5 Hacks to Raise Money From VCs

Contents

Introduction

Raising venture capital (VC) funding is often a crucial step for founders looking to scale their startups. While securing investment from VCs can be challenging, implementing effective strategies can significantly enhance your chances of success. In this article, we will explore five simple tactics that founders can employ to raise funds from venture capital firms:

  1. Follow and engage with VCs on Twitter
  2. Build relationships early… Then close quickly!
  3. Focus on individuals, not firms
  4. Invest in a professional designer for your pitch deck
  5. Keep your pitch deck short (<15 slides)

Follow and Engage with VCs on Twitter

In today’s digital age, social media platforms have become powerful tools for networking and relationship building. Twitter, in particular, offers an excellent opportunity to connect with VCs and stay updated on how they think.

By following VCs on Twitter, you can gain insights into their investment theses, curiosities, beliefs, and even their personal interests. You can gain value by simply following and learning, or go a step further by engaging in the discourse. Thoughtful replies and quote tweets can grab a VCs attention and ignite a meaningful connection.

Build Relationships Early… Then Close Quickly!

You should be networking with potential investors long before you actually pitch them. One partner from a top-tier VC firm told us he almost never backs founders that he meets for the first time in a pitch setting.

One reason for this is obvious: it’s easier to build relationships over time and in low-pressure settings. The second reason is perhaps even more important: VCs love to see that a founder delivers on their promises, and you need time to prove that. If you can tell a VC your goals in advance, then follow-up to prove that you hit your goals, they will know you’re a serious and capable founder.

Once you’re actively raising, the tone of your VC conversations should change. You want investors to feel some urgency that another VC will lead your round if they don’t step up to do it. Don’t ever say things like “we’re early in the process”, or “you’re the first firm we’ve talked to”. Instead, tell the VC you’re “having second or third conversations with about 10 firms” and have a clear sense of when you might receive term sheets. Don’t mention other firms by name, but make them sound legitimate and reputable.

As a bonus tip: if one potential investor moves quicker than the rest, it can be tricky to keep them at bay without offending them. If you need to stall one VC in order to give others more time to catch up, go with the following tactics:

  • Say your legal team needs more time to review their term sheet
  • Ask for introductions to ~1-2 founders in the VC’s portfolio who can serve as references

Focus on Building Relationships with Individuals, Not Firms

While it’s important to research and target VC firms that align with your startup’s industry and stage, it’s equally essential to focus on building relationships with individual investors within those firms. Investors ultimately make the funding decisions, and developing personal connections with them can significantly increase your chances of securing investment. If one partner passes on you, it doesn’t mean the entire firm passed — feel free to keep reaching out to other partners from the same firm.

By connecting with investors on a personal level, you can better understand their investment philosophy, their areas of interest, and how they can add value beyond capital. Furthermore, investors often have extensive networks that can provide valuable introductions and partnerships. By building relationships with individuals, you tap into these networks and benefit from their expertise and connections.

Invest in a Professional Designer to Make Your Pitch Deck Stand Out

Your pitch deck is a crucial tool for conveying your startup’s vision, market opportunity, and growth potential. The content of the deck is most important, but visual appeal also contributes to a first impression. Investing in a professional designer to create a visually appealing pitch deck can significantly enhance its impact and captivate potential investors. It should only cost ~$1-2k to hire a freelance designer off a platform like Upwork.

A professionally designed pitch deck communicates attention to detail and professionalism, instilling confidence in investors that you are serious about your business. It helps you convey complex information clearly and concisely, and keep an investor’s attention as they page through. The cost of sprucing up your design is minimal relative to the value of securing a good term sheet, so we recommend making the investment upfront.

Keep Your Pitch Deck Short and to the Point

When presenting your startup to potential investors, brevity is key. Your pitch deck should be concise and focused, delivering the most critical information without overwhelming the reader or listener. A long and convoluted pitch deck risks losing the attention of investors and diluting the impact of your message. Keep it under 15 slides.

Remember: your deck just needs to pique their interest, it doesn’t need to address every potential question that could arise. You will have plenty of time to answer questions and provide more information if investors agree to schedule a meeting (or multiple meetings) after reading through your deck.

Conclusion

Raising venture capital funding requires a strategic approach that goes beyond traditional pitching. By following these key strategies, founders can significantly enhance their chances of attracting the attention and investment of venture capital firms. Engaging with VCs on Twitter and organically connecting with aligned investors through mutual contacts, social media, and networking groups create valuable opportunities for visibility and relationship building. Focusing on building relationships with individuals rather than firms establishes a personal connection and taps into the investor’s network. Investing in a professional designer for a visually appealing pitch deck conveys professionalism and leaves a lasting impression. Keeping the pitch deck short and to the point ensures clarity and captures the interest of busy investors. By implementing these strategies, founders can navigate the competitive landscape and position themselves for successful fundraising, bringing them one step closer to realizing their startup’s growth and success.

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