Fundraising Advice From Dan Martell #1: Building a List of Investors
I had the honour of bringing Dan Martell to Kitchener-Waterloo to meet with many of our startups on June 18th, 2012. Dan is a passionate serial entrepreneur with a big heart and he offered to meet with as many startups as I could get in front of him. I took up the challenge and created a jam packed day for Dan.
We started out at the Accelerator Centre meeting with about 10 startups focused on B2B markets. After an incredible 2 hour session at the AC covering everything from fundraising to marketing we headed to the VeloCity Residence for a quick tour. After meeting with a couple of our top students, Dan had a break for lunch before another two hour session with about 20 companies from the Communitech Venture Services Group. We covered the concepts of fundraising, cold calling, pricing models and scaling.
A short break and we were off to our final two hour session with about 15 companies in the VeloCity Garage where we took a very technical approach to the discussion. We talked about effective metrics, the value of cohorts, activity streams and focusing on paid users.
A short break followed before Dan attended our weekly VeloCity dinner speaking to both our residence and Garage teams about his experiences at Flowtown. It was an incredible day and Dan’s stamina throughout the day was impressive to say the least. One of my favorite comments from Dan during the day was that he had never met so many startups in Canada in one day before. I think it was an eye opening experience about what is growing in Kitchener- Waterloo right now.
I promised to write up many of the key insights from Dan during his visit that day. Without a doubt, one of the most valuable areas of advice from Dan Martell during his visit were the concrete steps on how to effectively raise money for your startup. I have taken my notes from the discussions with Dan and broken them down into four key steps:
- Building a list of your top investor prospects
- Setting up meetings with potential investors
- Nailing the meeting
- Raising the round
This post will focus on the activities associated with building a list of your top investor prospects.
Fundraising – Building a List of Investors
Building an effective list of top investor prospects is preparation work that will yield animmense amount of value as you start fundraising for your venture. Your list should include about 50 investors (best case scenario) that have written cheques within the past 12 months (active investors), live within 50-100 km radius and have previously invested in your space. You want to focus on active investors since they will have more experience with investing in startups and will require less work to convince them to write a cheque. Angel investors typically invest because they want to leverage their network, have some fun and hang out with interesting people. By being local the investor is more likely to meet their own criteria for investing in your company.
It is very important that one person on your founding team be assigned the role of building and managing the list throughout your fundraising process. This is a key element of your business success and deserves focused attention. The list itself should contain the name, email, social platforms (Facebook, Twitter, blog, etc), cellphone number, list of companies they have funded (including the entrepreneur(s)) and a column later for capturing how much they might invest. You want to treat your list like a traditional sales funnel where you assign a percentage of confidence to derive a total dollars measure based on their average deal size. For example, Investor X has a 25% of chance of investing in our business and her average investment is $40,000 so you would write down $10,000 in your investment column. Be realistic! You should sort your list based on the amount of money you can expect from investors throughout the process with the biggest money at the top of your list. That means in the initial stages of building your list, you want to have institutional seed investors at the top.
With your list in hand, in our next post we will talk about how to get a meeting with your top prospects. Have you used any of these techniques? What worked well for you?
This is the first of a series of blog posts from Dan’s visit!
Fundraising Advice from Dan Martell #2: Setting Up Meetings with Investors
Fundraising Advice from Dan Martell #3: Nailing the Meeting
Fundraising Advice from Dan Martell #4: Raising the Round