Nathan Beckord
Showing that you already have the support of interested funders will generate even more interest.
Are you a bit nervous about approaching investors? You're not alone. Sometimes you don't know how to present yourself as a founder when it comes to presentations. Were you too reserved in school or do you express your enthusiasm openly?
Luckily, Loop's Brian Gannon has some tips for doing just that smoothly while promoting his company: He raised $8 million in three rounds of funding to fund Loop's digital photo-sharing frame, which makes it easy for families to exchange treasured photos.
So, how did he do it? In this article, Brian shares his thoughts on how to build FOMO, how to prove that you have traction, and various other tips that will help you close a round and get the funding you need.
How to attract investors to your startup
1. Prove it
Social proof is a way to show support from interested donors, or as Brian puts it rather crudely: “These celebrities trust me.”
If you can get a respected or well-known investor in the community to vouch for your startup, you'll be off to a great start. Talk about your idea when networking. Brian did this and attracted the interest of one of the early investors in Ring doorbell.
2. The early honeymoon phase
We often hear that investors want to see traction, and to an extent, that's true, but there's something to be said about the power of the concept stage.
“There's actually a nice honeymoon period in the beginning when you have the dream and no data to disprove it,” Brian says. “I encourage people to embrace that period.”
Some investors like these types of opportunities because the entry price is often lower than it would be once the company has gained traction, positioning them as an opportunity to get in at the earliest stages of an idea.
3. Streamline your outreach
You don't need to reinvent the wheel when it comes to investor outreach, and as with most things, simplicity is best.
Does this mean you'll send the same formatted email to every investor in your contact list? No. But you can create a basic format that you'll replicate when you reach out. Customize a few details, but keep the basics.
Brian recommends keeping your message short and to the point: “Here's what I do. Here's what we make. Are you interested? Let's give each other a call. Be very brief and to the point.”
4. Plan lots of meetings
Brian admits that he underestimated the number of meetings it would take to close a round. If you thought it would be a few dozen, think hundreds. Even Airbnb and Square had over 120 meetings, but these are very popular concepts. If you were something more unorthodox, you might need many more meetings.
Sometimes meetings come up unexpectedly. An investor wanted to connect with someone at an event, but was having trouble finding an Uber. Brian offered to give them a ride in exchange for listening to the presentation. The passenger ended up becoming an advisor for Loop.
5. Find followers
Instead of looking at meetings with investors as a chance to trick someone into investing in your startup, think of it more like a date: “You're not trying to convince people, you're trying to find people that truly believe in you,” Brian explains.
You're looking for people who already know and understand you. You're not trying to change or fix someone to get them to believe in you. Just like your one true love, the right investor will be on the same wavelength as you without you having to sell them too hard. They have experience with concepts like yours and understand your value. If that's the fit you really need and it takes hundreds of meetings to get there, it will be worth it when you finally get it right with someone.
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6. Confidence sells
Confidence and poise communicate a lot to investors: pretending that you are the one in power, not them. Yes, they have the money, but you have the opportunity. You have the power to multiply their money and lead it to something bigger.
Brian recommends not just showing up to the conference to present, but also bringing some good news with you: Maybe another investor deal. Maybe a new product feature. Anything that shows things are going well so they'll be excited to join you.
Another thing to keep in mind? Your body language. “Investors have seen thousands of entrepreneurs; they can see through your fears and all your bullshit,” says Brian. Be confident. You built a startup from the ground up. You're impressive and making for a good investment opportunity.
7. Selling momentum and creating FOMO
Showing traction is a great way to prove momentum and make investors want to join in the fun. Brian suggests scheduling meetings with potential investors early and saying: We plan to raise funds in the next few months. In fact, it may be ready sooner.
If your presentation is compelling enough, you may receive an offer to write a check at such an exploratory meeting.
Is it too late to pretend you're not funded? Another tactic is to put a deadline on your funding round. In reality, you might not have a set date for when the round will close, but it helps create the sense that you need to prepare to raise money and start working on actually getting your product moving.
Another FOMO-inducing factor is asking for slightly less than you need. It's better to oversubscribe a round than to not meet your goal; it's more impressive from a momentum standpoint. But be careful not to inflate it by 3 or 4 times and completely balance it out, as that will dilute everyone's share.
8. Combine truth with mystery
Don't lie to potential investors or misrepresent your projections; that's bad news all around. But with the right language, you can build up the hype you've created. One way to do this is to make investors feel important; no one wants to know if they were the last person you pitched to.
Is there a better way to create a frame? You are the first investors we have contacted. It may be the first investor you've contacted that week or month, but the investor doesn't need to know that.
In other words, you don't have to reveal every detail — maintaining an air of mystery without lying is a healthy balance.
9. I can relate
It's easy to be general when proposing something. Showcasing a broad concept and its range of uses makes your solution seem more appealing to a wider audience.
But it's more effective to break it down into specific use cases. Brian has found that presenting with concrete examples is more effective than using generalizations.
As we began using customer testimonials to explain all the real pain points that Loop had alleviated, we found something that resonated with many of our investors who have families. Telling one person's story brings the product to life in a way that a bullet point on a slide just can't.
And it's that sense of realism that makes all the difference in reaching the right investors.
This article Foundersuite Stories How to raise PodcastsA behind-the-scenes look at how startup founders raise money.
About the Author
Nathan Beckord said: Founder Suitedevelops software for startups that are raising funding. Nathan Funding Stackis a new platform for venture capitalists and investment banks to raise capital and support their clients and portfolio companies. Users of these platforms have raised over $9.7 billion since 2016.
