💰 How to Fundraise VC - Meetings, Follow-Ups, and Closing

Toby Egbuna
February 15, 2024

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Note: this is the what behind CREAM. Over the next few weeks/months, I’ll be sharing the how. Subscribe to my newsletter to get these insights straight to your inbox.

CREAM:

1. **Consider** if VC fundraising is for you

2. Ready your documents

   1. Part 1 - Pitch deck and communications

   2. Part 2 - Financial model, market calculations, and data room

3. **Establish** an investor pipeline

4. Activate your fundraising round ← todays newsletter

5. Maintain relationships

You’ve done all this work; now it’s time to bring it to life. Let’s raise your round.

Activating your fundraise is a 4-step process:

1. Meeting with investors

2. Following up

3. Managing your investor pipeline

4. GETTING THE CHECK(s)

Meeting with investors

The first meeting

Most of your VC meetings with start with a first call. This is scheduled after a connection has been made and the investor agrees to take the meeting with you.

Since you probably made a connection to the investor via a warm introduction, they should already have access to your pitch deck. This first meeting is an opportunity for the investor to dive into any parts of your business that they have questions about. Typically, the first meeting goes one of two ways:

1. You walk the investor through your entire deck and they ask questions either intermittently or at the end

2. You give the floor to the investor so they can ask specific, targeted questions

Meeting with investors is all about confidence. The more confidence you exude, the easier it is for the investor to buy what you’re selling. A power move to try is, rather than jumping straight into going through your deck, to give the investor an option of how the meeting can go. Let them know that you’re happy to go through the full deck or to keep it casual and answer specific questions after sharing your elevator pitch/one-liner. This shows that you’re confident in whatever direction the meeting goes, but it also is your first opportunity to see how interested the investor is. If they ask for the full pitch, they probably haven’t read through your deck. That’s not necessarily a red flag, but it is definitely something to note if you start to have doubts about the investor’s interest in your company.

Here’s how I suggest running your first meeting:

1. Small talk (5 min) - talk about anything other than your company. An easy conversation starter is “Where are you calling from?” but if you want to take it up a notch, do some research about the investor ahead of the call. If you can comment on where they went to school or their favorite sports team, you build rapport, and that rapport might get you your next meeting.

2. Pitch/conversation (15 minutes) - this is where you’re either going through your deck or just answering the investor’s questions. The more you speak with investors, the easier this gets. Eventually, you’ll notice patterns in the questions you get and you can start to prepare answers for those questions.

3. Ask the investor questions (5 min) - always take some time to ask the investor questions about their fund and how they invest. You should walk away from every meeting with an understanding of:

   • Whether or not they lead rounds

   • The average check size

   • The investor’s process

4. Confirm next steps (5 min) - take the last five minutes of the call to figure out what the next steps are. Ideally, you walk away from the meeting with an expectation of when you will hear back from the investor or a confirmation that they aren’t interested.

VCs are notorious for being ambiguous in their feedback. They will very rarely give you a flat-out “no” but they’ll also drag their feet in giving you a decision. Apply pressure to investors by asking them what their interest level is in your company and what you’re doing. Most of the time, you’ll be able to tell their interest level based on their body language; even if you don’t get a straight answer.

Also, your goal in this first meeting is not to get them to write a check. Your goal is to get another meeting. Even the most experienced, pedigreed founders aren’t closing an investment after one meeting.

Follow up meetings

For those investors who are interested, you’ll likely have at least two additional meetings with other members of the fund. These are much less standardized than the first meeting, but here are a couple of formats to be prepared for:

The group pitch

• Length - 45-60 mins

• Number of people - 4-6

• What to expect - This is where you pitch the broader team of investors at the fund. If you get here, the fund is genuinely interested in what you’re building. The call likely has at least one Partner from the fund. Expect super detailed questions. Partners have seen it all. They’re not going to give you a lot of fluff; they’re going to ask you questions based on what they’ve seen other companies in your space get wrong/right.

The potential customer pitch

• Length - 30 mins

• Number of people - 3-5

• What to expect - the investor will bring you on a call with a few people in their network who could be potential buyers of the product. They want to see how they react to seeing the product demo but also how you as a founder do selling the product.

The showcase

• Length - 45-60 mins

• Number of people - 4-6

• What to expect - the investor will introduce you to some of their LPs (limited partners; the people that gave the investor money) and ask you to pitch them. If you get here, the investor is probably going to cut a check. It’s more of an opportunity for the investor to get their LPs excited than anything else.

Following up

If you’re a founder with a great track record or if you’re building in a super hot space (like AI right now) and you have multiple investors trying to give you money, then you don’t need to worry about following up; the investors will contact you.

If that’s not you (and it probably isn’t if you’re reading this guide), then your job after and between meetings is to follow up.

Getting to ‘no’

Think about fundraising like a game. The object of this game is to get to no as quickly as possible. Remember, 95% of the funds you speak with will turn you down. The sooner you get to no, the sooner you can get back to contacting other investors who might give you a yes. You want to follow up as quickly as possible after every meeting and make sure that you’re checking in with investors regularly for updates.

After your first meeting, send the investor a follow-up email to thank them for the time and link to your initial diligence data room (pitch deck, financial model, and market calculations). If there was anything else that you spoke about sharing in the meeting - such as a recorded demo or customer list - include that too. You want to send this follow-up no more than one hour after the meeting. Investors are busy, so try to capitalize on the recency of your meeting.

Here’s a template that you can use to follow up with investors after the first meeting:

Hi <first name>,

It was a pleasure speaking with you today. <insert note from conversation>. Looking forward to continuing the conversation.

As discussed, please find a link to our data room here <insert link>. I'll circle back next week to check in. If you have any questions or if you'd like to jump on another call in the meantime, just let me know.

Talk soon,

Toby

You can tailor this message for any follow-up meetings that you have with the fund.

In a perfect world, you don’t even leave the meeting without a confirmed set of next steps and a timeline for an update, but again, investors can be very coy, so bring things back into your control and let them know when they can expect a check-in from you.

How often to follow up

Make investors give you an answer. If you let them leave the door open, they will. Unless you get a clear answer on when you can expect to hear back, I would follow up with investors every 2-3 days. Use your follow-ups to let them know how the round is coming along and/or to share any progress that you’ve made as a company, like signing a new customer or press.

Managing your investor pipeline

As you’re taking meetings, you want to make sure that your investor pipeline is kept up to date. This shouldn’t take you more than 15 minutes a day to do, but it will save you loads of time and keep you organized as you finish out your raise.

Go back to your investor pipeline from the Establish section of CREAM and add a column for Stage. This is what we’ll use to track where you are with different investors. Here are the options you should include:

1. Target - you’re targeting this fund but haven’t reached out or asked for an intro.

2. Contacted - you’ve requested an introduction but haven’t connected with any investors from the fund.

3. Connected - you’ve connected with the fund and you’re waiting on a confirmation for a meeting.

4. Meeting scheduled - you’ve scheduled a meeting with the fund.

5. Meeting held - the first meeting has been held and now you’re waiting on next steps.

6. Second meeting + - you’re in diligence with the fund and other investors from the fund’s team are looking at the deal.

7. Asked for terms - the investor is in final diligence and has asked for a term sheet ❗

8. Documents signed - term sheets have been signed ‼️

9. Declined - the investor declined to invest.

10. 👻 (Ghosted) - the investor never got back to you after your first meeting.

Here’s how my CRM looked during my raise:

As you can see, I could easily see where each investor was in the process, and by clicking on each opportunity, I could get a snapshot of how much they invested, who my contact was at the fund, and a few other notable tabs.

If you’re interested in getting access to my fundraising CRM, shoot me a note at [email protected]!

GETTING THE CHECK(S)

If fundraising is a marathon - 26.2 miles - then this is the final .2. The race is not over, but you can see the finish line. Finish strong.

Usually, an investor will tell you that they want to invest over the phone or a Zoom call. After this call, wrap things up as quickly as possible. Ask your legal counsel to send the term sheet to the investor for signature, and once it’s signed, make sure to send your bank details over to the investor so they can process the wire. There are, unfortunately, horror stories of investors signing term sheets and then reneging on their promise, so you can’t celebrate until you see the money hit your account.

But, once it hits your account, please celebrate. Don’t play it cool.

Fundraising is one of the most taxing things that you’ll do as a founder. So, when you get that call that confirms that all of the hard work was worth it, let it out. Tell the investor how appreciative you are of their commitment to you and your vision. Take the afternoon off to do something fun with people you care about.