The drag race till the holidays starts now, at least in terms of fundraising.
The 11 work weeks after Labor Day and before Thanksgiving are a few shy of the 14-week average time to seed-round closing that CB Insights says is the new normal. Odds-on, if there’s no term sheet signed before then, the check books are sealed until after the new year.
Doing the math, that puts us in the thick of crunch time right now. I'll offer a glimmer of optimism: VCs, angels and other early-stage investors will be hunting for deals that come standard with traction-demonstrating metrics, too. Now’s also an excellent time to crank up the fundraising machine.
Miss that window without enough runway to make it through the winter and a cash-starved startup could freeze to death.
But all’s not lost if you get things rolling. Here are four steps to start your engine.
1. Build a funnel.
Just like a sales funnel for potential customer leads, you can set up a stepwise process to collect and engage potential investors. At first, just list all the ones that could be targets in a spreadsheet. Then, use Paul Graham’s weighted expected value
scheme to prioritize them. Add to it as you forge ahead.
2. Ask for intros.
Your advisors, mentors and prior investors know you, your venture and your progress, especially if you’ve been updating them on a monthly basis like Justin Miller
, Jason Calcanis
and others implore you. The people who know you and your venture best can advocate for you and help you understand who you’re approaching. Other entrepreneurs who you know and have raised rounds recently are also excellent sources of warm intros. LinkedIn is your friend for the search process, but an email intro directly to your target is the end goal.
3. Get off the bench.
Make pitch dates with a couple of known quantities to test your message, delivery and ask. Then methodically find the warmest intro to each of the people and funds in your funnel. Have your documents ready (a pitch deck, a leave-behind deck, exec summary, some financials). Your goal is to get the first meeting, the second meeting and keep the conversation going until you can make a concrete ask.
4. Evaluate your funnel on an ongoing basis.
You are the only one tracking your progress. Deliver the message to these strangers and see what piques their interest. Note what falls flat, too, and if a theme emerges, think hard about whether that feedback merits a change in message or raise target or both.
Repeat this process mercilessly to keep yourself realistic about what you need to do next. Who seemed interested but isn’t answering your emails? Who wants a deck? Who’s scheduling the next meeting? Who hasn’t written a check since 2001? If people aren’t writing checks or moving you forward in the process, put them on the back burner.
These steps outline a few boxes to check as you start your Fall fundraise—the sort of bones you need to support a solid message, hardworking team, real value prop and an opportunity for a solid return on investment. Those are the deal-making elements, but these little things can help start you in the right direction.
Photo credit: U.S. Navy photo by Mass Communication Specialist 3rd Class Ron Reeves [Public domain], via Wikimedia Commons