When you’re ready to raise a seed round, it could take way too much time from you if it’s not plan to be effective. Meeting investors, pitching and getting some of them on board are not easy tasks. In fact, some investors you thought were jumping with you for sure might surprise you.
Anyway, let’s say you’re at the right moment to start the seed round. You need to get in front of those investors, get to know them and get them to know you, and the most important part of the deal: closing it.
Let’s say you already approached those startup investors like a boss, and you want to close a deal with them as soon as possible. There are a few things you can do to make this process as quick as possible:
Line investors up for The Ask
Request a meeting with them or to meet in an event or something related. Disclose the reason why you want to meet with them and let them answer you. Remember this is when you already have a relationship established with them and you’re allowed to do ‘the ask’ from them.
If you live abroad, just line them up all of them for the same week. Give them some time to schedule the meeting. Reach out to them and tell them you’re going to be in town to see investors. You could do this three weeks ahead.
Get An Answer Right There
Most entrepreneurs feel uncomfortable asking for an answer or what would the next process be when they meet the investors. They end up leaving with nothing. Ask for an answer, and provide a system to get the answer. If the investor needs to think about it, tell them the timeline you’re working on and when would be best for you to hear back from them.
You can gently remind them about it by email and provide some updates if you have them, but it’s important you give the image that you ask for what you want, and you don’t want to lose anyone’s time.
Everything in writing
Investors are busy and they a lot of startups. You can’t expect them to remember absolutely everything you have agreed upon in person. That’s why you should always send a follow-up email after a meeting, summarizing all the decisions you guys have made.
If you have the meeting in the morning, send it on the afternoon, and if you go for drinks at night, send it the morning after. It has to be shortly after so the information is still fresh in their memory. That way they can validate everything you put in the email. You’re actually helping them to have all those ideas and decisions organized.
Know your term sheets
You really have to know and understand everything about the potential term sheet. Most investors have a very standardized system that you should know beforehand. They can work around exceptions (depending on every case), but you should find out what they normally agree to.
The best way to push for modifications is to have already signed investors with the conditions you want to implement. That way they will see you’re trying to make it fair for everybody.
Don’t lose momentum
It seems I haven’t learned this. It’s quite important to get things done when they’re hot. If you lose momentum, the excitement about your company will fade away. Make sure you set timelines and gently urge investors to make a decision before it’s too late.
It always helps when others are also interested in your company. Of course, you have to be careful about not being too much of a sell-out for the highest bidder. You have to appreciate who are behind the cash, and what they mean for your business.
If you don’t close the seed round on time, it might mean you can’t move on with operations, so every second counts.
Don’t lie about your numbers, experience, expectations and the reality of the company. They will detect any BS you try to sell them and when they realize you haven’t been honest (because they will), they will ose trust in you, and that’s a deal breaker.