First-Time Founder Guide to Fundraising Amid COVID

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After several years of working with first-time founders and writing my First-Time Founders Guide, many first-time founders have reached out to ask about how to fundraise. Amid COVID, the volume of questions has risen and the need to understand how to fundraise during COVID widened. To help, I’m including the most frequently asked questions and my answers to them in this post. Bonus: all answers are linked to actionable resources.

Review the Q&A and if after reviewing the Q&A…

  • You still have questions: you’re in luck and I’ve partnered with Arlan Hamilton on her Fundraising from Scratch course and you’ll be able to get most of (if not all) your first-time founder questions answered there. Sign-up here and use my partner promo code to get 10% off:
  • You’re ready to pitch: Pitch investors on Twitter in this thread and submit your company to my startup-fund matching tool here (beta funds participating include: Backstage Capital, Harlem Capital, Hustle Fund, WXR Fund and more).
  • You want to get more curated resources and build a relationship with me: subscribe to my newsletter, follow me on Twitter, and attend my office hours.

Q&A

How will COVID-19 impact the fundraising environment?

Know

  • Investing is not business as usual.
  • Investors/Operators are spending 25% or less time on investing activities.
  • Investors’ industry foci are evolving.
  • Less than 30% of funds said they’re looking at new deals.

Expect valuations to go down.

Expect to pitch virtually.

How do I split my focus between fundraising and cash efficiency?

  • The best type of funding is revenue. So, I recommend that companies focus on revenue versus fundraising.
  • In this market, you have to be cash efficient. Cut costs, get scrappy, and if you need to, do lay people off.

What other sources of capital are available?

  • If you are not a VC fundable startup, you will have to look at alternatives.
  • VC funding alternatives include (e.g., loans, crowdfunding). My recommendation: bootstrap.

How do I conduct pre-fundraising research?

Review this guide on what all founders should do before fundraising.

Research thesis-aligned investors and make a list of them.

  • Make sure your pitch deck has the essentials.
  • If you’re raising on a priced round, assess your companies valuation.
  • Prepare a due diligence data room (a google folder works) with what investors will add to their investment memo.

Make sure your crisp on your metrics.

Next, target thesis-aligned active investors:

  • 182 Active Funds
  • 190 Active-Investors
  • 135 Active Funds Investing in Founders of Color

How do I build relationships with investors?

  • Interact on social (e.g., comment on posts, retweet, ask specific questions).
  • Don’t lie.

How do I manage and track my fundraise?

  • Treat fundraising like a sales process and use a sheet, airtable or a CRM platform.
  • When you connect with investors, ask the tough questions (are they active, can they invest) and document notes.

How do I raise as an underestimated founder?

Leverage resources that are specifically designed for you:

  • Resources for female founders
  • Black Female Founder Guide and Resources

Target investors who invest in underestimated founders:

  • 135 Funds Investing in Founders of Color
  • +500 Women Angel Investors

About investing in community-driven cos + supporting our underestimated founder/investor fam. GP @thecommunityvc Scout @lightspeedvp Frmly @backstage

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