(photo courtesy of Heri at Montreal Tech Watch)

We held a demo day for the first grads of our Founderfuel program this week. It was an amazing event with over 600 people and nine awesome presentations from the teams. While the teams nursed some well-deserved hangovers the next morning I put together some suggestions for how they take the interest generated at demo day and turn that into actual investment.

With the proliferation of accelerator / incubator funded companies in the market today, hopefully this advice will apply to you as well. Starting on the day after your demo day, here is what I recommend:

1.) Follow up today. Contact each person who expressed an interest. Unless you feel someone is only mildly interested, take a “presumptive close” approach. Assume they are in and help get them to the finish line. Don’t get into custom due diligence sessions with each potential investor. Instead, send them your deck, ask them what else they need and if they have a subscription amount in mind. You want to do this without coming off as cocky!

2.) Build a pipeline: Create a simple spreadsheet to track your leads, level of interest, potential subscription amount and next steps. Keep it updated and fresh.

3.) Broadcast: Beyond folks that you met yesterday, who else can be added to your pipeline? Are any of your mentors potential investors? Can they recommend other potential investors? Can you use Angel list?

4.) Get a lead: Rounds come together quicker if you have a lead investor. That person should be taking at least 30% of the round. If you can agree on a deal with that person you can use that to get people on board.

5.) Secure the $, then optimize the deal: While valuation matters, the most important thing is to get the $ you need to get to the next big value-creating milestone. Don’t lead with a deal structure, but instead focus on the $ you need and what you will accomplish with them. ┬áDon’t cave in and do whatever investors want, but don’t be greedy.

6.) Valuation range: We all hear about crazy valuations in the Valley. Those valuations are not found elsewhere. Make sure you know what valuations are for companies at your stage in the market where you are trying to raise.

7. Time is the enemy: The more time that passes from 1st interest, two things happen: i.) Investors realize that they can live without that particular deal and there is always another great one around the corner; and ii.) You lose the opportunity to sell the dream and instead have to sell actual results.

It takes a full time dedicated person to close an investment round. While some commitments happen on demo day, in most cases you need weeks if not months to close your deal. The faster you can capture that initial interest and close it, the faster your deal will be done.

Category:
Angels, Raising Capital, Venture Capital
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  • Dave Litwiller

    Very good advice, widely applicable to young companies seeking early stage financing. Similarly important in my view is that each successive meeting with candidate investors achieve a rising sense of excitement and opportunity to build momentum toward a completed financing.

    http://www.scribd.com/doc/48175284/Cash-Connectio

    • http://startupcfo.ca Mark MacLeod

      Thanks for sharing the link Dave.