Hey there, Dan Martell here, serial entrepreneur, investor,
and creator of SaaS Academy.
In this video, I'm going to teach you
how to go boom, raise some money, more than $100.
But I'm going to teach you how to create a fundraising
narrative to help your fundraising
process be super-easy, and be sure to stay till the end
where I'm going to share with you an exclusive resource
called my "Fundraising Like a Pro" training,
which I break down the three phases of fundraising
and tell you exactly how to reach out
and get connected to investors.
Share those at the end.
Let's kick it.
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So the other day, I was on a growth session
with a potential coaching client named Rodrigo in San Francisco,
and he asked me.
He's like, hey, we're about to raise some funding,
but I don't understand kind of like what do investors look for
and how do I create the process and how do I
make it so that it is--
it's easy, and I don't spend six to nine months out there
in the market trying to raise little bits of money
from a bunch of people.
And it was such a great question,
that I actually walked him through the things
that I think need to be present to actually create
a fast and momentum-driven fundraising
process, and really, the narrative, the story
that you kind of want to craft to get investors excited
about your startup.
You know, I've been super-fortunate to have raised
money twice for my last two companies, Flowtown.com
and Clarity, from some of the top investors in the Valley,
so Steve Anderson from Baseline Ventures and Freestyle Capital
and just some amazing dudes.
And what I've learned in helping other entrepreneurs
raise over $150 million of capital
for themselves is there's definitely
a process around the story arc in the narrative.
And that's what I want to share with you in this video.
Step one, two peaks.
This is the big idea.
There are two times--
the best times-- to raise money for your startup,
before you're publicly available,
and after you figure it all out.
Because here's what's normal in a startup world,
is, before you launch, you've got some early traction
and customers using it.
Maybe you're in private beta.
That's the best way to do that.
And things are feeling really good.
And then you launch publicly, and you expect I'm going to get
covered on Tech Crunch and all these media outlets,
and it's just going to-- you know,
I'm going to go on product and it's just going to take off
and rocket ship out of the--
in outer space.
And that's just usually not what happens.
What happens is it kind of goes up, and then it flattens,
and it comes down.
You have churn issues, and you have monetization issues,
you have product hook issues.
And all these things that aren't working out,
and you work your butt off for like another year and a half.
And then finally, you get to a level of product market fit
where the product comes back and there's more traction.
Now, there's two of the best times
to raise is before you're publicly available,
and after you figure it all out.
So what I would say, if you're early stage,
is keep the product in private beta.
Have a way for people to subscribe
to be notified when you open up to the public, and that way,
you can create a lot of excitement
for what the potential could be around your product
and traction in the market so that investors
can feel like they're in early.
Now if you've already launched, unfortunately, you've
got to go all the way through that trough of challenges
and get on the other side.
And at that point where you feel like you're
starting to get that growth curve,
you can get investors back excited.
So I hate to be the burster of bubbles,
but if you've already launched, you kind of
got to go over here.
If you haven't launched yet, use that strategy.
Number two, pre-marketing.
OK, so most people don't realize that.
Fundraising isn't like, oh, I've decided to raise money
and now I'm going to go and talk to investors.
There's actually a whole phase before.
There's three phases.
The first phase is pre-marketing.
This is where you actually start doing
the research for who are the best investors, who
are the entrepreneurs that can get you introduced
to those investors, and make sure that you time it--
the sequence, to create momentum in the conversations
and that you're like-- you're literally meeting with one
investor and maybe two or three investors in the morning,
and two or three in the afternoon.
And you're going maybe to San Francisco and Boston and New
York in a way that's very strategic to create
a bunch of buzz.
Because investors talk to each other.
Especially if you're doing an early-stage round,
you want to make sure that you get,
you know, maybe one lead and a bunch of other people
to help fill out the composition of your fundraising.
So to me, the pre-marketing phase
is how you create a narrative, or a conversation in the market
to get people excited.
And that is around the research of--
and I'll give you the first step is,
only raise money from people that understand your industry
or understand the problem that you're solving.
Too many people are pitching investors
that don't know B2B SaaS, or, if you're
in mobile apps or finance fintech
or whatever it is for you.
And they'll take the meeting because they
want to learn and meet great founders,
but they probably would never have invested.
So there's a whole strategy around that.
Again, I'm going to show you how to get
the "Fundraising Like a Pro" training to teach you how to go
through that filtering process.
But make sure that you allocate at least six weeks
to the pre-marketing phase of research,
connecting with entrepreneurs that have raised money
from those investors, and having those conversations
way before you ever decide to start raising money officially.
Number three, manufacture traction.
Now this is not--
I'm going to preface this by saying this is not
to be deceiving or screw with the numbers
or lie about any level of traction you've had.
All I'm saying is that there is a way to create a hockey stick.
And the way this works, especially
if you're not public yet, or if you can time or sequence
your partnerships or whatever growth.
You know, if you're investing in paid acquisition
and you know you have a channel that that's performing,
you can sequence the growth curve to ramp up.
And I think this is what a lot of accelerators do.
I know that I've heard stories at Y Combinator where
they pretty much say look.
Your goal is to build this growth curve
and just make sure that it continues to grow over time.
So how do you manufacture traction?
Well, if you've got a list of beta users
that have subscribed to be notified
when you open up the product, well then,
it makes a lot of sense.
If you know you're going to raise,
you know, three months from now, to slowly ramp up.
If you had 1,000 people, start with 200.
Let them in the product.
Let them use it.
Get some conversions to pay.
Then let like 300 or 400 people.
Then let 600 people in.
And what you do, and it's look.
It's just-- it's reality.
You're just like slowly phasing people into the product.
You'll create that growth ramp.
And you can do that with partnerships,
so you can like sequence the partnerships in a way
where it kind of builds that momentum.
And this is what a lot of accelerators
teach their founders to do, because it just looks better
as a story, as a fundraising narrative,
and it's something that you have control over.
So definitely recommend that you do that,
so that when you go to the market, you've got
that built out.
Just don't do it in a way that if you
don't have enough kind of gas to sustain
that, then all of a sudden you have a huge dip.
And then you're trying to talk to investors,
because they're going to ask what happened on that dip.
Number four, team story.
So here's the deal.
Most investors at the early stage will always say,
I invest in the person, not the product.
And the reason why, is at the end of the day,
the product more than likely will pivot and shift.
I mean, this is true for every one of the companies
I've built, and many of the companies I've invested in,
over 40 companies, Intercom, Hootsuite, UNBALANCE.
And even though the core problem they were solving
may not have shifted, but the product did.
What was always true and consistent was the people.
So the way I think about the team story
is, if there's any challenges in your business,
maybe you guys don't come from the industry,
or you've never started a company before,
or you're attacking a market that typically only sells
to mid-market or enterprise and you guys have never
done that before.
Whatever the objections you think an investor
might have around your team and experience,
you want to overcome that with advisors, OK?
Or, make sure that if you know that there's an objection
they might have, and you have a great answer
from a team point of view.
Maybe they're like, well, you've never scaled this company
to 100 million users.
And you're like, no, but our CTO has.
He used to work at Facebook.
That's the kind of thing where you
want to make sure that in the narrative,
in the conversation, that you front load into that talking
with investors.
So the way I think about it is, you
want to list all the weak points of the business
model, your team, the experience, and then
fine advisors or front load conversations
about the specific characteristics of members
on your team so that you can overcome that.
So it just slowly takes-- kind of mean,
the truth is, is investors want to de-risk the opportunity.
OK?
They would love to invest in fast traction, high growth,
big market, big opportunity, a clear outcome
for either public offering or exit,
and they want to make sure that there's
little to no risk in regards to where you are in early stages,
where you're at today, and who's going
to fund you in your next round.
And that's the way I think about it.
The team story needs to be rock solid,
and that's the way you overcome that.
So quick recap, four steps to creating
a rock-solid fundraising narrative for your startup.
One, make sure you pick the right two
peaks, before you launch publicly
or after you've figured it all out.
Number two, do the work on pre-marketing phase.
Three, manufacture traction in a way that
shows a growth curve, and four, ensure
that you have an incredibly powerful team story
to get investors excited about your business.
As I mentioned earlier, I want to share with you
an incredible resource called the "Fundraising Like a Pro"
training.
It's something I created a few years ago for my portfolio
companies.
You know, I've invested a ton of software businesses,
and they're always going through a fundraising process,
so I want to give them my strategies
that I've done to fundraise in my last two companies faster.
I mean, Clarity raised $1.6 million in seven days,
and I break down that strategy in that training.
So you click below to get access to that,
and if you'd like this video, be sure to smash the Like button.
Subscribe to my channel.
If there's anybody that you care about,
you think this video could serve,
feel free to share with them directly, and as per usual,
I want to challenge you to live a bigger business and a better
life, and I'll see you next Monday.
Hard to get the money, the money, money.