Mar 15, 2023
Hey there! George here. Today, we're diving into the world of pre-seed and seed fundraising for startups. I'll share my experiences raising funds for two startups I co-founded and give you actionable insights on various aspects of the process, including deck building, valuation, networking, outreach, and more. Let's get started!
The Pain and Importance of Fundraising
Raising funds can be challenging for founders. It requires time and energy, and the fear of missing out on product development can be daunting. However, if you need the extra speed to execute your ideas, raising money might be necessary. Exhaust all other means of acceleration before resorting to funding, and remember that timing is crucial.
Building Your Deck
A well-prepared pitch deck is essential. Begin with a basic Google Doc covering market, problem, solution, team, and timing. Pitch to friends and acquaintances to refine your message. When ready, create a professional deck using a service like Pitch.com. Practice your pitch, ensure it's concise and engaging, and keep updating the deck based on feedback.
Finding Investors and Outreach
Leverage your network to find potential investors. Help your friends connect you with investors by providing them with a concise introduction email. After exhausting your network, conduct your own outreach by researching startups in your market and connecting with their investors. Remember to personalize each message and be cautious with mass email newsletters or outsourcing outreach efforts.
Building and Managing Your Pipeline
Prepare a list of at least 50 potential investors before starting your fundraising journey. Use a CRM like Pipedrive, Google Docs, or a Notion template to manage your pipeline. Streamline your process using AI assistants like Hints for efficient pipeline updates.
Networking with VCs
Separate fundraising from networking. Build your VC network before raising capital, ask for advice, and maintain relationships over time. Support other founders before seeking their help with fundraising. Consider joining accelerator programs or founder communities like Mercury Raised and Launch House for networking opportunities.
Legal Aspects and Valuation
Incorporate your startup in Delaware, US, and use SAFEs (Simple Agreement for Future Equity) for fundraising. Services like Clerky.com can help automate the process of sending SAFE agreements and setting up a legal entity. Choose valuation wisely, as it varies between markets and the startup's progress.
Setting Expectations and Saving Energy
Fundraising can be time-consuming and energy-draining. Set realistic expectations and be aware of potential toxic investors. Build confidence in your startup, and focus on creating products that people need. Your conviction will attract investors to your journey.
In summary, prepare a pitch deck, connect with potential investors, manage your pipeline, network with VCs, set up legal agreements, and choose an appropriate valuation. With hard work and confidence in your startup, you'll be well on your way to raising funds for your next big idea. If you have any questions or suggestions, feel free to leave a comment, and don't forget to subscribe for more tips on fundraising, product development, and productivity. Happy fundraising!
For a smoother fundraising journey, check out this video, part of our educational project "Hints: Productivity for Startups"