Fundraising is to startups as tech companies are to Silicon Valley: the two go hand-in-hand with one another. Some founders find fundraising thrilling—an adrenaline rush if you will. But most founders, especially first-time founders, find the process of fundraising to be stressful, mystifying, and at times, painfully drawn out.
I recently moderated a discussion between Russ Heddleston, DocSend CEO and founder, and Jared Verzello, Atrium Managing Counsel. Based on their experience founding, investing in, and/or counseling startups, I wanted to share their firsthand insight into what they’ve seen founders do wrong during the fundraising process.
Mistake #1: Your pitch is a Saturday afternoon exercise.
Preparation looks different to different people, yet one principle remains key for everyone: You need to practice—a lot. As a first-time founder, it can be easy to look at other companies and wish you had the charisma of another founder or the interest of a specific investor. Yet many people don’t always realize the amount of work and time that goes into achieving those successes.
The importance of practicing your pitch doesn’t just apply to first-time founders. No matter how many years you’ve been fundraising, there’s always an opportunity to level up as you practice. In fact, Jared shared that Atrium CEO and founder Justin Kan—an experienced and successful fundraiser—didn’t even feel like he nailed the Atrium pitch until he was 80 pitches deep.
Y Combinator also extends over a 12-week period to offer founders a comprehensive window for fundraising support and to hone their pitch. The bottom line? If you want to really nail your pitch, it’s going to take time and you need to practice, practice, practice.
Founder tip: Perfecting your pitch is not going to take a couple of Saturday afternoons. No matter how much practice you’re putting into it, consider 10x more. Usually, one meeting is all you get with an investor.
Mistake #2: You haven’t boiled your knowledge down to the basics.
As a founder, you’re really knowledgeable about the problem you’re trying to solve. However, it can be difficult to take all of that knowledge and boil it down to just the basics. If you can take all of the information and convert it into a story, you’ll find that human beings are naturally receptive to and engaged in storytelling.
Jared shared that he often does an exercise with his clients in which they have just five minutes to pitch to him. After the five minutes are up, he shares the key points he took away from their pitch. More often than not, they haven’t simplified their pitch enough.
Does this sound like you? If so, try to follow this two-part approach to refining your narrative:
Focus on the first half of your pitch by clearly defining your problem statement, your solution, and its impact. The simpler, the better—you only need one sentence on each of these. If you have more than one founder, each co-founder should craft their own one-sentence answer.
The second half of this exercise is to tell a story about your market and the experience that the user currently has. Then, reframe it to say: “Imagine if…” and share the experience that a user would have with your proposed solution.
Founder tip: Think about your “Imagine if” statement as the “Aha!” moment for investors. Done right, it helps them understand how things work today and how they can be better—with your solution—tomorrow.
Mistake #3: You haven’t given your audience enough context to understand what you’re trying to do.
When it comes to your narrative, remember that context is everything. Not only do you need to boil things down to the basics, but you need to also keep in mind that your audience doesn’t have the same context that you have.
The last thing you want is to go down a rabbit hole of explaining things without having sufficiently set the stage for your audience beforehand. Investors need to be able to easily understand what you’re talking about, why it’s important, and how it’s impactful from the outset.
For example, think about when a friend or family member asks you what you’re working on. It’s easy to jump right in and tell them about your product and even your challenges—but they’re likely not going to understand because they don’t have any context around it. Instead of coming in hot and excitedly sharing in-depth technical or product specifics, start by telling a broader story that can segue into what your solution can accomplish.
Founder tip: Don’t get too eager to jump right into product details—even if that’s what they’re asking you about. Take the time to set the stage so you can enable them to understand your solution when you get around to telling them about it.
Mistake #4: You don’t have a strategy behind scheduling meetings.
How you set investor meetings during fundraising can quickly fall into a “lessons learned” category if you don’t have a sound strategy in place. Taking meetings as they come and in an infrequent pattern can diffuse any sense of real urgency for closing the deal with investors.
Enter: the sandwich effect. Rather than extend the process over an uncertain duration of time, try to sandwich all of your meetings within a two-week period, an approach that Russ followed with DocSend.
Worried about how to juggle conflicting schedules and coordinate a smooth two-week window? According to Jared, Justin often advises founders to think about setting up these meetings at least two months out.
Say you have a spreadsheet of 80 investors who you ideally want to meet with. People are going to be incredibly busy if you’re trying to schedule them all next week. However, they are much freer a couple of months in advance. If you start reaching out ahead of time, you can quickly see an optimal time period emerge and then start packing people into it.
Founder tip: Sometimes you’re going to have investors who want to meet earlier. Resist that urge. Remember: If you have a bad meeting, they can talk to others and ruin the sandwiching effect.
Mistake #5: Your pre-meeting deck is an email with bullet points.
Most founders can’t secure a meeting without providing some background information ahead of time. Generally speaking, five bullet points in an email isn’t going to help you put your best foot forward with investors. However, if you can put together a highly visual, simple deck to send over, it’s going to give you a much better chance of getting that meeting.
Got your verbal pitch nailed down? Turn that into headlines that can make up your deck. If your pre-meeting deck is clearly outlined, your actual meeting can become more of a frank discussion because they already understand the problem you are trying to solve. At that point, taking the meeting with you means they want to continue a conversation.
Getting the clarity down in your pitch deck is time well spent. According to insight shared by Russ, you have just under four minutes to capture the VC’s attention. This means that you need to tell your story clearly and succinctly, and in a way that leaves them wanting to hear more.
Founder tip: Your deck should be easy to click through—avoid getting overly detailed on slides that derail an investor from being able to quickly consume information.
Looking for more tips and tricks to help you nail your pitch deck? In partnership with DocSend, we analyzed hundreds of Seed and Series A pitch decks. In doing so, we discovered not only the most common types of slides and their order, but also how to successfully tell your story in a way that entices an investor. Download our template, “Your Fundraising Pitch Deck — The Do’s and Don’ts.”