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What is a fundraising process?
I often discuss the importance of a fundraising process, but it has recently come to my attention that many of you who are newer subscribers aren’t aware of what this means. So today, I wanted to explain what exactly a fundraising process is and why you should follow one.
A major mistake that many founders make is not having a fundraising process. When they realize they need to raise, they just start reaching out to investors and taking meetings as they become available.
This strategy often fails because investors don’t feel any pressure to make a deal, they know that you have no timeline or deadlines and that you will continue to pitch other investors even after they give you a term sheet. This is often when you end up in a position where someone tells you they want more commitments before they invest or that they want a lead investor. In short, they want to have some process already in place before they commit.
How do you fix this?
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Having a process just means that you have a plan for your fundraising. This is often very simple and requires minimal effort.
Make a list of all the investors you want to reach out to. Don’t reach out over a long period of time. Hit them all within a week to make sure that you are starting the process with investors at the same time.
Set aside a one-week to one-month (max) period where you will take investor meetings. Having them all in this period will allow you to shift into a fundraising mindset and create some pressure on investors, who will get FOMO knowing how many meetings you have.
Set a deadline by which you will let investors know if you are going to continue with them after these initial meetings. This deadline also acts as their deadline for letting you know if they are interested.
These small changes will make a massive difference when it comes to your fundraising chances.
Do you have a fundraising process? |
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