared the next time you are asked the same question?
• Some founders like to touch on a topic in their deck that they know will lead to questions
• Then they can be prepared to field those questions when they come
• This allows them to continue with their presentation and deep-dive later if appropriate
• Before the meeting ends make sure to have clear action items and next steps
• You should have your own goals thought out ahead of time
• Why did you request this meeting?
• Why did you accept this meeting?
• What are you hoping to get out of it?

Can you nail the “post-meeting follow-up email"?

• Always send a post-meeting follow-up email
• It is a good idea to follow up that day to thank the investor for their time while you may still be top of mind
• Be positive and thank them for their time
• Include any specific feedback that they provided that you found valuable
• This shows that you heard them and are open to feedback
• Address whatever concerns they expressed during the meeting with clarifying detail
• Be concise
• Use bullet points if possible
• Provide any additional information that they requested
• Include any resources that you would like them to potentially share internally
• Indicate you are looking forward to whatever next step you agreed on
• If you don't hear back you should follow up when appropriate
• This can depend on what the agreed-upon next steps were
• If you are supposed to meet in the next couple of days then you’ll want to follow up sooner than if they suggested circling back at the end of next quarter
• Always include an exciting update in response to the original email
• This will provide them with the context of the original email as well as something new and exciting that is happening right now
• Try something like,
• “Since our last conversation, we launched feature XYZ which led to TK” or
• “We have recently acquired ## customers and our month over month growth is now ##%”
• This is so much more valuable than an email that says, “just moving this to top of your inbox” which is can be seen as passive-aggressive or annoying
• Investors who get this often assume they did not respond to the original message for a reason and move on to the next one
• Providing metrics will potentially get their attention and make them wonder if they accidentally missed your original message
• If appropriate you can create a sense of urgency by letting them know where you are in the fundraising process
• One of the surest ways to get a response is to let them know, "I have a term sheet"
• You should for no reason, ever lie about this (or anything for that matter)
• The investor community communicates regularly and this is the surest way to destroy your credibility
• An example of a lie that might seem innocent is including in your deck that Jason Calacanis is an advisor to your company
• Although you are in Founder.University and have gotten some advice from Jason he is not an advisor in the way that it may portray if you put that in your deck
• Be honest and direct

Do you know how to diligence potential investors?

• This is different than "researching" investors
• You are researching investors when you are creating a list of who you would like to take meetings with
• When you are performing due diligence you should figure out how valuable they are as partners
• Just like investors will go deep on diligence on your company, you should do that for investors
• Identify founders in their portfolio and reach out to them
• Ask the founders what their experience was or has been working with that investor?
• Was the VC firm helpful, easy to work with, if they could do it all over again would they still take their money?
• Some investors just write the check and are hands-off
• If that is what you are looking for that is good to know
• Other investors can be really helpful in various ways
• Some investors have legal expertise, some enterprise sales, some operational, etc
• And some are actually a net negative to your company
• You don't want to add a bad investor to your cap table

Send a great investor update

• At least once a month you should send an update to your investors
• These updates should be easy to digest, concise, and to the point
• Keep in mind your investors could be receiving tens of hundreds of these updates each month
• You want your investor informed on your business and the surest way to do that is to get them information that they’ll actually read
• Charts and bullet points with updated numbers are best
• Easy to see the direction you are trending
• Comparing the last several months is nice for reference
• You can always ask your investors what information is most valuable for them to see each month
• You should have two separate update emails
• One that you send you current investors
• One that you send to potential investors
• Include the "not yet" investors on your updates
• These are investors who expressed interest (and you want to work with) but it might be too early for them
• You may be able to convince them over time as they watch your growth that they should invest in your next round
• The reason you want a separate email here is if you do not want to disclose certain information to those who are not invested yet
• Tip: If you have some information you’d rather not share with prospective investors then include it in an easily removable section and send that version to those investors
• That way you only have to write one update each month and delete a few lines
• Here is what we look for in our portfolio founder updates at LAUNCH:

[Greeting], Who are you, what do you do? Lead with your one simple sentence to remind investors, at the top of EVERY update - REVENUE: ## - SPEND (EXPENSES): ## - BURN/PROFIT: ## - CASH ON HAND: ## - RUNWAY: ## [Note: it is a great idea to show the last 3-6 months (or average) so investors get an idea of the direction this is trending CEO Report Quick narrative of how the month went, highlights/lowlights Team - TEAM SIZE: - Hiring/firing general team updates Product Product updates or findings Marketing Marketing effort and results Charts - Key Metrics: - Revenue by month, broken down by revenue stream if applicable (MRR vs. Project-based for example) - Subscribers - Pipeline Asks & Discussion Challenges, asks, request for investor input Best, [Founder Name]


• This is in the body of the email, not an attachment
• Do not make your investors do anything except open the email

Understand SEC rules around fundraising

• When you're raising a 506(b) (which is the most common) you can't talk about the raise publicly
• With a 506(c) you can raise in public, but you have to confirm investors are accredited by reviewing accreditation documents
• Reviewing W2s or letters from lawyer/accountants are the most common way to do this
• 506(c) usually costs more money because it takes more time and founders usually hire a service to verify accreditation
• You should only accept money from those who truly understand the risk; accredited investors
• If you take money from a non-accredited investor this can make fundraising down the road a lot messier
• https://twitter.com/Jason/status/1138608352500494338?s=20
• If you take $50k from your family, what happens if you lose it? Will it ruin your relationship? Can your family member afford to lose it?
• To be safe only take money from accredited investors and don't talk about fundraising publicly

• This Week in Startups: "Fundraising: The Details"
• Startup Fundraising Resources: 100+ articles, tools, websites that help you get funded
• The Startup Fundraising Playbook
• When to raise money for a startup, and how to decide how much you’ll need
• How to Raise Money Instantly for Your Startup
• Wilson Sonsini Knowledge Bank
• How do SAFEs Work?
• How Do Convertible Notes Work?
• Conversion into Equity: Differences between SAFEs and Convertible Notes
• Legal Differences Between Priced and Unpriced Round
• Greg Miaskiewicz, CEO of Capbase, Cap Table 101 Presentation: