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1/ Fundraising is a bit of a chicken and egg process, where once you get momentum it's easy and before that it's almost impossible.
Closing a funding round requires momentum, and there is an art to "creating" FOMO in a genuine way.
Here are some do's and don'ts:
Closing a funding round requires momentum, and there is an art to "creating" FOMO in a genuine way.
Here are some do's and don'ts:
2/
Don't: try to create pressure before the investor is excited about your startup.
Sometimes entrepreneurs will say things like "the round is almost closed", "we need a decision this week" etc, before they have met the investor.
You need to first get buy in from the investor.
Don't: try to create pressure before the investor is excited about your startup.
Sometimes entrepreneurs will say things like "the round is almost closed", "we need a decision this week" etc, before they have met the investor.
You need to first get buy in from the investor.
3/
Don't: exaggerate your fundraising state.
Investors have a pretty tuned BS sensor and saying things like: "We are expecting term sheets next week", "we just talked to 10 funds next week" often backfire.
In those situations the investors might be tempted to just wait.
Don't: exaggerate your fundraising state.
Investors have a pretty tuned BS sensor and saying things like: "We are expecting term sheets next week", "we just talked to 10 funds next week" often backfire.
In those situations the investors might be tempted to just wait.
4/
Do: be honest about your stats and fundraising and have real momentum.
Things like "last week we had x, y, and z commit to the round", "we have had 20% month on month growth for 6 months".
Those types of concrete data points work.
Do: be honest about your stats and fundraising and have real momentum.
Things like "last week we had x, y, and z commit to the round", "we have had 20% month on month growth for 6 months".
Those types of concrete data points work.
5/
Do: have strong backchannels with those investors.
If you can, have one of your existing investors or a friend get/send useful information.
This may sound complicated, but ideally you spend time networking to relevant entrepreneurs months before fundraises.
Do: have strong backchannels with those investors.
If you can, have one of your existing investors or a friend get/send useful information.
This may sound complicated, but ideally you spend time networking to relevant entrepreneurs months before fundraises.
6/
Do: run a strong investor pipeline. The biggest thing in your power is to get connected with or reach out to as many investors as possible.
For @BankMercury seed I talked to 150+ investors. For our series A, I talked to 25 VCs. Those were both relatively quick rounds.
Do: run a strong investor pipeline. The biggest thing in your power is to get connected with or reach out to as many investors as possible.
For @BankMercury seed I talked to 150+ investors. For our series A, I talked to 25 VCs. Those were both relatively quick rounds.
7/
Creating momentum is hard but every fundraising process that succeeds has it.
We started Mercury Raise partly to help entrepreneurs get that initial momentum, so that's one other tool you can use. http://mercury.com/raise
Creating momentum is hard but every fundraising process that succeeds has it.
We started Mercury Raise partly to help entrepreneurs get that initial momentum, so that's one other tool you can use. http://mercury.com/raise
