How to fundraise in an economic downturn
Are valuations down? Are investors dropping out? Here's what we're seeing at SeedLegals, and how to increase your invest...
We recently hosted a webinar with HubSpot’s Anna Gordon where she explains how a CRM tool can help your fundraising process. Anna has also written this blog to give you her top tips on nurturing your relationship with investors.
You’ve been dreaming of starting a business for years. Working for yourself, making your own schedule, and sharing your talents and your passion to make the marketplace and the world a better place.
It would be wonderful if you had savings at your disposal that could cover all the costs of starting your business. But if you’re like most entrepreneurs, you’ll need to rely on the support of investors to build and scale your business.
The only problem? It takes a lot of time to fundraise. With a lean startup team, a significant amount of your time is going to be spent on seeking out investors, which means less time to actually build your company.
Thankfully, successful fundraising boils down to having the right tools at your disposal. We’ll show you how to use some of them to your full advantage.
There are a lot of sources of capital for you to turn to, but no fundraising plan is one-size-fits-all. Who you reach out to depends on your business model and what works for your specific business. Some of these sources include:
Just as a sales team must source and qualify a list of potential customers, a startup must do the same for potential investors. Notice that we said qualify in addition to source. That’s because just like not every customer is going to be a good fit for your business, not every investor will be either.
Whether you are working on an investor list for your initial round of funding or have moved on to later rounds, it’s essential for the investor to be the right fit for your business.
This step is about doing your research and your due diligence. Look at potential investor’s past activities as a basis for evaluating good fit.
What else can they do for you? Will they help you beyond capital?
When it comes time to create your list, you’ll have two options for building your list.
Check out the SeedLegals-HubSpot webinar for a comprehensive overview of how to manage your fundraising with the help of a CRM tool:
There are three common mistakes that startups make during the fundraising process. Being aware of these mistakes and knowing how to avoid them can save you time and money at a vital stage of your business.
Though you’re dealing with investors and not customers, you’ll still need to walk them through a buyer’s journey. This begins with qualifying investors so you don’t waste time and energy pitching to the wrong investor. Your sales process will differ depending on your business, however, it will likely follow steps such as:
Using a CRM like HubSpot will help you keep all of your investor information in one place, templates allow you to send commonly used outreach materials at the push of a button, and you can manage your investor pipeline with reminders and tasks, allowing you to follow up with potential investors and avoid having anyone fall through the cracks.
Before investors are willing to provide financial support for your startup, they’ll want to see your financials. You need to have investor metrics ready to present to show them that you are serious and have a plan in place.
Depending on your business model and stage, investors may ask to see:
A CRM will allow you to pull these metrics quickly and view them in a clearly displayed dashboard.
In order to convert a potential investor to a source of funding, you’ll need to create a steady flow of communication. This is broken up into three stages:
Trying to do this without the help of a CRM system would likely lead to stress, lost funding, and drowning in a sea of sticky notes. It would be nearly impossible to keep track of who you are in contact with and where they are in your pipeline, who is interested in supporting you vs. who is not interested (and whether it’s not now or not ever), and who has already invested in your business and needs to be kept in the loop going forward.
Like any other job or responsibility, having the right tools is essential to your success. Fundraising for your startup is necessary, struggling is not. With an all-in-one CRM platform like HubSpot’s, you can spend less time tracking down the information for leads, and more time building your business. SeedLegals members are eligible to apply for the HubSpot for Startups program and unlock benefits such as 30% off the HubSpot CRM suite, free resources for scaling startups, and access to our integration benefits.
Author: Anna Gordon, Partnerships Manager, HubSpot for Startups UK&I
Anna manages the HubSpot for Startups program for UK & Ireland. Through partnering with VCs, accelerators and incubators, she educates startups on all things sales and marketing. Prior to HubSpot, Anna worked at Enterprise Ireland where she both advised and secured investment for Irish tech startups and SMBs.