Outside of a small % of incredibly hot deals the people that raise money treat it like a sales process (which is precisely what it is). It’s a real grind that works by the law of numbers. Here is what I advise to everyone who asks:-
- The more you approach the greater your chances of converting
- Spend more time researching and less time meeting
- The more you adopt a sales process mentality the better you will do. Closing deals is an art. But it’s a boring art. You have to learn to love it.
The key parts of the process
- Research > Meet.
- Block out at least a full 2 days at the start to do this. Do nothing but research investors. It will save much time in pointless f2f meetings with investors who were never ever going to back you anyway.
See the companies they’ve backed before, any link?Read their blogs. Speak to founders they’ve backed . Find people on LinkedIn who know them. Don’t try to ‘get an intro’ – make it an objective process to find out if you truly are relevant.
2. Do a hundred
Why 100? Because it’s a funnel.
Meet 10. convert 2 to a meet. Zero sales.
Meet 100. Convert 20 to a meet. 2 to 4 sales.
The more you do the better your chances of raising. Simple as.
3. Love the Follow up.!
Be quick to respond on. email, be clear on the follow up and when, make all materials available. Find out what is stopping them investing and what would convince them (people rarely ask this). Understand behavioural psychology (and the buttons you can push to prompt people to action) in a world where no one has any time.
It’s amazing how many investors are convinced by a great sales process. Not least because it gives confidence you can sell to your customers ;-)
I don’t know of a great book or article on closing funding rounds but I’m sure someone will tell me.
In sum Process. Process. Process.
It’s dull. But a lot of being successful is. It’s a grind. The more people learn to love it, the better their chance of raising.