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How to raise money for a business: startup funding, finding investors and preparing for meetings

How to raise money for a business: startup funding, finding investors and preparing for meetings


If you don’t know me, I am the CEO of Slidebean,
an AI presentation platform with over 600,000 users worldwide; a lot of which are tech startups. We not only raised capital for our
own business, but we went through some top US accelerators (DreamIt, 500 Startups), and we have helped hundreds
of companies raise money through our product, in many cases sitting with them and helping
them craft their story. Today we are going to look into the process
of raising capital, from business validation to investor meeting. This is how to raise money for a business. Very few businesses can raise money before
traction. Traction is proof that your business is viable,
and that you, as a founder, were able to bootstrap your way to it. We’ve covered this traction ordeal at length
on our previous videos, as well as how to create a pitch deck- so now we’ll focus the
investor workflow. I had a lot of help here, mostly thanks to the accelerator programs I mentioned. You see, the best way to reach an investor
is with a warm intro- that means finding somebody you both know who can introduce you to them
via email. When inside a startup accelerator, it’s your
job to navigate the partners’ LinkedIn network to reach out and connect to relevant investors-
meaning, putting money in companies in your stage and your industry. I would expect most of you watching are not
in an accelerator, so your next bet is navigating your own professional LinkedIn network. The way I used to tackle this was I’d sit
down with an investor list (we have one at FounderHub), filter them by industry, deal
size, and then start looking them up on LinkedIn. If you have a 2nd-degree connection that you
know well enough to ask for an intro, shoot them a quick email blurb explaining who you
want to meet and whether they can introduce you. We’ll look at the blurb in a second. What if there are no investors in your network? That gets tricky. The first step is growing your network: attend
startup events, connect with people, and add them up on LinkedIn. Alternatively, you can pay for a premium LinkedIn
account and use it to contact them that way. Typically LinkedIn has a reasonable response
rate, and it might be a better alternative than their cluttered email. Cold emailing is really a last resort. Before that, you could do Twitter mentions,
but we are already stretching far down the rabbit hole. Your success rate with anything but warm emails
will be quite low. The email pitch should be short and to the point. When requesting an intro, your email could
look something like this: Hey person, I noticed that you are connected to Elon Musk. Do you know him well? I’m working on a new company called XXXXXX,
and I think it’s right up his alley. I am wondering if you can introduce me? Now for the investor email, you should also
keep it short. Something like this: Hi Elon, I noticed that you have invested
in some companies in the ____ space. I am working on a new startup that does this
________. We are not raising money at the time, but
plan to open a round in the next few months. Can I send you my investor deck you to take
a look? I would love to get your thoughts. Needless to say, you shouldn’t try to reach
to Elon Musk. Now, the reason why I recommend going with
the ‘not raising money at the moment’ bit is because it helps, for two reasons: You don’t want to appear in a hurry to raise
money. No investor wants to put money on a sinking
ship. It’s essential to build relationships. Few investors will give you money if they
just met you, so saying that you don’t need money NOW, is an excellent way to establish
a relationship before actually discussing a round. If your pitch deck is interesting, you will
likely hear back from them. This is why the first pitch is the first and
often the only impression you might get to make. If you share that with platforms like Slidebean,
you can get a notification when the investor opened the deck, and know which slides they
saw. If you want to try that out, the first 25
people to sign up with the link in the description will get a free 3-month trial period. After a couple of emails back and forth, you
will get invited to a meeting. If you don’t get a meeting, make sure you
ask why wasn’t the pitch deck attractive, and whether there’s a particular KPI, they
would like to see you hit. First meetings usually are an informal conversation
about your company. The average flow is for you to go through
the deck (a variation of the one you sent, with more details, especially on the vision
and the metrics side). After a 10-15 minute walk through your deck,
you’ll jump into a Q&A session and discussion about the business, what they found, and whether
you are going in the right direction. While I’m not an investor myself, I have talked
to hundreds of startups, and I can undoubtedly say that the conversation that happens after
the pitch is a fantastic way to get a feel for the founder’s expertise and passion about
the business. If someone like me can tell when a founder
knows their trade, you can bet that most investors will too. There’s also an inevitable founder compatibility
variable. They have to like you, and chatting for an
hour is one of the best ways to find out. Other questions might come up. They might not like your terms. They might want more traction. At this point the conversations could go in
many directions so here are some general tips for you to get through this: Be responsive to emails and use an open email
tracker, that will cure your anxiety and give you some visibility as to what’s going on. Try to close conversations with an action
point. Maybe a reply from them or your company hitting
a goal- but make sure there’s always an item to follow up on. Send monthly or bi-monthly updates to your
progress. Make commitments and try to overdeliver. If you fail to deliver acknowledge that you didn’t, be honest and explain what you are doing about it. Getting the first investor is the hardest. Once you have one, you can get others to follow
in their terms, but that first one commitment will be hard to get. A lot of investors, especially angels, will
want to wait for a ‘large’ investor to accept the round terms as a validation that they
are not the only ones liking your business. Don’t be afraid to ask them openly if they’d
be willing to come in as the first investor. I always quote Elizabeth Yin, one of our mentors
at 500 Startups when she said that you need to pitch 100 investors for every $500,000
you want to raise. We found this statement is close to the truth-
so don’t expect to close this deal with the first investor you talk to. A term sheet, by the way, is a summary of
terms for the round, such as valuation, cap, fundraising amount and other specifics. We have a few term sheet templates you can
check. A signed term sheet means that you have agreed
on terms, and you can go to other investors and say ‘we have our lead investor,’ or ‘we
have X% of the round committed.’ We interviewed the CEO of AskLorem, who had
terrific insights on how they raised their money. You should look into that session for ideas. If you are raising money on a convertible note, then the first check could be as little
as 10% of your round, and you can close it and collect the money before you even get
the other investors onboard. That’s the great part about convertible notes-
and you should check out or video on convertible notes if you haven’t. If you are raising a priced round, you will
need all investors on board, signing the round to make it happen, which can, of course, take
longer. Alright, so I hope you found this video useful. If you have any questions about this, please
let me know in the comments. I usually make my best to try to answer them quickly. Hit that Subscribe button and thanks for watching.

  • Interesting informations, found out about slidebean like 5-7 days ago, already watched 90% of the videos, very inspiring and well crafted

  • Exactly at good time 😊 👍

    Good video explain I will definitely try all this tactics & trick as we are planning to raise money

    https://for.vision/ ☺️

  • What would be your advice on foreign Entrepreneurs who are planning on going to the US for a Seed Investment? Great video btw!

  • You mentioned getting a check for 10% using convertible notes. When does the investor have to put in the rest of their investment funds? Also, if raising using convertible notes, is there any talk of voting rights or board seats or is that only for priced rounds? Lastly, is there such a thing as a limit to how much convertible note investment to accept in a round (pros/cons)? Let’s say you want to raise $500k but get multiple offers that tota $1m, what is the right approach? Thank you Caya!

  • Thanks brother its very helpful . I am from india can you please make a video on indian investors and how to find them coz we also have business and want to raise some fund to go big .

  • This is super informative and helpful! Gaining so many ideas from this video alone and I'm glad to have foumd you guys. Looking forward to use your platform soon. Thank youuuuu

  • Is it a good idea to email potential investors your pitch deck AND your business plan? When do you typically show your full business plan to investors?

  • I have watched like 7-10 videos by SlideBean, I humbly request to leave the link of things you mention like your old video or any other stuff in description

  • Hey, this is a very important video to me as I’ve just started the development of my own website. My concern is the lack of Cash Flow, actually none at all, and I know investors do want to see that. At the same time, the website is in development, we have a team, and social media. I want to know and it would be very helpful, is it possible to still get investors with no cash flow as of yet? I go on websites and they say having cash flow even if it’s little and I don’t know just HOW little is little in terms of cash flow. So I want to know as well if it still possible to gain an investor with just the team, the media, and within the development stage of the website?

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