How to build and maintain momentum in your fundraising process

Momentum is the single most important factor that helps startup founders raise capital.

In 20+ years of working to connect founders with potential investors, I’ve learned that there’s a direct correlation between the speed of your fundraising process and the probability of actually getting funded.

Startup investors are incredibly smart people who eat, sleep and breathe these kinds of investments. The best investors are pros at sensing whether a deal has momentum or not — or worse, whether a deal has gone stale.

When you’re raising venture capital for your startup, you will have to hustle like you’ve never hustled before. As CEO, your primary job is building and maintaining momentum for your investment deals.

Once you have set up and organized your fundraising funnel, it’s go time.

Check out these tips for creating momentum in your next fundraising round:

Great hack for asking for email introductions

Asking for introductions to your target investors is one of the best places to concentrate your efforts at the beginning of a round. If done well, these email intros can get the ball rolling quickly.

The trick is to make it as easy as possible for your connector to do their job.

Before you send your first email, map out mutual connections between you and your target investors. You may find that you have some “power connectors” in your network — people who are already in touch with several of your targets. Put these people at the top of your list.

Reach out to your connector with a brief email that says something like: “Hey, I’m raising money and I see you’re connected to these investors on my target list. Do you know them well enough to make an intro?”

After your connector responds with a list of introductions they’re willing to make, here’s the best way to help them help you:

• Start a clean email thread to your connector — one for each target investor.
• Write a clear subject line: “[Connector], can you introduce me to [target investor]?”
• At the end of the subject line, include at-a-glance info about your company: company name, the funding round + the single most exciting data point about your business
• Keep the email body very short. Investors get dozens of these emails a day, so keep yours to four to five sentences:
  • Use one sentence to say what your company does and link to your website.
  • Reiterate that you’re fundraising, and ask for the intro.
  • Mention any connections you may have with the investor (Universities, past employers, etc.)
• Link to a teaser pitch deck. This will be much shorter than your full deck and should include five slides:
  • The problem your company solves
  • How your company solves it
  • Market information
  • Traction thus far
  • Your team

Now all your connector has to do is forward this streamlined, informative email, and your target investor has all the information they need to decide if they want to take a meeting.

As you’re building momentum, go for what I call a blitzkrieg approach to introductions. Send as many as you can at the same time instead of waiting for replies from each one. Before you know it, investors will be moving down your fundraising funnel at a healthy pace.

5 hustle tips for maintaining momentum

 

An investor’s natural inclination is to wait and see whether a deal is worth investing in before they put their money on the line.

This means that it’s incredibly important to build some triggers into your process that speak to an investor’s FOMO and let them know that they had better pay attention because your deal is going places.

Prepare for momentum-probing questions

At the end of your pitch meeting it’s common to hear questions along the lines of: “So how is the round coming together?” This is an investor’s way of feeling out a deal’s momentum, and your answer should signal investor interest, the professionalism of your process, and a tight timeline.

For example, if you started a fundraise in January, you could say: “We just started our fundraise. I’ve got 12 meetings this week and 14 set up next week. We’re running a pretty efficient process, and I’m hoping to close this out by the middle of March.”

Put your pitch deck to work for you

Your pitch deck is a living, breathing document that you continually refine over time. If, for instance, your go-to-market slide raises eyebrows at a couple of meetings, it’s time to try a different tact.

By the time I closed the seed round for Foundersuite, I was using version 42 of our pitch deck, and I would tweak it after every few investor meetings.

If you’re bringing a co-founder to these meetings, ask them to take notes on every question an investor asks, then create an appendix slide for every answer.

Use a pitch deck hosting tool that will tell you whether a target investor has opened your deck and how much time they’ve spent with it. This is crucial for knowing how to approach a meeting — whether you’re going in cold or talking to an investor already familiar with your work — and for understanding which investors are most interested.

Send out investor updates

Investor updates are the secret weapon in your fundraising toolbox. It’s ideal to start the process a few months before you begin raising, but it’s never too late to start sending concise, informative updates to a broad list of target investors and supporters.

Send a cold email to some of your top investors, offering to add them to your list for a sneak peek at what the company is doing — this is a hard offer for any investor to refuse.

Be consistent. Include your top metrics, share what you’re doing in the month ahead and what you achieved in the last month. You’ll create a virtuous cycle of communication, execution, and success that shows investors you have what it takes to lead your company to the next level.

Show up everywhere your investors look

Consider running re-targeting ads on Facebook or LinkedIn. Upload the email addresses from your fundraising funnel and use them to deliver brand awareness ads about your company. Stay away from ads specific to your deal, as these are usually prohibited by ad platforms.

If you’ve already mined LinkedIn for mutual connections, try Facebook — friendships can sometimes provide even warmer introductions than business connections can.

Explore options beyond VCs

Other fundraising avenues such as angel syndicates, angel groups, and equity crowdfunding can take time to set up, so they aren’t great for creating momentum at the beginning of a raise.

That said, they can be great tools for filling out a round that’s already more than two-thirds committed and ready to close.

Treat it like a full-time job

This season of hustle will require a lot of any startup CEO. It’s hard and stressful, but it can be helpful to know what to expect going into your first round of fundraising.

You’ll want to treat this process like a full-time job. Assuming you already have a full-time job actually running your company, this means you have to get creative in order to make space for the fundraising process.

Consider delegating some day-to-day responsibilities to your co-founders, or look into hiring a part-time CEO to cover for you as you go all-in on raising capital for the future of your startup.