Ellie here, CEO and co-founder of Further Faster.
Startups founded by women receive a depressingly small slice of the overall pie when it comes to funding. That number has hovered around 2% for over a decade, even as the total amount of venture funding has ballooned to record heights.
In order to address this persistent disparity we have to both unpack and understand the drivers of the problem (read more about that here) and we have to proactively work on solutions to help our fellow sisters in entrepreneurship overcome the incumbent barriers and set themselves up for success.
To that end, we have a new program we’re making available to women founders that will kick off in June. Ready to Raise is an intensive, action-oriented, 8 week, virtual program designed for early-stage, female founders. The program prepares you with the essential knowledge, skills, and resources to successfully raise the dollars you need to achieve your goals.
At the end of 8 weeks, you’ll walk away from the program armed with all the materials and strategies you’ll need to successfully navigate the fundraising process.
But if you’re thinking about raising money for your startup, and don’t know where to begin, here are 5 ways to improve your process from the very beginning to set yourself up for the greatest likelihood of success.
1. Expand your knowledge base.
Especially for those considering fundraising as a first time founder, it can be a long, strange process filled with unfamiliar terms, concepts, and decisions that can have long-term ramifications. It helps to build your own knowledge base so that you can make these decisions and negotiate from the strongest possible position.
There is no shortage of books and articles about this topic, but that volume can be overwhelming. To help you cut through the noise, we recommend checking out the following books. These books will help you become familiar with the decision points, the tradeoffs involved, and determine the best course of action to help you meet your goals.
2. Set Your Timeline + Funding Expectations
Fundraising is a long, multi-step process that involves the kind of relationship building that happens over months, not weeks. Therefore, it’s a good idea to make sure you have a realistic timeline in mind.
If you decide to start the process from scratch and want to meet your fundraising goal in just a couple of months, that’s likely too short of a timeframe to be successful in meeting your goal.
For first-time founders in particular, it’s a good idea to bake in at least 6 months, if not more, to run a full process.
3. Create Your List + Qualify Targets
Once you determine that fundraising is the optimal way forward for your company, you have your monetary goals in mind, and a realistic timeline set – you’ll want to start building your list of investors and funds that meet your criteria.
This is a process of funneling down large quantities of information. You’ll want to start by searching large databases of investors from AngelList, Twitter, as well as fielding information from your own networks and communities.
The most important part of the process here is to separate out qualified targets based on fit and proximity to your personal network. What stage do they invest at? What’s the average check size? What are the sectors they care about? How active are they (do they have current investments, or have they not made an investment in over 5 years)? What’s their investment thesis?
4. Establish an Organized Outreach Process
Once you create a list of targets that fit your stage, sector, values, and any personal connections you can use, the next step is to organize your outreach process. There are a number of different ways you can organize and track your outreach – we know folks who have successfully used AirTable, Asana, Trello, or even Google Spreadsheets to run the process. The basic building blocks are to set yourself up with a monthly goal of outreach, and record the outcomes of when emails are sent, if there’s a resulting meeting, add the follow up steps from the meeting.
5. Build Relationships + Trust
We’ve alluded to this throughout the article, but first and foremost fundraising is a processing of building credibility and trust. And while this is a process with very few shortcuts, there are a few ways to strengthen your hand going into a first meeting.
Right off the bat, you should be prepared to establish with a prospective investor the fact that you have hypotheses and testing procedures in place. Especially early on, investors don’t expect that you will have all the answers or perfected product / market fit or even your business model. But what they do want to hear about is the testing and learning methodologies you have in place by which you will come to perfect your product and business model. Leading with information about what you’re testing, how you learn, and how you put those learnings into action goes a long way to building the credibility and trust that is critical to getting deals done.