VC Minute – quick advice to help startup founders fundraise better.
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One of the things we’re going to do in season two of the VC Minute is share new voices and different perspectives with you. Kicking that off today. Is my teammate, Allyson
Hi, my name is Allyson Plosko and I’m a Principal at SpringTime Ventures. I’m excited to be hosting today’s episode of the VC Minute, Building An Investor’s Confidence In You.
If you’ve heard it once, you’ve heard it a thousand times, at the seed stage, the strength of the CEO and co-founders is one of the most heavily weighted pieces of criteria in the investment decision making process.
This is especially true for companies with zero to little revenue. Regardless of how big the potential market is, if investors aren’t convinced this is the team to tackle this particular problem, it’s always a pass. However, it’s rare to see an investor give this feedback because doing so without making it seem like a personal attack is a bit tricky.
Yet, there are concerns that erode investors’ confidence that aren’t personal at all, and in fact are completely feasible to tackle with practice and preparation.
Examples of these correctable founder red flags include muddling the story. If it’s 10 minutes into a conversation and an investor still hasn’t quite figured out the problem you’re solving, the solution you’re building or the value prop, that spells trouble.
Usually confusion stems from too many details that don’t matter, or not connecting the dots to the important pieces that do. Remember, from an investor’s perspective, an unspoken part of the pitch is evaluating whether you can sell the vision of your business. And a key part of that is effectively communicating why your business exists in the first place.
A second red flag is not knowing your numbers. How much revenue did you do last month? How many contracts have you signed? How many people are using your solution? You should know the basic relevant metrics for your business, cold. If you stumble through these questions it gives investors pause that you’re as tuned in as you need to be.
The final one is not communicating. Investors know that fundraising isn’t a CEO’s full-time. But when you’re running a fundraising process, it should be a top priority and reflected in the speed of your communication. If you need more time to follow up on something, just drop a note with a new timeline. You’re running a business and investors are forgiving when things arise, just don’t disappear for weeks and expect things to be okay when you finally do resurface.
Investors are looking at how you communicate pre-investment as an indicator of what you’ll be like to work with post investment.
Quite frankly, mastering these three areas is table stakes for successfully raising a round. Give yourself a fighting chance and build an investor’s confidence in you as a founder by refining your pitch with trusted individuals and your network, reviewing your key business metrics and promptly following through on request.
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