Before you get too far into this blog, check out the first blog in this two-part raising capital series, How Do You Know You’re Ready to Raise Capital?
Your business is ready to start raising capital, so where to begin? Here's our step-by-step process for running a successful capital raising campaign.
Building Your Investor List
When it comes down to it, raising capital is a numbers game. The more investors you can get in front of, the better chance of deal success. But not every investor is going to be the right fit for your business. VCs typically have sector and industry preferences, along with stage preferences.
Your first step should be to create an investor persona to align with your business. This persona will allow you to build a list of potential like-minded investors to target. Raising capital is hard so you don’t want to waste time going after investors that aren’t a good match.
Another consideration—while VC deals are the ones making front-page news, in actuality, there are less than 2,000 VCs in the US compared to 300,000 Angel investors. Especially if you have an early-stage company seeking a seed round, Angels should make up an important part of your overall positioning.
At Exit Velocity, we typically provide an investor list of around 1,500 opportunities based on a well-defined investor persona.
Targeted Outreach - Running an Email Campaign
Once you have your investor list, you are ready to start prospecting. You will first need to select a tool or spreadsheet to manage your list, and then prioritize and segment the list into groups.
You then can build an email sequence of 5-7 emails with targeted and progressive messaging to go out to your leads list during the outreach process. Keep the messaging concise, personalized, and human in tone. Being generic or overly salesy won’t work here. Always end the email with a call to action asking for a meeting or call.
Prepping Your Pitch Materials
Once you have a list and start outreach, you will need to prepare your pitch materials. Your pitch is a major tool to get your business off the ground. It matters, so make sure you get it right! At a minimum, you will want a 30-second pitch, a 1-page investment overview, and a full pitch deck. Here is a breakdown of each of those pieces:
Start with who you are and the name of your company
Describe your company in a concise and compelling way (the hook)
Create maximum impact and trigger a response (e.g., request for your contact details)
Leave the audience with 3 key points
The goal is to earn a second conversation
One Page Investment Overview
This should be a brief investment fact sheet summarizing every major part of your business. It needs to promote your company, your vision/mission, and how you differentiate from the competition. The goal of the 1-pager is to grab attention and convert into a pitch meeting so be punchy, to the point, and impressive!
Potential content to include:
Information about your team
Your business model
High-level info on your competitors
Your unique selling proposition
Future financials and next steps
Milestones that your company has accomplished to date
The pitch deck
You’ve earned the pitch meeting! Now it’s time to really tell your story. Be bold and direct. The deck should include the problem, your solution, your why, the team, how you’ve achieved traction, your business model, and your raise amount. Some other things to include:
Keep the deck to 10 key slides including value proposition and knowing your white space - we have a great template if needed!
Use bullet points vs. paragraphs - so the investor gets your business quickly and succinctly.
Add in KPI’s and data points relevant to your business - you need to show you meet objectives and deliver on a promise
Monthly Active Users/Gross Merchandise Value/Customer Acquisition Costs/Lifetime Value/Churn, etc.
Know your financial numbers and provide a very high level 1 slide P&L summary
Always have an appendices to refer to if asked especially in later meetings when due diligence occurs
Tracking Investment Opportunities
Throughout your email outreach and pitch process, plan to track opportunities in a spreadsheet or CRM. Fundraising is a tough and arduous process that takes time, so try not to get discouraged. Always ask for a review of the meeting in the last 5 minutes of a pitch, and then learn from the feedback and iterate on the materials as needed.
At Exit Velocity, we provide our companies with a running start in the capital-raising process. Our experience and personal networks allow us to open the door to thousands of investors who trust our stamp of approval means the company is investment-ready.
Through our long-term support program, EV Capital™, we manage every step of the raising process for our founders - from start to close.
Get in touch with us to find out more.