At the time of attracting investments, the founder understands exactly why he needs venture capital, which investor will be smart for him, and his startup has already reached certain indicators (very different from startup to startup):
1.It is necessary to start attracting investments 6–12 months before the need for them.
That's right on both sides. For you and the team — it is stability and confidence in the future. You do not have to shake on the run for investors when the money is left for a month. It will be useful for the investor to see the track record of the company, he will be able to follow your progress.
2. Consider the seasonality of venture capitalists.
In Russia — New year, may, summer; in Europe, Asia, USA — its own characteristics. For example, China in January will work the first 2–3 weeks actively, but a week or even earlier before their new year (February 5, 2019) — people will begin to rest.
3. Get commitment from your investor in the previous round.
It is always significant when the current shareholders participate in the rounds — they are already on the Board and know how to develop a startup, see the potential for its growth. If they do not want to consider the option of entering together with new investors, understand what is the point, get feedback from them.
4. Correctly determine the amount of the round.
In this matter, the founders show their imagination as much as possible. I recommend to determine the amount of the round based on the needs of the company + lay a pillow (if you need $1 million, and you understand that they will last for 10 months, lay another reserve for 3 months and attract $1.3 million).
5. Make a list of potential investors.
At this stage, you have already formed a network. Write down a minimum of 50 potential investors and build communication with each individual. Well, if you can imagine friends. Also make a research on investment activity in your industry, competitors. Who has raised money in the last 12 months? Contact them and drink coffee together, it is important to get valuable contacts and advice from the founders who have already passed this way.
6. Identify the weakest points in the first meetings.
Plan 5–7 meetings per week, first meet with those who are less interesting as an investor, to later hold their best meetings with the most desired investors. It is important to hear all the weaknesses of the startup from investors and close them for the first meetings. Always ask directly why you are not interested, ask for an open feedback and actively work on it.
7. Work with each investor after the meetings, create a system of notifications about the success of your startup.
After meeting with the investor, specify if he would like to receive messages from you about the main results of the company. This can be a short letter every 2 weeks or a month about the team, new customers, changes in technology, the course of the investment campaign.
8. Choose an investor for a long time. Make a deal quickly.The investor of the next stage should strengthen your startup. What synergy will your business get from the partnership? Try to get investment from the most useful investor and don't forget about structuring. Making every step, don't forget to ask yourself: is this something my company? Why? What is the use? Investors love strong entrepreneurs who defend the interests of their startup, because perhaps this company will soon become his too, and he will understand your position on the next round of investments.