What Wikipedia Can’t Tell You About Raising Capital

BY JOHANNA BUCHWEITZ

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What Wikipedia Can’t Tell You About Raising Capital

BY JOHANNA BUCHWEITZ

Read More

"At the end of the day, you are entering a longer term relationship with your investors, and you want to make sure your values align and you are incredibly transparent and clear about what you need from them."

- Johanna Buchweitz
@LimitlessShow @franklyco_

Hi! I’m Johanna

And I’m a strategy loving, to- the-point, No-BS business problem solver on a perpetual quest to help women achieve the time and money freedom they have always dreamed of!

"At the end of the day, you are entering a longer term relationship with your investors, and you want to make sure your values align and you are incredibly transparent and clear about what you need from them."

- Johanna Buchweitz
@LimitlessShow @franklyco_

When it comes to raising capital there are a few ways to get funding for your company, but today we are just going to cover venture capital (VC) funding. There are a few points you should know before even thinking about pitching your company to potential investors. This point is actually the most important thing, the thing that almost no one ever wants to tell you. Taking on an investor does not mean you are beholden to the investor where you have no say, no voice and just say “thank you so much for giving me your money, here are investor reports of how your money is being put to use and what the growth is.” Your investor is not this scary dictator who you are at the mercy of; they are financiers who believe in your vision and are investing in you with the hopes of getting a great return on their investment. They need you as much as you need them. It is still your company and it is imperative that you think of your investor relationship as a partnership instead of a dictatorship (where they are the dictator). That being said, before you even approach investors, you need to be super clear on how you want that relationship to operate once you secure the funding. 

Your Turn To Take Action

Ask yourself the following questions to create a clear set of guidelines you set with your investor

  • What will you always put first before growth? 
    • Example: you will always act in the best interest of your customer, with honesty and integrity, and provide them with the best experience possible to know they are valued even if that means sacrificing super fast hyper growth. You would rather have long term growth and high retention rates over headline growth rates in the beginning with huge drop offs in customer retention over time.
  • How do you want to communicate with your investor?
    • Do you want to have quarterly calls and presentations? Do you want to chat for 30 min for informal updates monthly? Do you want weekly emails? What is your communication style?
  • What values do you want your investors to share with you?
    • This is so important to be clear on. Again, it is a partnership and relationship and you do not want to be in one with someone whose values and visions are so drastically different than yours to the point where you will 100% have a ton of friction when it comes to making crucial business decisions that they will have a say in.
  • What are you looking for in an investor?
    • Only money, strategy suggestions, introductions/networking, guidance, etc? If you need their time in addition to their money, what will that look like? Be specific on exactly what you want their help with and what that would look like for both you and them. 

Once you are clear on these guidelines, you can start looking for investors to pitch. Most VCs want an introduction, someone to vouch for you before even taking a meeting. Think you know absolutely no one in this space? Don’t worry, high chances are you know someone who knows someone. LinkedIn will become a dear friend of yours. Start by creating a list of VC firms that are in line with your industry and your funding round size. Do your research here. Once you have that list, go to LinkedIn and search for the name of the VC firms, look at their employees and see if any one of them have a mutual connection. You will find mutual connections; reach out to that connection and see if they are willing to make an introduction. Your mutual connection may not actually know them well enough to make that introduction, but don’t worry, keep going through this process, because it is a numbers game. 

Once you get that introduction, send over your pitch deck (for more information about what to include in your pitch deck, check out Slidebean, they have great initial templates), and get that initial investor meeting, make sure to clearly communicate what YOU are looking for in an investor. Beware: you will get many no’s before you get yes’s. Fear not, even Uber got turned down a bit in the early stages before getting funding. It is all part of the process. When you do get those no’s, ask for feedback. You may not always get a response, but it is good when you do to understand where the investor is coming from. Sometimes, it will provide you great insights and advice and help you either improve your pitch deck or improve how you communicate the pitch to future potential investors. It is also important to be able to filter when feedback is solely from the investor’s lens and is not appropriate feedback to apply. This can sometimes be super obvious and at other times not so much; take the time to properly and thoroughly go through the feedback. You also have the power to say NO. Say no to investors who offer you funding who you believe will not make good partners and not align with your values and respect the boundaries you want to put in place. Saying no can be scary, and I get it. You want the funding to help grow your company, you may even feel you desperately need it and cannot succeed without it, but it will hurt you in the long run to take on investors who are out of alignment with you and your company’s mission, vision and values. 

At the end of the day, you are entering a longer term relationship with your investors, and you want to make sure your values align and you are incredibly transparent and clear about what you need from them, how your communications will go, what is important to you/non-negotiables, and ask them as well those same questions you asked yourself. Happy investor relationships are not only good for your company’s growth but also for your peace of mind and it helps to have them championing your success and appreciating your investor relations, when you go to raise your next round of funding.

Happy fundraising!

XO
Johanna

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