March 17, 2022

Preparing to fundraise

Venture funding is best suited for ultra-high growth businesses in very large markets and is closely linked to the early days of some of the most iconic tech companies in the world including Apple, Microsoft, and Meta (Facebook) as well as some of the newer companies demanding our attention. There are a handful of category defining technology businesses that have been able to grow through profits (see Mailchimp) but the reality is that to hit scale, most do it through venture funding.

Venture funding is by no means the only source of funding but if you have decided to pursue it, here are a few thoughts about how you might prepare with an idea validated.

Build an all-star team

A core team needs both the insight and the skill to build the product they say they will. If your product is heavy on operations, make sure someone covers that skillset. If your technology is relatively simple it might be less important for founders to be technical. Map out what your core competencies are and between the founding team make sure you've covered the major buckets.

Develop your fundraising collateral

Most people go from idea to research to pitch deck. I much prefer to go from idea to research to memo to deck. This middle step of a 'memo' is essentially a deck in word form. This serves multiple purposes but most importantly it allows you to get your content together without having to think about how exactly it's presented.

In this way, when you go to the last step you're more concerned about communication than content. You should also do at least some high-level financial modeling on spending and revenue drivers but the earlier stage and the less concrete your business model, the less important this will be.

Start conversations

Before directly pitching investors, try to start building relationships with the relevant stakeholders. Always ask if you know or can get warm intros to these conversations but cold reach out can also be highly effective.

I find that other founders and angels can be a good place to start. While analysts and associates at funds might be more willing to jam on ideas rather than pressing you for a pitch. When you're ready to pitch they can also act as strong advocates for you through the internal process.

Effectively preparing to pitch can take a process from good to great and beyond!