3 Unexpected Fundraising Secrets From a VC

Oct 14, 2022

I recently did a presentation on “Understanding Venture Capital” for this year’s Main Street Entrepreneurship Seed Fund cohort out of Georgia State University.

I shared #protips on fundraising — lesser known tips and strategies for success when you’re going out to meet VCs and raise money.

Here are 3 keys to fundraising that every entrepreneur should know!

3 Secret Tips About Successful Fundraising

1. Get An Entrepreneur Intro

Investors love intros from other entrepreneurs, especially those in their portfolio.

🤔 Why?

Entrepreneurs have an eye for founder talent. They know what it takes.
Mutual respect and busyness. If they make the time to meet someone and intro them, it’s going to be legit.
No financial incentive for an entrepreneur to make an intro.

Service providers— lawyers, accountants or consultants—may have a great intro, but they also have a clear economic interest in seeing a company raise money.

An entrepreneur intro-ed from a service provider may have a slightly higher bar to traverse into trust.

Exception: a long history of partnership with that service provider.

What about intros from other investors?

Depending on the investor and the relationship, this could work.

There has to be a clear reason why someone passed on the investment themselves.

If a firm only invests in software, and you’re a medical device, it’s pretty clearly not a fit. If you’re deep tech and they’re consumer products, it makes sense why the investor passed.

But know – in the back of every investor’s head is — “The Exception.”

If an opportunity is amazing enough, investors expect other investors to make an exception.

*EXCEPTION* EXAMPLE
Benchmark and WeWork. Benchmark didn’t do real estate. Until WeWork. Because Adam Neumann and his vision were so compelling, they made an exception.

Despite WeWork’s fall from grace, Benchmark made a 40x return. Exception validated ✅

Best way to get an intro to a VC in order of priority:

Warm intro from entrepreneur
Warm intro from service provider or investor in unrelated space
Warm intro from anyone
Meet at an event
Cold outreach
Do nothing (Worst way to get an intro! 🤪)

2. Pitch Your “Worst First”

It seems counterintuitive.

Pitch the investors or firms you’re least excited about FIRST.

Save the ones that seem awesome or seem like a great fit for last.

🤔 Why?

Work out the kinks when the stakes are lower.
Get a feel for common objections and see what responses resonate.
Learn what’s confusing in your pitch and fix it.
Move away from memorization to deliver your pitch naturally and smoothly.

You’ll be more cohesive, polished, confident, and prepared.

THAT’S what you want to show your preferred investors.

This comes from the Salesloft playbook. They raised $245M from top tier investors using the reverse order strategy.

There’s a reason the championship game is played at the end of the season. Save the best for last.

3. Practice, Practice, Practice — For Q&A!

Most entrepreneurs have a well-rehearsed pitch. Rubber hits the road in Q&A.

Q&A feels impromptu, casual, and a chance to see someone’s “real” personality and skills.

How you answer investor questions can make or break your fundraise.

BUT. You can totally practice and prep for investor questions! You get better, more confident, and more polished the more reps you have. (This is why you save the best investors for last!!! See #2)

Check out —> this research to nail your objection handling.

If you do it right, you’ll raise 14x more money than your peers.

This raises the question…

How to practice?

PRACTICE TIP #1
Pitch meetings are like job interviews. You’ll get asked the same 20 questions over and over. (“Common investor questions” feels like a future post…) Different questions, same playbook.

ACTION: Make a list of likely questions. Plan your answers. Practice them aloud. Have a founder friend poke holes. Remember: promotion not prevention.

PRACTICE TIP #2
Go to Pitch Practice! It’s weekly. It’s free. It’s led by the awesome Jacey Cadet, VP of Marketing and Community at Atlanta Ventures. She’s fun, she’s brilliant, she creates a welcoming, safe, and entertaining environment to learn and practice.
Getting in front of someone in the industry for advice without burning an investor meeting is rare and game-changing. She’ll help your pitch and prepare you for typical investor questions.

ACTION: Sign up for Pitch Practice at the Atlanta Tech Village. Fridays at 1pm.

What other fundraising tips do you have? What is “common knowledge” in the VC world that founders may not know?