When talking to fellow entrepreneurs and investors these days there is one thing I hear in almost every call: “Times are crazy.”
And of course, they are partly right. Venture capital investments are at an all-time high and you can spend your whole day reading funding announcements on one of the big startup news sites.
But I still think that fundraising is incredibly hard - at least for most companies and founders. Statistics show that only 1 out of 100 startups gets funding for their idea.
I have seen the ecosystem from three sides of the table. As a founder that was first failing to attract any investor but then raising millions for his startup. As an investor that has seen hundreds of pitches and invested in companies all around the world. And as a CEO of a business that is selling pitch deck & fundraising templates and has helped hundreds of startups raise funding.
Today I am sharing some of my lessons with you so that you can successfully raise funding for your startup in 2022.
We first have to start with understanding how investors tick. Most VC firms work like startups on their own. They are getting an investment from their LPs (=Limited Partners) to multiply this money over the lifetime of their fund.
To do that they split the total amount of money in the fund into a number of investments, depending on the size of the fund. They have to invest in several companies because venture capital is very risky and there are three outcomes for each possible company.
As you can imagine investors are looking for companies that have the potential to become breakthrough companies. Because they are responsible for not only compensating the losses but also the financial returns of the whole fund.
Understanding this is essential for your future fundraise as you have to be sure that your company can be at least a billion-dollar or more company. If you can’t paint this vision, your startup won’t be interesting for most venture capitalists.
Now you are ready to plan your fundraising. And there is a lot you will need till you get the money on your bank account - from creating a pitch deck over to finding investors and managing your captable.
A lot of companies out there can help you with parts of the process. I created the Startup Fundraising Map to give you a graphic overview of the options you have.
So make sure to choose the tools you want to use and then stick with them. Which tools you are using does not really matter in the end as you will make the real differences between getting an investment or not - but the tools will definitely support you on the journey.
A pitch deck is an integral part of every fundraising. You might think it’s just a presentation but there is so much more to it.
When creating a new pitch deck you will likely start with a blank page in a presentation software of your choice. It is now vital that you start with the content first. The best way to do this is to answer the following main questions first:
By answering these questions, you make sure to not forget any information that an investor wants to know when reading your deck.
Many founders tend to include as much information as possible in their deck, flooding the pages with infinitely long sentences, descriptions, and explanations, but the key is to keep the essence of the most important information and present it in a concise way.
After you have finished your content you can move over to the design part. A lot of founders underestimate the importance of a well-designed pitch deck but statistics show that you only have about seven seconds to gain an investor’s attention. And what better way to do that than with a stunning design.
If you are not familiar with a good structure or design you can also use a Pitch Deck Template or hire a freelancer designer that can help you work on it.
If you get stuck during the process of creating your deck, it is a great idea to have a look at pitch decks from successful companies like Airbnb, Uber, and forth. There are several pitch deck collections on the web that can help you understand how the companies’ founders structured their pitch decks, what kind of story they tried to tell, and which metrics were chosen to be placed in their decks.
Practice makes perfect. This is not just a saying, it simply is the way to perfect your pitch.
A great way to practice your pitch is to do peer pitching exercises with your friends or colleagues. During this exercise, you pitch to an audience of people without them making notes or anything. Right after you have finished your pitch, it's one of your friends' turn to do the exact same pitch you just did before, but without having any notes or other guidance.
You can now observe if your audience has really understood your pitch deck and all the information you try to convey. If some important information is missing in your friend’s pitch, you now know that there is some more work to be done before your deck is finally finished.
99% of cold outreaches to investors go wrong and having no access to the right people is one of the main reasons why startups don’t get funded.
So your job as a founder is to build this network early on. Surround yourself with founders, business angels, VC investors, and other multipliers in the startup ecosystem before you need it. Because when you kick off your round of fundraising you can then ask them for introductions to the investors you want to talk with, as they might have already spoken to them or have them on their captable. An intro from one of these people can be very powerful.
Besides that, you should also work on your reputation & reach as a founder. You can do that by being active on social media or in communities and ultimately, investors will not only reach out to you but also see it as some kind of validation.
I hope you liked today’s lessons and are now ready to start your fundraising in 2022. Feel free to let me know if there is anything unclear or you want some extra lessons.
Maximilian Fleitmann is a serial entrepreneur & investor based in Berlin - Germany. He raised venture capital for his startups and has helped hundreds of founders craft their pitch decks to raise money with his company BaseTemplates. Being passionate about everything fundraising-related he loves to share his learnings.