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Jun 18, 2014
StartupSource.ca's Top Tips for Raising Capital
By Mat Goldstein and Graham Topa
Many startups will tell you that one of their biggest challenges - if not their biggest challenge - is raising enough funding to keep their venture going. Meeting investors and selling them on your business, idea or team is not easy, but there are definitely some strategies that are more effective than others. Here are some tips on how to go about finding the right investor for your startup:
1) Network Strategically
Successfully connecting with your future funders is all about preparation. Do your research to figure out which venture capital funds or angel investors are active in your industry and geographic location. Scour their websites for information about who they have invested in, what events they will be attending, and what previous companies they have been associated with. Check their Twitter feeds to find out what they are interested in. Once you have gathered some info (which is always an ongoing process), map out your possible points of intersection with your target investors. Do you know anyone who has worked at one of the companies they have invested in? Can you find out what conferences they will be attending? Use LinkedIn, your university's alumni directory, and your circle of advisors including your law firm and accountant. Some founders even make a spreadsheet to keep track of who they know that may know someone else close to a prospective investor. The investor is the bulls-eye in the center of your target. Work your way through the outer rings until you get to the person you need.
2) Get an Introduction
Once you know who your prospective investors are - don't just send out a cold email. In the history of raising capital, of course there are some success stories that involve cold-calling and cold-emailing, but those are few and far between. A far better strategy is to find a connection to vouch for you, your abilities, or your company's potential. It's like wearing a wedding ring - you're more desirable to the species you are trying to attract if some other member of that species has already vetted you and pronounced you worthy. For some investors and venture capital funds, introductions are the only channel through which they will entertain new potential deals.
3) Build Your Online Profile
When you do manage to connect with an investor who might be interested in your company, you can bet your bottom dollar (which, in the case of many startups is also your top dollar), that they will do their homework. So make sure you have a profile in the tech community. Reach out to widely read sources of startup news and technology such as Betakit. Build a profile on AngelList. Develop your presence in social media. Do whatever you can to make sure that when a prospective investor googles your company, something comes up that you want them to see. .
4) Get Out of the Office
To the maximum extent possible, try to put yourself in front of potential investors. Create a calendar of events where potential funders are likely to be present and make sure you are there too! Conferences such as mesh, DX3, and OCE Discovery are excellent opportunities to showcase your technology. Some conferences even feature opportunities to pitch - such as Nspire's National Business and Technology Conference - which is a great way to create a buzz around your name. Watch this space for continuous updates of events and opportunities.
5) Ready Yourself for Investment
Most investors will expect to see a properly incorporated and organized company with trademarks and/or patents either obtained or in the works, employment agreements, non-compete agreements, supply agreements etc. to ensure that your innovation is properly protected. They may also expect financial disclosure, including revenues and projections. So ensure that your business house is in order.
These are just a few tips for getting your foot in the door with investors. For those of you who have successfully raised capital, what would you add to this list?