Venture Capital

The All-in-One Startup Funding Guide

Pitch deck, term sheets, investors and equity crowdfunding.

There is a proven process to successfully raising startup funding.

Over the years, I’ve learned about the process by getting to know a few of the world's most successful serial entrepreneurs, raising millions myself from angels & and VCs, investing as an angel, and being CEO of the VC fund + equity investment platform

Across all this investment and fundraising activity, I’ve seen that the most successful fundraisers have several key elements in common. Below are five parts to successful fundraising for your startup — with specific examples, templates, and resources.

The Pitch Deck

Every successful startup begins with an idea, which is refined over time.

Creating your Pitch Deck is one of the best processes for getting your idea and business out of your head, on paper, and to enable continual questioning and refinement of your thinking and approach.

I wrote a dedicated post on how to create The Ultimate Pitch Deck. Read through this as you put your deck together, and use the template and examples there. For now, here are the high-level takeaways on pitch decks:

  • Follow the formula investors look for, which I show you in my post
  • Investors don’t write checks for decks — the goal is to get a meeting/call
  • Go deep on your “meta” narrative — why this, why now, why you, how
  • Give essential product/traction points but less information and more story

To help you with your deck, I created a template with examples and resources of successfully funded startups and their pitch decks — it’s all in the pitch deck post. This includes recommendations from VCs like Dave McClure of 500 Startups and the deck that Reid Hoffman used to pitch and close Greylock when they invested in LinkedIn’s Series B.

Also, see successful fundraising pitch decks live in the wild. For this, I recommend you go to Crowdfunder and look at several of the VC-backed companies we have invested in from our Fund and who are fundraising online. Some of these companies fund publicly, so you can flip through their decks.

Term Sheets (What To Offer Investors)

I’ve also written a detailed post on Term Sheets. It includes samples and templates from leading legal and VC firms, along with data and resources on how to think about the valuation of your company when you’re fundraising.

If you haven’t raised angel or venture capital funding before, there’s likely a lot you don’t know about it from a legal, structural, and process standpoint.

The high-level fundraising process with investors goes like this:

  • The founder shapes terms of financing (e.g. $500,000 in priced equity at a $5M pre-money valuation)
  • The founder discusses these with investors, and investors consider and respond
  • A first investor decides they will invest at specific terms (not always at the terms shaped by the founder)
  • If the founder accepts, this can be formally or informally a “lead investor” (someone credible who priced the round)
  • All the detailed legal documents get created or updated, and the investment is finalized
  • The founder goes out to raise the remainder of the round at the same terms as other investors

Term sheets are used in this process to help founders and investors reach an initial agreement. Again, I’ve shared some great examples and templates for you in my post on Term Sheets.

After terms are agreed to and the term sheet signed, long-form documents are drafted and signed by legal counsel, and then the money is wired.

Build Your Target Investor “Hit List”

Every great fundraiser aims high by first finding out who the best companies and investors are in their space, then learning about them and setting goals to meet with them and capture their interest and investment.

To this end, you want to build a profound and ambitious investor “hit list” for yourself. This is a list on an Excel spreadsheet of at least 40–50 active investors — notable angels, VCs, and high net-worth people who have created, sold, and invested in companies in your space.

Great fundraisers do great research to find these investors and are creative and resourceful in the ways they find to contact them directly. Your first step is to search Google for the leading investors in your space/industry. Google “top ____ angels” and “top ____ investors.”

As a FinTech company, I might search for “top fintech investors”, and I would find this list in the results, which I would add to my hit list.

This will help you build up your hit list of 40–50 investors or more across individual angel investors and VC firms. In your Excel spreadsheet, write down the names of the investors or firms and partners in those VC firms and what city they’re in. Then, use the online lists of investors to deepen and flesh out your list info at places like Crunchbase, LinkedIn, and Crowdfunder.

Also, leverage the success of companies that have come before you and raised money in your space. Search for the names of companies you know that have been very successful in related markets to yours. Use these online investment sources and platforms to identify the investors who invested in those deals. These are also your target investors.

With your hit list in hand, you’re ready for the next step in meeting and pitching investors…

Preparing, Meeting, Pitching Investors

Getting in front of investors takes several steps in preparation before you can expect to find and reach the right investors, meet with these investors, and close any funding.

Successful fundraisers put the following process into place before they go out to investors to make sure their time is well spent: (Note — I’m not including equity crowdfunding in this section on meeting investors, but I cover that below.)

If you don’t have a live product, get as close to a working demo as possible (wireframes, designs, etc.) I’ve seen this simply be a mock-up of an entire app or screenshots, CAD designs, etc. Just don’t expect slides on a deck alone to do the trick and trigger interest.

Ideas are not what investors Fund, but detailed product plans, progress, teams, and rollout strategies can be.

1. Get friends and family (or yourself) to put the first money into the company/round.

2. Bring on an advisor or two with experience in a related space; expect them to add value & and make intros

3. Structure and timing are critical and are your friends. Set a specific time frame for your fundraiser to include an outreach period, terms period, and closing period. Tell investors precisely what the time frame and process is.

Often, I see great fundraising set the timing up as roughly two weeks for outreach schedule, four weeks of meetings where they meet with investors and discuss and negotiate terms, and then four weeks of closing to follow where they get everyone in (or not) promptly and with a final close deadline.

The more you stick to your timing and guns here, the more you and your investors will respect your time, and the more often investors respond positively.

4. Send a short pitch deck ahead of the meeting, set expectations that you are asking for funding (qualify)

5. Have an “ask” and suggested terms for the investment when you meet (see Term Sheet section below)

6. Plan to hear “No” from your early meetings. Knowing this, go to the lower-pressure and less significant investors first. Use these meetings to get feedback and become more comfortable on your pitch. Pay attention to what they question, where they get hung up, what they are excited by, how you did well and where you were weaker.

7. Expect a lot of No’s and failure. Everyone fails most of the time at fundraising until they don’t.

8. Celebrate the process of getting good investors to say No. I know this sounds odd, but hear me out. Every successful founder knows how hard fundraising is, myself included.

To feel better about myself in the fundraising process, I developed a strange and unusual “ritual” that I took up not to think as deflated at difficult points in the fundraising process.

My ritual? I make a point of celebrating how many “No’s” I received. I look over the long list of all the investors who have passed in one long spreadsheet. Looking at this, I positively acknowledge myself for the hard work, time, and toughness it has taken to get this many meetings and hear this many “No’s.”

I also remind myself that this is part of what success looks like — getting in front of many great investors while knowing that I will likely hear 15–30 No’s for everyone “Yes” early on.

Use Equity Crowdfunding To Reach Investors

Early-stage funding across angel and venture capital is moving online. As little as two to three years ago, it was against the law to raise funding for your startup online. But today, some new opportunities and laws allow you to raise money online from angels, VCs, and even smaller investors daily (see my post on The Disruption of Venture Capital).

In short, new equity crowdfunding platforms aggregate investors and can help you get in front of hundreds or thousands of investors quickly.

There are generally two categories of funding platforms — those that help you raise money from high net-worth investors (accredited investors and investment firms/VCs) and those that help you raise money from everyday people (non-accredited).

I recommend that any startup founder start by raising funding more traditionally offline and aim as high as possible to build great direct investor relationships. Get a strong investor or two in if you can first — as they bring strong follow-up on interest once you’re on an equity crowdfunding platform.

Then… look to leverage what you’re already doing with an equity crowdfunding platform that first works with high net-worth investors (accredited). The reason is that you won’t have to spend much on added cost, time, or legal resources to put your company out to accredited investors (meanwhile, with non-accredited investor platforms, it is a more protracted and more complex and expensive process).

The leading platforms for angels, VCs, and high-net-worth investors in terms of their size ($ raised online) include Crowdfunder, CircleUp, and Angellist.

Best of luck with your fundraising.

And if you feel like this free resource has been valuable to you, please take two seconds to retweet and share it on FB for others.


Similar posts

Subscribe to our monthly startup newsletter!