More than 20,000 entrepreneurs and investors came together last week at Denver Startup Week to attend the world’s largest free entrepreneurial event. One of the most informative sessions I attended was presented by Anna Mason, Partner at Rise of The Rest Seed Fund. According to Anna, 75% of venture capital dollars are funneled into just three markets (Silicon Valley, NYC and Boston). Here’s a summary of Anna’s top ten tips for increasing your shot at securing elusive venture capital investment in the rest of the country:
- Fundraising is Marketing. Build your funnel. Know your customer. Close the loop. Nurture your relationships.
- Be careful What You Wish For. You enter into a business marriage the day you accept venture capital (VC) dollars. Before accepting any funds, you need to do your research on the VCs because they will hold you accountable.
- Perfect Your Pitch Deck. Your 10-15 slide investment deck should be short, simple and sexy. The deck needs to stand on its own and should focus on team, product, market size and traction.
- Create a Narrative. A startup is only as valuable as the sum of its people. Bonus if you can link personal experiences to market opportunity.
- Competition is Good. No competition means a limited, or non-existent market. Do your research before suggesting no competition exists and when you find it, differentiate yourself.
- Rep Your City. Focus on the strategic advantages of your city – not every successful startup was born in Silicon Valley. Lean in to why your city is the right location to build your business.
- Timing Is Everything. Venture capital is a supply-constrained industry. FOMO can create a VC rush so approach the market only when you are ready – know how much and what you are going to do with investment dollars.
- Be Ready to Scale – Fast. Venture Capital demands significant and rapid scaling to realize returns so you need to be able to hit the ground running when you land that first seed round check. But remember, this is a business marriage so leverage investors’ experiences and networks and you will go far.
- Don’t Use Bespoke Investment Terms. Think twice before accepting terms from an investor that demands terms deviating substantially from standard. Experienced securities counsel will help you understand and negotiate these terms to protect your company and your equity in it.
- Decoding VC Responses. No means no – and probably means never. Thank the VC for their time, ask why they aren’t interested and move on. Not now – this generally means the VC are interested, but you are missing something or seeking investments too early. Ask the VC what they would like to see before investing and follow up when you hit that milestone. Yes means yes…usually. When you receive a yes, but – it usually means they aren’t ready to lead. Keep the VC up to date on your progress and follow up when you find your lead investor.
If your company is ready to raise capital, consider Husch Blackwell as your trusted legal adviser. Our team of startup attorneys helps startups across the country secure tens of millions in funding every year and we look forward to helping you secure the best terms for your deal.