1) When I was running my last company, I thought the right approach to convincing an investor to invest in my company was persistent. It turns out that is both true and not true at the same time. Some thoughts here:
2) On one hand, like everything else, persistence is really important in fundraising. Investors, whether they are VCs or angel investors, get busy like everyone else and priorities are constantly shuffled around. Consistent follow up is important to make sure you are top of mind.
3) And persistence can yield great results! My business partner once followed up with an investor 13 times before he ended up investing! Many people think that if you ping somebody a couple of times and they don’t respond, it means they are not interested. That isn’t always true.
4) On the flipside, there are plenty of investors who just never respond no matter the number of follow ups. They just completely ghost and we’ve all been on the frustrating end of that.
5) So how should you prioritize your time? What I’ve found works best is to focus on momentum. You may not know in the first conversation if somebody is actually warm. There are a lot of people who fake excitement.
6) Momentum is seeing progress in going from one step to the next in an investor’s process. For angel investors, that could mean seeing progress going from mtg #1 to mtg #2 to commit. For VCs it could mean mtg #1 then to #2 w the seed team and then to the all partner mtg.
7) This is why it is so important to understand each investor’s process, because everyone has a different process. And it is hard to know if you are seeing momentum if you don’t know what the process is.
8) If you are stuck in the same step over and over in an investor’s process, that is a bad sign. Eg you meet w an investor 5 times and no one else at the firm when the process requires mtg others. Etc.
9) If you see that fast momentum - whether it is with the firm or an individual - you should be able to at least get a verbal commit quite quickly. This applies to both big checks & small checks. You should be able to get to this within 1-2 months for most firms & individuals.
10) So when people say that it takes 6 months to fundraise, for the right fit, they are not actually talking about getting taking 6 mo to get a verbal. You should be able to get the verbal quickly. Due diligence and legal often takes a long time and is what adds the time.
11) If it is taking that long to get a commit, it means that you are talking to the wrong people & you need to spend more time finding new leads that are warm. In my experience, it is a lot easier to find excited new leads than it is to convince cold leads to become warm.
12) Fundraising is not about convincing ppl to invest. It is about triaging investors quickly. Ppl are too afraid to triage leads out of their fundraising process because there always feels like a glimmer of hope that those investors could be convinced.
13) Once you’ve identified that an investor is actually a cold lead, the best thing to do is to *NOT spend more time with him/her* and move on. Keep the person on your email list w updates. Maybe you can circle back at the end to see if they are warmer and can be FOMOed in.
14) When in doubt, spend more time trying to find new leads - that is usually what ppl don’t do enough of when fundraising.
