This is the final post in our series on how social change startups should approach the task of raising money. In our previous posts, we talked about creative ways to think about securing that much-needed early stage capital for your project. Here we offer some specific tips for building relationships with early funders.
These insights come from Morgan Debaun (CEO and Founder of Blavity), Shannon Farley (Executive Director and Co-Founder of Fast Forward), Monique Woodward (Venture Partner at 500 Startups), Josh Stearns (Associate Director of the Public Square Program at The Democracy Fund), Morgan Simon (Managing Director of Candide Group), Taren Stinebrickner-Kauffman (Founder of SumOfUs.org) and Jennifer Brandel (CEO and Founder of Hearken), who offer a range of perspectives and expertise across technology, philanthropy and venture capital.
The relationship you have with your first funders has a lasting impact on your startup and sets the tone for much of the funding that comes after it. We know that there is no ‘one size fits all’ approach, but there are still some clear best practices and considerations that will improve your chances of securing funding with investors who support your vision.
Do Your Research
Time and time again, the founders and investors we spoke with could not stress enough how important it is to do your research when reaching out to funders. Being informed helps you find the right funders, customize your introduction email or pitch and show respect for people’s time. You’ll need to understand the stage you’re in and the investors likely to invest in you — the size and type of fund, startups in their current portfolio and the focus of the investment are all important considerations. That means knowing if you’re early or late stage, or better off focusing on angels rather than large institutions. As we noted in our last piece, there is a surprising amount of information about VCs on Quora threads, Foundation Center, Guidestar and Chronicle of Philanthropy are key resources for non-profit founders. Word-of-mouth intel can also go a long way — make time to connect with people who were recently funded by your top targets so you can keep up with any potential shifts in strategy.
Find a Networking Strategy That Works for You
Farley says you should be reaching out to enough people to hear at least one ‘no’ every single day while Debaun offers another way to think about making connections: she found that the most productive connections for her and the people she met were those that had been facilitated by advocates in her network. “I don’t believe in the scale game of 500 cold-emails and meetings,” she explains. “For me as a black female founder, that’s a waste of my time. I need people to opt-in before they even meet me. That’s my reality.” You can also try Woodward’s recommendation: investing time in developing a deep relationship with two or three funders you think are a really good fit, and cast your net as wide (but well-targeted) as possible for other connections.
Stinebrickner-Kauffman says that getting the meetings can be the hardest part, and you should expect 25 percent of your meetings to result in funding. She also suggests approaching fundraising much like one would approach organizing, which we talk about more in our first post in this series and our Raising Money 101 webinar.
As we’ve said before, the fundraising space is driven by relationships often nurtured over many months and sometimes years. It’s critical to be able to forge new relationships with people that don’t always start with money. Contee recounts in Raising Money 101 a time where she and the person who ended up being her lead investor talked for two hours on a park bench about their hopes, dreams and childhoods. She explains, “Angels know this pattern you’re about to face better than you do. So he was trying to understand, ‘Are you the kind of person who is unstoppable?’ ‘Are you the kind of person who is going to persevere and figure out how to get around a big obstacle?’”
So how can you initiate these relationships? If you’re sending out cold emails, clearly show that you understand what the funder is interested in and get them excited about what you’re doing. (This Unreasonable Institute postoffers guidance on a number of the kinds of emails you or your supporters will need to write). Present at Demo Days or panels. Catch people at conferences. Even content can be used as a relationship builder. The team at The Democracy Fund uses media as a way to keep up-to-date on the space, and they appreciate when founders send them stories about their work, whether it’s a video or blog post, that they can consider and potentially spark a conversation.
Make a Clear Ask
A lot of the work of a founder is a grit and stamina game. Much of the lift is trying to find the right people and making clear to them the ways they can help. In Brandel’s opinion, ‘maybe’ is the worst case scenario, because it makes it difficult for you to focus on where to spend your time most effectively. Be direct. Ask, “Are you a ‘Yes’ or a ‘No’?” If they’re not interested in funding you at this point, ask if they’d be willing to connect you with other people who might be interested in supporting your startup. Then make it easy for them to help you. Debaun recommends creating a spreadsheet of people that you want to meet, then sharing it with people who are willing to help along with a pre-drafted introduction email for them to use.
Listen to Learn
According to Brandel, “The best part of fundraising was that every time we pitched to someone we would get a new question. Things we didn’t readily have an answer for or hadn’t thought of. If you’re willing to listen and do the homework, you can get much stronger from interactions with the people who don’t give you money. Learn and listen for patterns — is everyone asking you about this one thing? If this one thing isn’t important, then you may not be talking to the right investors.” Really thinking about the kinds of questions you’re getting gives you the chance to learn more about who would be a good fit, and what you’re missing when you’re pitching funders.
Follow Up and Follow Through
Many funders are surprised at the number of startup founders who just don’t follow up after an initial conversation. According to Farley, the people who get into the Fast Forward accelerator program are the founders who are great at follow up and proactively and respectfully seek out coaching. Simon recommends having your follow-up materials well organized in an email or Dropbox without a password, making it easy for potential supporters or connectors to access your materials as needed.
There’s nothing more important than finding your champions and making sure you’re clear about who is aligned with what you want your startup to be and do. Whether you’re for-profit or nonprofit, it’s critical to find investors care about the change you’re making in the world. As Brandel said, “This is a harder path to take. It might take you a bit longer, but ultimately you will surround yourself with better people who will help you achieve your goals.”
This is part of a series on fundraising for startup founders focused on impact, and is a collaboration with Shannon Baker, Director of Partnerships at NMV. We’ve also released an infographic that shares all our tips, which you can find here. Let us know if you have questions or more suggestions for resourceful entrepreneurs.