Today, I’m launching VentureKit Radio, a podcast that shows how domain experts do the hard things in startups. The first episode is about fundraising. My guest, Brendan Baker, worked at Greylock Partners and was the dealflow manager and second employee at AngelList. He reviewed over 8,000 deals and helped hundreds of startups raise funding.
I’ve had my own experiences with fundraising, raising $27 million across three startups. My most recent startup, Breakthrough, raised $6 million from Social Capital, First Round Capital, and angel investors before being acquired.
My talk with Brendan covers how to contact potential investors, create a fundraising narrative, run a pitch meeting, and close investors. I hope you enjoy it.
[2:31] How do you decide which investors to target?
[4:31] How many investors should you target and how long does fundraising take?
[5:14] How do you decide which investors to approach first?
[6:55] How do you contact investors?
[8:11] What success rate should you expect from pitch meetings?
[9:01] What percent of pitches on AngelList were fundable?
[10:59] What defines a great fundraising narrative?
[11:33] How understanding the idea maze can improve your fundraising.
[14:12] Why to make your pitch specific.
[15:14] How investors think about your competition.
[17:17] How do you get good feedback on your pitch?
[19:28] What common mistakes do founders make in pitch decks?
[21:25] Why you shouldn’t bury your pitch’s lead.
[22:27] How do you convey traction?
[25:29] Tips on pitch delivery.
[27:16] How do you handle hard questions?
[28:48] Why it’s critical to maintain your credibility.
[29:56] How do you know it’s not working vs. you just haven’t met the right investors yet?
[30:38] How do you close investors?
[32:14] How do you determine a fair evaluation?
[34:08] Details about Brendan’s latest project, Fabric.
Key Takeaways About Fundraising
● Focus on investors who can invest at your stage, in your market, and have invested in the last 3-6 months.
● Rank the investors you plan on targeting as your first, second, and third choices. Pitch your second-choice investors first. You don’t want to deliver a rough pitch to your top choice.
● Be as narrow as you can while still targeting a roughly $1 billion market. You’ll show discipline and credibility and reduce the number of direct competitors.
● Build a strong network of founders who can help you personally and professionally.
● Investors have a short attention span — hook them in the first few minutes.
● Maintain your credibility. Admit what you don’t know, don’t overstate, definitely don’t lie.
● A key tool in closing investors is offering better terms for closing early.