For our final session as part of Seed Sprint, the 4 week investment readiness sprint we hosted with SeedLegals Ireland, Anthony Rose, founder & CEO of SeedLegals, took to the Zoom stage to share his best advice for for unlocking investment, and answer founders' questions.
As always, Anthony’s advice was practical and well researched, and we’ve outlined 10 of our favourite tips here.
Research investors motivations / persona pre-pitch. Investors are motivated by different things, and generally they fall into a persona, i.e. they’re interested in financials, SEIS, new technology, or sustainability. Their different motivations mean they’re assessing different KPIs, and although you’re pitching the same deck, you can pick out different elements of your proposition that will be interesting to them. The more research you do, the more you can tailor the pitch to pique their interest.
Make sure you’re communicating the essence of your business. Despite who you’re pitching and what tailoring you might do for different investors, make sure you’re communicating clearly. Practice pitching to family / friends and ask them to tell you back what they took from your pitch to ensure you’re communicating the value proposition effectively.
It may seem easier to approach VCs over angels, but it’s harder to win them over. It’s quick and easy to target VCs straight away because they’re easy to find, with websites and email addresses, but the likelihood is at pre-seed, you’ll be too early, and will end up wasting time pitching them. Take the time to find and connect with angels, they’re harder to find, but they make the decision themselves, tend to do less due diligence (which saves time), and they expect lower returns. Looking for a low cost way of finding angels? Do a quick search on LinkedIn / Twitter.
Is skin in the game important? Data from SeedLegals shows founders put a median of £26k of their own money into their business. This isn’t necessarily to show skin in the game, but more because investors like to see something tangible (an MVP / proof of concept) prior to investing.
Consider agile fundraising. If you don’t have the money yourself to build an MVP / poc, consider an agile fundraise. This is a way to unlock cash upfront, rather than waiting to close a round. SeedLegals have SeedFast (which acts like an IOU for shares) where investors get a discount to provide capital upfront. It can make a big difference with getting the ball rolling on product build at the earliest stages.
Use SeedFast's to entice investors. Investors typically like to invest when they see others investing too. It validates the idea in their eyes, and they like all of us, get FOMO. Telling investors you’ve already had someone say "yes" to you via a SeedFast shows someone else believes in your idea, and that you've already got some momentum.
Shamelessly promote what you’re doing. It’s hard for some people to shout from the rooftops, but it’s the lowest cost way of marketing at the earliest stages. Go on LinkedIn and Twitter and talk about your fundraise, your milestones, your successes. The more noise you make, the more people will find you.
To justify valuation, demonstrate growth. Building something, launching something, having users, and finally having revenue all adds to your valuation. So remember, the earlier you decide to raise, the lower your valuation will be and the more equity you'll need to give up. Of course, there are exceptions to this but for the most part, if you want a higher valuation, you need to put in the work.
Don’t mention valuation on your deck. There’s mixed advice out there on this, but valuation can change depending on conversations, and you don't want to have different versions of decks you’ve presented with different valuation amounts as it’ll get confusing.
Remember the point of the deck is to get the follow on meeting. The purpose of this deck is to get your foot in the door and secure another meeting, not get investment, so the deck doesn’t need to have all the details. It just needs to get the investor interested.