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- Feb 2, 2016
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One thing I have learned over the years of raising money is that it is often better to do a "soft ask" of a funding round, before it is officially open.
As an example, we're currently raising a small bridge round (500k) for a company I am running. Over the past several weeks I've had conversations with a couple dozen potential investors to gauge their interest on a commitment.
It is a much, MUCH easier conversation when you are able to say "Hey, here is our story, we're thinking of raising between X and Y, and the valuation will probably be something between A and B, but we are not asking you for anything right now. Would you be interested hearing more now, and then talking 1-2 months from now when the round is open?"
This makes it a much more relaxed environment as you are technically not asking them for anything and no official decisions need to be made that day, but they are able to give you their honest feedback.
Many investors are pretty open about what they are looking for and what they are worried about (e.g. they doubt you can scale as much as you're claiming, they may have doubts about product/market fit, concerns over burn rate, use of funds, etc.)
This also gives you time to address these issues when you make your actual pitch, as they have already told you what they're looking for. You've been given a glipse of how they think. This allows you to tailor each pitch slightly, based on who you're talking to.
You can usually get a pretty good idea of who'll be open to writing you a check based on their response.
This assumes of course you haven't changed the terms from what you originally told them.
This week I was able to officially "open" the round, and tell the group we're already over 60% committed in the same day. Want in? Better act fast.
Raising money is a bit like dating in the sense that it's often better if they know other people are already attracted to you. Nobody wants something that nobody else wants, and it's touch to pitch for money if no one else is interested.
Starting from zero is rough. This helps you alleviate that (a little).
This may seem simple to a lot of you but many people still don't do it. I've seen a lot of people open their round, then begin conversations. This can mean a round is open for weeks or months with no investors committed. The longer you stay at zero, the more difficult it can be.
Good success.
As an example, we're currently raising a small bridge round (500k) for a company I am running. Over the past several weeks I've had conversations with a couple dozen potential investors to gauge their interest on a commitment.
It is a much, MUCH easier conversation when you are able to say "Hey, here is our story, we're thinking of raising between X and Y, and the valuation will probably be something between A and B, but we are not asking you for anything right now. Would you be interested hearing more now, and then talking 1-2 months from now when the round is open?"
This makes it a much more relaxed environment as you are technically not asking them for anything and no official decisions need to be made that day, but they are able to give you their honest feedback.
Many investors are pretty open about what they are looking for and what they are worried about (e.g. they doubt you can scale as much as you're claiming, they may have doubts about product/market fit, concerns over burn rate, use of funds, etc.)
This also gives you time to address these issues when you make your actual pitch, as they have already told you what they're looking for. You've been given a glipse of how they think. This allows you to tailor each pitch slightly, based on who you're talking to.
You can usually get a pretty good idea of who'll be open to writing you a check based on their response.
This assumes of course you haven't changed the terms from what you originally told them.
This week I was able to officially "open" the round, and tell the group we're already over 60% committed in the same day. Want in? Better act fast.
Raising money is a bit like dating in the sense that it's often better if they know other people are already attracted to you. Nobody wants something that nobody else wants, and it's touch to pitch for money if no one else is interested.
Starting from zero is rough. This helps you alleviate that (a little).
This may seem simple to a lot of you but many people still don't do it. I've seen a lot of people open their round, then begin conversations. This can mean a round is open for weeks or months with no investors committed. The longer you stay at zero, the more difficult it can be.
Good success.
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