Tips On Raising Funds From Angel Investors and VC’s
For the last decade or so I have seen my fair share of pitches. In the last 2 years, the start-up game has really ramped up from everyone wanting to live their Shark Tank dream to wanting to become the new Facebook. I get as many as 10+ pitches a week, and some are good, a few are OK but most are really bad. After talking to some other angels I came up with a quick list of what to do and what not to do based on the feedback I received.
· You can have the best looking deck in the world, but if your idea has no legs, it won’t matter so save the time.
· Don’t make demands such as “you must call me either way if you like my pitch or not” umm no. If we see something we think is interesting, you will get a reply, otherwise please understand we are mostly busy people and cannot reply to every blind solicitation coming our way, don’t take it personal.
· Persistence is not a bad thing, but if you email someone at every address and social media outlet 10 times a week, it feels like a stalker, don’t do it.
· In your SHORT intro, give the person you’re pitching a glimpse into what makes your idea special. This really is fishing so you need a sharp hook.
· I don’t care about your financial projections. VC’s that have quants on staff may care as they can run the numbers 10 different ways, most angels won’t. I have started enough businesses to know those fluffy numbers are never close to the real world. I looked at my own spreadsheets from 15 years ago and thought well shit, I was way off, if I only knew then what I know now…..
· If you do get someone interested, if you don’t want to hop on the phone or meet in person, that is another turn off or red flag. Most people are not going to do a deal over email, wire you some cash, spread some pixie dust in the air and pray they can get 10x back.
· Have a clear path to money, everyone knows it will take a while, but if you haven’t figure out how to make a penny, wait before you pitch.
· If you could not raise some money from FFF, that is a red flag. Tell me a handful of people that know you, put some cash in because they believe in you.
· Have idea of how you will handle talent as you scale. Seen tons of great ideas fail because they didn’t have the team to execute. If you have to hunt heads on your own or go to meetup groups to find some like-minded people, I don’t care, tell me how you’re going to get the people to grow. (an Indeed ad likely won’t work btw, don’t think passive)
· Do you want funding, a consultant or both? If you want crazy terms but want the investors to be part to full time consultants the deal is going to end up different than you planned, time is the most valuable thing and hand holding costs money.
Anyway, these are just general tips, they won’t apply to everyone nor every situation. Getting money out of people isn’t easy, hell it’s hard to get your friend to pay for the bar tab right? Picture how hard it is to get someone to lend your start-up money….