Most entrepreneurs struggle while fundraising as it’s an extremely competitive process. Here’s what to do when you find yourself in a tough position raising money.
Do More Meetings
What: Make sure you’re doing ~15 meetings a week, and stack your meetings together to the best of your ability. This means, over the course of 6–12 weeks, you should expect between 100–180 meetings to complete a fundraise.
Why: Around 90% of your investor leads will result in a no and most of the yeses tend to come at the end of a process. This high rate of failure is solved by simply doing more meetings. For example, most seed rounds involve at least 10 investors, at a 10% conversion rate, you would need to do 100 meetings. More meetings means more yeses, which means more money.
Focus on Small Checks
What: If large check investors (e.g. $500k+) aren’t saying yes, turn your attention to smaller check writers like Angel investors and Micro VCs (e.g. $10k-500k). If you focus all your time on these investors, you can build momentum rapidly for a $1M+ round.
Why: Angel investors and Micro VCs usually need a lot less evidence of progress than larger investors, before making an investment, and they make a lot more investments per year. Plus, smaller investors will usually have a network of larger investors they’re willing to introduce.
Go Back to Work
What: If you’ve done ~150 meetings and tried the full spectrum of investors with minimal luck, it’s probably time to go back to work. This means stop fundraising and make a plan to stay lean and survive for 12 months on what you have. Aim to hit 15%/month growth and retry fundraising in 9 months.
Why: If fundraising is not, or seems it will not, result in more cash on hand, then you’re wasting time you could be spending on generating revenue. You can also use this new-found time to address the primary concerns investors shared, e.g. market, traction, unit economics, etc.
Fundraising is hard for almost everyone. If a time of turmoil arrives, take deliberate actions to respond to the situation and give yourself the best chance of fundraising successfully.
Thanks to Kaego Rust for their help with this article.
Photo by Cristofer Jeschke
Sterling Road invests in pre-seed B2B startups based in the US and Canada.
Full investment process. Contact: ash@sterlingroad.com
