6 Tips for Founders Looking to Raise Capital

There is a lot of chatter around raising capital in 2023. In December of last year, we saw a down cycle in VC activity broadly speaking. Now in January, it seems the tide has turned — sort of. We’re seeing an increase in activity, but only for select areas of the market. With the uncertainty of what 2023 will hold for Founders raising capital, it has never been more important to approach your fundraising strategically.

I know, I know. You’re on a tight timeline and there is a rush to get funds in. (Let’s talk about how to create more runway for you!) The reality is, if you’re not approaching your capital raise strategically, you’ll waste a ton of time and resources without any bites. Here are some tips as you head into your 2023 raise to increase your chances of success.

1. Narrow Your Focus

Yes, there are a lot of options when it comes to investors. But blasting your pitch out to them all is a missed opportunity. Without a narrowed focus, you’ll target investors who are not in-market for your product or growth stage, or even for the amount you’re raising. Avoid the wasted energy and pitching to the wrong people — target likely investors. This means understanding whether you’re pitching a strategic investment for them, what their current portfolio looks like, what they typically invest, and where you fit in their growth.

How do you find them?

I strongly urge my Founders to not purchase lists. These are usually outdated and misleading. Instead, look to databases, such as Crunchbase and Pitch Book. You can also leverage Twitter where there is a lot of active discussion for passionate investors looking for Founders. (This is a manual job — nothing worthwhile comes from shortcuts.)

2. Tailor Your Approach

Receiving a copy-and-pasted email is obvious to investors. It shows you’re taking shortcuts and really don’t care who invests, you just want their money. Instead, you can build from your “template” and tailor the story a bit in your email and materials. Tailoring your story means the value proposition you pitch, the way you connect to their goals, and what exactly you’re asking them to do is all unique to each investor. If you need help crafting your story, let’s chat!

3. Build a Relationship, Don’t Pitch

One of the biggest mistakes I see Founders make is they go straight to their pitch when sending emails, DMs or messages. This is a major turn off. Instead, focus on building genuine connection. Investors want to work with Founders they trust and respect — this doesn’t happen by making the relationship feel transactional. Rather than starting with “My name X, my company Y is raising Z,” focus on creating connection around recent articles or posts they shared and demonstrate your ingenuity in thinking. Creating conversation first leads to the opportunity. If you’re not actively engaging with them already, start doing this before you cold outreach.

4. Secure Early Interest

I know, this is a lot easier said than done. But, the key to driving interest and momentum is to get your first investment, however small. Early investors get the most favorable terms — enticing early commitments will create momentum for larger opportunities.

5. Understand Your Story

Too often, I see pitch decks that are too data heavy and complicated to understand. Human psychology tells us that if something is too hard to understand, we’ll shut off. The same is true for your 60 second pitch. Telling your story is not about explaining the bells and whistles and how exciting the innovation is or even your origin story. Telling your story is about simplifying your message in a way that connects to your investor and how your product will help them survive and thrive. Take the time to refine your pitch with a clear story and then tailor that story to your investor. If you can inspire with your story within 2–3 minutes, the rest of the conversation will follow.

6. Know Your Path

The last tip I’ll leave you with is really the first decision you should make before raising capital. Too often, I see Founders raising who are not ready. If you haven’t properly built your funding strategy and ensured you’re in a healthy position to answer the tough questions, your hard work is going to fall flat. Not sure what a proper strategy looks like? Let’s chat!

I hope you have found these tips helpful. The key to successful fundraising is to ensure you’re prepared and in a healthy place to have tough conversations. If you’re looking to raise in 2023, let’s discuss your approach, where you’re at, and what building blocks you need to tidy up before hitting the roadshow.