The venture capital industry provides many businesses with the funding they need to grow their business to the next level. There are more than 78,000 people who work in this market throughout the country. Every year, the venture capital industry generates more than $60 billion in revenue!
That is a testament to how much value there is in providing funding to businesses that have something new to offer the world. However, it can be difficult for investors of all kinds to know which businesses are the right ones to provide capital for. That is why businesses need to spend so much time on their fundraising strategy.
Many company leaders focus on what they know about fundraising and pour tons of hours into it. However, the greatest fundraising success often comes not from doubling down on what you already know, but from trying out different strategies. So what can you do to take your fundraising strategy to the next level?
Read on to learn all about some of the most powerful tips for successfully raising the capital your business needs!
1. Pursue Fundraising Strategies Early
Many businesses focus only on building the business until the time comes when they need funds. Then, they start reaching out to potential investors and trying to pitch them on what their business can accomplish.
However, there are only so many potential funders for you to pitch to. It is often better if you can focus on building deeper relationships with potential investors. However, this strategy may not be available if you are desperate for funds as soon as possible.
Whenever you can, it is better to reach out well in advance of when your business will need funds. Taking small steps to establish relationships in advance can make investors much more inclined to listen to your pitch when the time comes.
On top of that, this can be the perfect way to demonstrate patience and foresight. When business leaders reach out to try to set up meetings as soon as possible and ask for funds as soon as possible, it can give investors the sense that the business is in desperate condition.
On the other hand, if you have been establishing a relationship for weeks or months in advance, it can show that your business can get by without immediate funding. As paradoxical as it can seem, it is often the businesses that need funding the least that have the easiest time getting it.
2. Avoid Making Enemies
Many of the people who provide funding for businesses know each other. As you are reaching out to potential funders or presenting to them, remember that you always want to leave things on a positive note. Even if you think that a potential investor is making the biggest mistake of their life, make sure to wish them well and act with perfect civility.
When things are stressful and you need funding as soon as possible, it can be tempting to push harder on possible sources of funding. However, making a mistake with one potential investor can often lead to losing opportunities with others.
No matter what the situation, treat every investor who turns you down as someone who might turn out to be an ally later on. In fact, if you continue to focus on building strong relationships while raising funds, you might find that investors who declined to provide you with funding can end up connecting you to others who can.
3. Follow Up on Business Fundraising Opportunities
There is often a fine line between following up and looking desperate. However, it is important to remember that potential investors are often extremely busy. If you have an opportunity to communicate with an investor, be prepared to follow up three times even if they do not respond in the beginning.
Of course, you might want to wait a week or so between each follow-up message. However, you should be ready to demonstrate perseverance and organization by getting in touch again with investors who may have forgotten about your initial message.
Some business leaders find it difficult to wait for the right amount of time before following up with a potential investor. In many cases, it is best to have a trusted employee take care of reminding you when you should follow up with an investor.
4. Understand Potential Investors Before You Pitch Them
When you do get the opportunity to communicate with an investor, you should make the most of it. That means learning as much about them as possible before you get a chance to speak to them or show them your presentation.
This is also when you can figure out how to customize your presentation. No matter how long you spend on your presentation, don’t make the mistake of thinking that you are trying to create the one perfect presentation for everyone. There is no such thing.
Instead, the presentation that is ideal for one investor will differ from the version of your presentation that will work best for another.
Learn about what a potential investor cares about. If possible, you might even want to read any books they have written or review any details of their life history you can find. It can also be helpful to look at the other companies they have funded in the past.
If you can manage it, it can be extremely helpful to speak with anyone who has presented to the same investor before you, especially if they succeeded.
It can take it long time to figure out how to approach a potential investor in a personalized way. However, there is often nothing as important for a business’s success as finding funding at the right time.
Of course, one of the first things you should check is whether a certain investor is capable of providing the minimum capital you will need.
5. Focus on More Than How to Raise Funds
Many businesses go through a building stage followed by a fundraising stage. However, even if you have been in the middle of your fundraising stage for months, it is important to remember that your investors care about what you are building rather than about your need to acquire funding.
Make sure to remind yourself of the vision that you have for your business. Focus on how it can impact the world both financially and altruistically when applicable.
Sometimes, it can help to speak with your employees to stay in touch with what your business is all about. While you are focusing on fundraising, they will still be focused on what your business might be able to achieve in the world. That is often exactly the energy that you will want to bring to a meeting with a potential fundraiser.
6. Keep Trying Out Different Stories
Sometimes, your personal vision for your business is the perfect story to share with investors. After all, your passion can be contagious as well as persuasive.
At the same time, there is no guarantee that your vision will be what resonates the most with every possible investor.
Some business leaders only end up considering a few different stories to tell about what their business might mean to the world. It is vital that you consider a wide variety of stories that conceptualize your business in different ways.
You might be confident that you have the right narrative for your fundraising strategy. However, even if you do, you will often find ways to add to or refine your story by considering alternatives. This goes double if you have been using the same story for a long time.
If you cannot think of any other ways of presenting your business, then you might not be thinking far enough afield. Consider describing only your product or service to people who know nothing else about your business. Then, ask them to imagine why what you are doing might be impactful in the world.
Because you already know how you expect your business to impact things, you might be surprised at the answers that people come up with when they don’t know very much about your business. The surprising answers that people give can often provide the inspiration you need to come up with a new story or improve your current one.
7. Don’t Rush Your Business Funding Strategy
These days, many businesses are focused on growing as fast as possible. Although there are a lot of good reasons for this, it is also important to wait for the right moment to start your serious fundraising efforts.
If you are struggling with the fundraising process, consider the possibility that you are starting too soon. Listen to the feedback of potential investors and consider whether you might be able to give a more persuasive presentation once your business has developed more completely.
8. Build Up Your Credit Score
Sometimes, the things holding you back from getting funding are mundane. The higher your credit score is, the more likely you are to receive funding from many investors.
Of course, it will often take a significant amount of time to build a higher credit score. However, even a few weeks or months of financial responsibility can give your score the boost you need to impress your next potential investor.
In some cases, you might even be able to give your credit score a quick boost. If you happen to have any debts that have gone to collections, they will be acting as anchors and dragging down your credit score. As soon as you pay off debts in collections, your credit score will often bounce back up.
9. Consider Many Options for Funding a Business
Some business leaders have contacts with the angel investor space. Others know a lot about acquiring bank loans or crowdfunding. The more you know about acquiring funding in a specific way, the more you might develop tunnel vision around getting the funding you need that way.
However, if you are struggling to acquire funding, it may be that you are looking in the wrong place.
Make a more comprehensive list of all of the different ways you might be able to raise funds. Think about business incubators and venture capital opportunities. In particular, focus on any potential fundraising avenues you have not been focusing on so far.
There is a good chance you have already picked the low-hanging fruit in whatever area you have been giving the most attention to. The more options you consider, the higher the chance you will find one or more fundraising avenues that will let you take your business to the next level.
10. Get Honest Feedback on Your Presentation
Practice your presentation in front of a variety of people. In particular, try to find people whom you trust to give you honest feedback.
If possible, you will also want to bring people to your actual presentations who can comment on your performance when the stakes are high. Remember that the most valuable thing you get out of some presentations will be practice and the opportunity to learn from experience.
Having someone present who can give you feedback will help you make the most of these secondary benefits.
Follow the Best Tips for an Effective Fundraising Strategy
It can take a long time to put together and perfect your fundraising strategy. However, it is essential that you do your due diligence to maximize the chance that your fundraising presentations will succeed. Considering how high the stakes can be when you are raising funds, it is worth pulling out all of the stops to get the funding your business needs to grow.
To learn more about how you can take your fundraising strategy to the next level, reach out and get in touch with us here at any time!
