Last week, one of our founders had to leave for a conference in Spain to present a very impressive whitepaper, so we packed a lot of information about non traditional paths to funding and the psychology of fundraising into one extended session. Mysty Rusk, Director of Innovation at USD/ angel investor; Killu Sanborn, Senior Director of Business Development at Oxford Finance; and Jennifer Schroeder, Principal at Tiber Creek Partners joined us to discuss various funding strategies. Killu discussed venture debt options and explained why equity capital is the most expensive capital for a founder to give. Jen focused on highlighting non-dilutive funding opportunities and the importance of strategic partnerships. And Mysty told us about some of the common funding mistakes she has seen during companies earliest stages.

A few takeaways from the session:

  1. In kind partnerships with other companies can be a tremendous benefit to your company with appropriate terms in place. Make sure to protect your IP, especially when entering an agreement with other companies. Do not give away IP in exchange for resources.
  2. Do the proper research. Early companies tend to do the studies that they can afford to do instead of the studies that they need to do to validate their product market fit.
  3. Ask for help when needed. The worst thing that can happen is that someone says no and you end up where you started.

We were also joined this week by Greg Horowitt, an investor, entrepreneur, and thought leader who discussed the psychology of fundraising with us. He iterated the importance of a good story, and what that entails. As humans we look for novelty and patterns; seasoned investors are no different. Investors screen hundreds if not thousands of companies, so Founders need to tell a great story that is intellectually stimulating as well as emotionally captivating. Remember that the story is not supposed to be hyperbole. Investors want to know why you are going to win, why the business is important now and who cares enough about the product to use it. You’ll also need to get them to remember you and to care about your business. So make sure your story explains how your business is going to change the world, how the business serves the customer and how that value is going to come back to an investor.

As we’ve mentioned before, fundraising is a two sided endeavor. Founders should investigate potential investors prior to setting up a meeting. But that doesn’t make setting up a meeting less intimidating. One way to jump start an easier conversation is by asking for advice instead of money. Try finding industry experts and capital providers with portfolio companies in your industry. Reach out to see if you can meet for coffee so to pick their brain. Ask questions and take the feedback. The more you can build a relationship prior to asking for money, the easier the fundraising conversation will be in the future.

Many thanks to Greg, Killu, Jennifer, Mysty for sharing your resources, knowledge and time! We are extremely grateful!

Questions to answer about your business and your product before pitching investors:

  1. Have you already tried to fund your business needs through grants or strategic partnerships?
  2. What does a prospective investor look like in terms of industry expertise, fund size and at what stage do they typically invest?
  3. Which companies are already in your prospective investors portfolio?
  4. Create an investor persona prior to creating your personal rolodex of industry experts and personal investors that you would like to meet. Find out their fund size, how much they typically invest in each company, exist strategies, how much capital they have left to deploy and their guiding values. Make note of who you’ve met with and who you would like to meet.