The process I've used to raise $7M for our company

Hello! If you know a founder who could use this advice, please do share! If you share on LinkedIn, please give me a tag so I can thank you.

My fundraising journey started with me Googling “how do you raise money for an idea?”

Today you’d just pop that question into ChatGPT and you could interact with the tool for an hour and get further than I did in my first few months of my entrepreneurial journey.

But even the mighty ChatGPT can’t make fundraising easy.

Especially right now.

This week I spoke at an event about angel investing in Lexington, Ky. for Middle Tech, a group in Kentucky that is creating media and events to support startups. I joined Evan Knowles (Middle Tech Founder), Gregg Morton (the founder of Fooji) and Jeb Jarrell (runs the angel syndicate for Render Capital) on the panel.

It was interesting for me to hear Gregg explain his journey as a founder—it mirrors mine, a series of pivots and experiments. We’ve also had similar experiences in pitching angels.

Most notably, we both had horror stories on how awful that journey can be.

Angels aren’t like institutional investors—they don’t usually have formed criteria, many don’t have defined check sizes, and it’s not like they have websites explaining what they’re looking for in a founder (therefore, they can can be hard to find).

I’ve raised a little more than $7 million for my company, GoWild. Much of that has been with angels, whether individually or through angel syndicates. To a coastal founder, this is not a lot of money, and might even be a coastal founder’s single pre-seed round. To a midwestern/southern company like ours, it is what we’ve required over a span of six years and every dollar was hard won.

Our region just doesn’t have the kind of deal flow and capital the coastal areas see. Kentucky startups raised $86M in 2022, compared to $734M to our neighbor Indiana, $31.5B in San Francisco or $29B in New York City. (Numbers from Evan’s closing thoughts this week.)

Kentucky’s total funding is a Silicon Valley rounding error.

I know a founder who left Kentucky to move to another state to pursue funding for his company. He said you just can’t do it here, and that he could count on his two hands the number of Kentucky companies who have raised more than a few million. I’m proud to be a finger in that metaphor, but I don’t want it to stay that way.

I’m not a fundraising expert—far from it. But I do recognize I am a few steps ahead of someone else who may be starting their journey. It’s why I share so open and often. The messages you all send me after every newsletter, telling me how much you appreciate the help on various topics keeps me writing these late-night newsletters. I do hope you’ll share this advice with someone who it may help.

With that said, today I’m going to give you a few tactical tips on how to make your fundraising easier. Depending on the source you’re looking at and the stage of funding, the volume of funding is down somewhere between 30% and 60%. That’s a cinematic-drive-off-a-cliff level of plummet. There will be startups who don’t make it. It’s already happening. It’s my hope that these tips can help maybe one or two avoid becoming that statistic.

Tips for raising from angel investors

First, have a great pitch deck

I’ve been called a “deck shiner,” because I believe a pitch deck matters. This feedback is usually from boot strapped founders who don’t raise. Your deck matters more than ever before right now, because competition is fierce. For most investors, you’re emailing your deck over cold in hopes of a response to setup a call, or your deck is sent over in a warm intro. Regardless, it’s your first impression.

A great deck is concise, tells a compelling story, and leaves an investor knowing just enough but wanting more. A few of my tips:

• Use compelling graphics throughout the deck. Excessive use of stock iconography/imagery or just lacking imagery altogether doesn’t give the eye anything to feed on—and the eye fees first. Charts, large call outs of impressive stats, top-notch product shots, professional founder photos—it all says that you do good work and keeps visual stimulation. Yes, companies like LinkedIn raised mega rounds with decks that looked like hot garbage, but you are not Reid Hoffman.

• The headlines should tell the story. Too many founders go with the “PROBLEM” and “SOLUTION” title structure. Most investors are going to fly through your deck on first blush, and will not read the body copy. Don’t depend on body copy to tell the story. Tell me what the problem is with your headline.

• Vision isn’t enough. Back up your product with data. If you’re mature enough, have your own unit economics to show proof that your product is working. If you’re early, show me the potential with sourced data.

• Keep it simple. Your slides should be Problem, Solution, Business Model, Competition, Founding Team, Fundraising, and a few other slides depending on the pitch. In general, Guy Kawasaki has the best model for a clean deck. Start with that.

I could go on for days about pitch decks, but executing on these tips will put you ahead of most pitch decks I’ve seen.

Second, get organized

Most founders spray and pray with investing. The successful founders have a process from the beginning, and understand that the secret to winning is diligently iterating on this process.

This process will vary for everyone, but in general I have found it helpful to do a few things:

• Build a spreadsheet of investor targets. As you meet new investors who are potential fits, they go into the spreadsheet, too. This sheet includes their name, contact info, estimated check size, notes and an ‘in” or “out” column. Every time you speak with them, update the notes with the last time you spoke and how it went.

• Get advice along the way. Every time you speak with an investor, close the conversation by asking them who you should be talking to. You’ll be amazed by how many leads come up from this, even if the investor is telling you no. Many will say “let me think on it” which is their way of getting out of answering—that’s fine. I can usually turn 5 leads into 10 with this process, though. And fundraising is a game of at-bats—the more times you swing, the more chance you have of getting on base.

• Talk to other founders. I can’t stress this one enough. Ask how their rounds are going, who they’re talking to, and share what you’re raising and how much you’re looking for. These conversations will turn into gold mines. Ask the founders if they can do warm intros when you have good leads. These warm intros will be where the checks come from 9 times out of 10. Cold outreach rarely turns into a check, in my experience. (Also, it should be obvious, but try to also reciprocate help to these founders who help you—the give first mentality builds karma.)

• Utilize LinkedIn. Comb through these founders’ LinkedIn profiles by searching through their connections for the title “investor” (pro move shared by my buddy, Jonathan). If you drum up a possible fit, ask the founder if they can do a forwardable email.

• Follow up immediately. After you pitch an angel investor, be sure to follow up that day with a thank you and the pitch deck (and maybe a data room, if you’re ready). However, you have to understand they may not respond to your next email. Or the one after that. Relentless follow up and diligence in making this followup impactful is key. I’ve sent a dozen unanswered emails to investors who turned around and invested. However, you have to follow the next section’s guidance to have this kind of success.

Make follow up meaningful

Here is where most founders I speak with lose the deal. This very step.

Their follow up is absolute crap.

If you think you’re going to “just bumping this to the top of your inbox” to a finished round, you are in for a rude awakening. If you think relentless pursuit alone will get the deal closed, please go to your spam folder right now and look at the tactics sales people are using on you. It’s embarrassingly the same tactics most founders use for follow up.

Instead of simply following up, sprinkle in some flavors of success at every touch point. This creates real FOMO. I don’t follow up with investors until I’ve made progress. After my thank you email, I will typically follow up in 7-10 days with 3-4 bullets of everything we’ve accomplished in that time period. This usually consists of news or product launches, partners won, growth achieved, monthly revenue results, and most powerfully, investors added.

It’s important to save some juice for the next round of follow up—don’t give away the farm on that first follow up. Just make sure every time you reply to that first email, you’re showing progress. This more than anything else will land deals, and again, the most powerful tactic is to show that the round is moving.

If you have 3 investors who have given you verbals for $100K, total that up and let all of the other investors considering investment know that you have made $300K in progress on the round, which leaves X amount left. You’ll often turn that $300K into $500K and verbals will quickly become deposits. The first check is the toughest, but smart founders can turn the first check into three, and three checks into six.

Finally, keep your investor communication consistent

I cannot stress this one enough. I maintain a CRM (you can use Mailchimp or whatever you like—the list will be small enough to be free) to create and maintain a list of investors and potential investors. Every quarter, I send them an update that highlights progress and updates around five categories and a letter from me. Those categories are Culture & Team, Marketing & Growth, Product & Member Experience, Financials & Funding, and KPIs, which includes a link to our investor dashboard.

This may seem small, but the number of investors who tell me we communicate better than any of their other startups is high. I often have investors request to forward my updates to their other startups to show how communication should be done. Investors want—and have absolutely every right to know—how your company is doing.

Not only that, but if you’re maintaining communication when you’re not fundraising, you’re going to have a heckuva lot more success raising a round when you are. Otherwise, investors realize you only show up in their inbox when you want something.

We once raised $850,000 in just two weeks on a $1M round, all because we announced it on our emails (more about that story here).

Tough times are still ahead

Every founder I have talked to is treading water. But it’s not impossible. Funding levels have dipped back to 2016, and some are saying the overall economic environment is the worst we’ve seen since 2008.

I’m not an economist, but I can tell you, the air has been sucked from the room. If you’re not in fighting shape, it’s going to be tough to keep your company breathing. A good approach, process and communication plan will help you punch your way through a successful fight and victory.

4 things to remember for fundraising

1) Your pitch deck matters
2) An organized process is more impactful
3) Meaningful follow up lands the check
4) Great communication lands future checks

Who I’m listening to: The Builders & The Butchers

What I’m reading: “The Revolutionary: Samuel Adams”

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