How to fundraise for the first time successfully

Every week, the seed collection founders contact me to understand our fundraising experience with Whoomies. So I am sharing with you the hardships we went through as well as the mistakes we were able to make with my partner Alex. The Whoomies adventure was able to begin thanks to the trust of some fifteen valuable business owners, on board during two pre-establishment and seed rounds, for a raised sum of €1.2 million.

In 2019, more than a year after its launch, our monetization strategy wasn’t ready yet. More authentic in the French funding system trusted by SaaS and BtoB ventures, we launched a mobile app, in response to the initial BtoC challenge, and motivated by a vision that decoupled completely from the traditional uses of the real estate market.

Long months of perseverance, punctuated by wonderful encounters but also by constant questioning, cold sweats, endless nights of sleep and unshakable trust. The ultimate resilience test I was able to pass thanks to the constant support of Alex and my loved ones. Often times, the questions from entrepreneurs who contact me are the same and make me want to write this article. Nobody has a “magic formula” for raising money, and it must be borne in mind that more than 9 out of 10 early stage entrepreneurs do not make it to the end of the process.

However I have tried to undo the “junior” mistakes I made so that I can share some practical tips, which I hope will save you a lot of time. A good idea is not enough to convince: preparing a good approach strategy is key.

Here is a collection of personal teachings, which have at times earned me great disappointments, some of them obvious but nonetheless worth remembering.

Don’t neglect the time you spend documenting your presentation

Building a presentation involves the complex art of synthesis. It means detaching oneself from one’s product, and gaining perspective on one’s daily operational life. Exercise is practically a schizophrenia for the founder who has to put himself in the shoes of the novice to discover his business.

Keywords need to be simple, smooth and airy to make your presentation impactful. Feel free to challenge your presentations by asking for advice. Each exchange allowed us to modify the wording, to lighten the content, still and always in constant evolution. Too much detail kills the article.

Let’s take an example of a slide from our first groups, revealing enough to make it clear:

Brighten your slides Allows the investor in a hurry to understand your bets at a glance:

  • the problem you solve,
  • show your value,
  • How you respond (a lot) to the topic better than the solutions on the market,
  • The level of development of your business: relevant to the market and/or attractiveness,
  • The growth potential (and ambition) of your business,
  • Finally, how your team integrates is key to making this happen.

Here is the second version:

Select a roadmap

It is essential to organize your schedule of prospecting phases, appointments, and reminders. Know that with some rare exceptions, the initial fundraising process is a full-time job. So be careful to distribute the tasks well to keep the activity going, even if the team is actually the cornerstone that will convince the investors. So the meetings will mobilize all the founders in most cases. Rehabilitate them as much as possible so you don’t waste too much time on your colleagues.

Then set a closing horizon or deadline. Psychologically, investors should understand that investing in your project is a limited-time opportunity. If necessary, feel free to insist on the fact that others are already participating in the tour: you will skillfully create your own “noise”.

Determine the value of your business

Whatever the stage of its development, investors need to understand the potential of your business, on which your assessment will be based. The financial challenge for them is to achieve a multiple of the selling price of their stake, while exiting in the future.

Beyond your financial expectations, you would, logically, have to announce the subscription price of the shares issued (except in the case of subscriptions to OC, BSA or BSA-AIR). Personally, it took me a while to unpack myself and talk about money without blocking in front of investors. I was almost shy about declaring a valuable character, convinced she wasn’t really the subject.

Talk about it, between the founders, to your network, within the incubators, to the funds … This will save you good disappointments from this pattern, from which it is impossible to recover later. The topic of seed evaluation seemed too vague to me. So I asked investment investors to guide me and give me some feedback on the value of Whoomies. Suppose the answers obtained have the advantage of confirming to me … no arithmetic method:

Organizing targeting and tracking of your “prospects”

This is to create a classification by category of investors. Ask yourself: How relevant is each investor? Depending on his area of ​​expertise, previous experience or knowledge of the market or network he can bring you to develop your business. Having the lead at the round table can often make a huge difference in accelerating and facilitating your exchanges with other investors.

Keep in mind that this is a long term partnership, which will often last 3 to 7 years of the life of your company. Better to get along! Obviously, not all of your business sponsors will have the same level of involvement. I am using the tool Notion.co Which I warmly recommend for organizing tasks and keeping track of projects on a daily basis. Others use Airtable or Asana, which are also suitable for this type of topic.

For example, here’s a little overview of my venture capital “papers” for our next roundup:

Organize your data room

A simple Google Engine is a good way to centralize (and develop) the information that will be communicated and will allow you to save valuable time relaying the information with your prospects. As an example, here’s our example:

Boarding

Good advice: never rush to deal with more strategic third-party investors, especially in your first offerings. It’s best to break your speech, experience, feel the elements of the language that you pick up, and those that don’t sound obvious.

From experience and without much surprise, here are the most effective levers for getting appointments with investors:

  • Networking: It is clear that building a relationship with a Bachelor of Business long before the potential fundraising process (through incubators, get-togethers, conferences, etc.) makes it possible to form a link intuitive personality more solid. Much more complicated, of course, in the time of Covid. Why not test more digital solutions in this case, such as the Shapr app. Life is beautiful encounters, and this also applies – without a doubt – to business;
  • IPOs by founders who have already raised funds;
  • Mediation and support platforms for fundraising (Eldorado.co, AngelSquare, etc.), or even independent advice (without forgetting to know about their reputation and track record);
  • Networks of incubators or schools.
  • Prospecting tools like Linkedin, are powerful enough for the first contact. On the other hand, I’m not convinced of the cold email interest in the fundraising approach (0 results on our part);
  • In the case of LinkedIn: Make personal introductions and never hesitate to contact anyone, whatever the market: European, American, Asian… Good entrepreneurs often respond kindly.

Let’s get started!

Some things to think about can be easily activated to save time in meetings:

  • Organizing presentation ‘workshops’, bringing together several investors/prospects for a discussion session with the founders.
  • In times of Covid, these workshops can logically take the form of video presentations or even live sessions. We’re testing this contact form with our contributors, who seem to appreciate the fun format and are more lively than a simple email report 🙂

Several appointments are often necessary when it comes to first contact. Don’t forget to keep the investors checking their investment intentions up to date. This is where the relationship with them begins, not at the end.

Finally, some final tips before you start:

  1. Fundraising is a sale: the state of mind and dynamism generated by the founders is key. Show your passion and energy for your project;
  2. You can’t please everyone, and that’s okay. Refusal or lack of answers will be numerous, and sometimes discouraging. Criticisms can be constructive and sometimes lead to new opportunities for thought. Even if it wasn’t easy emotionally, don’t take rejection personally.
  3. Flexibility is the key. More than once, we thought we had to stop everything, but we never stopped believing in Whoomies. Trust yourself and your project. Constantly experimenting with different approaches.

Don’t isolate yourself under pressure. Fundraising months are psychologically intense and will have a huge impact on your personal life. Take care of yourself and hold on to the people around you who care about you who will help you move forward.

Lauren Danai is co-founder and COO of Whoomies.

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