Investor outreach: The best way to optimize your fundraising in a recession!
Startup founders have to admit, to get a “yes” from an investor is one of the hardest obstacles to get through and that is why it should be taken seriously, with more humility, and empathy thus it’s time to re-examine your presentation and approach. Businesses face different challenges and problems during this process, and most of the time, it is because they do not have the resources, expertise, and the key network.
Here are some problems I have noticed for the last 3 years:
- Lack of resources to find key investors with money and lack of investment strategies aligned with the business model,
- No experience to deal with investors,
- Hiring a CIO that will require a monthly salary and or given shares with no guarantee of results. Ie., an Investor Relation Manager costs an average of $45K-$80K per month. Another point is to stay away if someone tries to sell you their network of contacts! This is mostly an emailing campaign tactic that rarely works (a large percentage of those contacts don’t even exist).
- Lack of planning on the budget needed for investors’ outreach. A typical mistake for startups is to assume if one startup can get funds with a similar business model, then they will too.
- Vague documents and poor pitch preparation will result in bad interpretation, misunderstanding, and lack of interest from Investors. Imagine all the efforts assembled into the presentation while the Investors only look over not more than 2–3 mins.
- Conferences are one of the best ways to meet Investors, however, you’re among the sea of crowds and you do not have their full attention. Sometimes it is difficult to identify them, and even if you get their business cards, you may or may not achieve a connection.
- Pitching at summits is expensive, most of the time you have to pay sponsorship and the audience does not consist of 100% Investors.
Conferences and Summits cost a lot in terms of travel, hotel, food, and preparation that you could be used for other activities. Selection should be made very carefully (we will write an article about this at later date),
- Marketing efforts and budget planning are insufficient for convincing prospects to analyze your project, usually due to a lack of experience.
- Think you are unique, and investors will rush to invest in your amazing business model? The truth is, it is very difficult to compete in a context where many VCs lost money and there are so many projects looking for funds that could be similar to your project.
Some advice that could help to save time and money
It is obvious you have to meet the basic requirements to present the pitch in front of investors, such as but not limited, to the strong value proposition, MVP tested, traction, numbers, etc., but the Investor Reach should be handled with care. This is something BC Impact will present soon.
In 100% of the time, all the founders I met told me their deck was ready, clear, and perfect. Each time when I reviewed the documents, I had to modify and/or optimize them. Perhaps it’s pride or for budget reasons?
Some, against my suggestion of not being ready, still present their pitch to Investors but only to return with no results and bad comments. The thing is, you only get one shot!
Every time it’s a ‘NO’, you get a strike! (like in baseball, 3 strikes and you’re out).
Essentially, you had shortened your investors’ list. This is the point that most businesses are not taking into account.
Some take the easy route and buy the investors’ list. Unfortunately, half or more on that list does not have the correct information- basically, a waste of money and time! This is not the approach I would recommend. It takes time to build rapport with investors and surely, they are bombarded with solicitation; your email will go in the junk mail. I always recommend focusing on the quality of the investors.
As we have to face the difficulties of the COVID19 Crisis, virtual meetings are popping up for the ‘good, the bad and the ugly’. You have a lot of proposals in the market promising you Investor Reach Service to connect with great contacts and paying an upfront fee from $10,000 to $25,000 depending on if you are meeting online or offline (later in the year) and what types of investors you will meet.
It is normal to pay an upfront fee and get a cut to the funds raised as you have to consider the business intelligence support, the amount of work and time to build the network and trust (months or years), and organizing the meetings.
What is not normal is to pay for a post office organization, getting no support, no feedback, and pitch with no investor in front of you.
What you should look for in these services that are relevant to help you succeed:
- 👉Who are the investors attending the meeting; quality over quantity or both? Do they really have a budget to invest in your project?
- 👉Are they investing in my industry and location?
- 👉Do you have a business intelligence service? A passive connection is not enough today.
- 👉Are the upfront fees and the commission on the amount raised fair VS the value proposition and in comparison to the price I would pay without this help in terms of time saved, and resources? In other words, we need a clear justification of the price and the value proposition.
- 👉What is the success rate?
- 👉How much time do I need to wait until getting results: Pitch, 1:1 meeting, etc…?
At BC Impact, after having to work with investors in Europe, the USA, and Asia, and connections with various startups, we have created the best and fair formula to help businesses sell better, faster and with more efficiencies to increase the chance to get funded.
Our partner and media agency will cover different types of investors you can’t normally reach (Family Office, Private Investors in Asia, South East Asia, and many more).
Want to know more?
Click on this link to apply for a fund. You can submit your project and we will send you our criteria selection and details of our offer.
It is time to get serious and make the right decision for your business. CODIV19 pushing us to move smarter, faster and at a lower cost.