Lessons for Founders from 50+ Crowdinvesting Campaigns (1/4)
How can a founder & the team contribute to the equation?
A few weeks ago we've marked the 50th crowdinvesting campaign launched on SeedBlink (now at 57). It's a good moment to take a look back at all of them and draw a few important lessons for entrepreneurs looking to raise financing in order to scale their businesses.
Our business analysts have seen more than 1500 startups, of which only 50 have passed the Funding Committee and launched their funding campaign on the platform. From this experience, we have identified some patterns and compiled a consistent set of do's and don'ts when it comes to running an investment campaign. More specifically, 50 recommendations that we will share in a series of posts over the coming days.
It is quite known in the startup world that nailing the right thing at the right time could make the difference between make it or break it. Bill Gross - an international serial entrepreneur, proved not so long ago that timing was the key to success for most of the startups he analysed (alongside other factors).
Similarly to this study, our team researched the activity of our first 50 startups that launched a campaign through SeedBlink, focusing on how the founder impacted the fundraising campaign. Here are a few of our findings:
The success of a fundraising process depends entirely on how well the entrepreneur can manage it.
At this stage in startup’s development, it’s highly important for founders to be honest, straightforward, and focus on advertising the added value in the meetings they have with investors, venture capitalists, and those who bring money to the table.
We contribute to your success by showing what makes you stand out from the crowd, but you need to review your business with objective eyes and take every opportunity to provide the information you want investors to know.
You have only a few seconds to catch investors’ attention, no matter if you deliver a pitch in front of them or enlist your campaign on a crowdfunding platform, such as SeedBlink.
Do your best! Start with some of your unique killer advantages and explain very briefly why they should pick you and not their other choices; this will help you stand out from the crowd.
Once you’ve delivered your pitch, continue to keep your advantages in the spotlight in your executive summary, company’s business plans, and PR-related materials.
**Radu Georgescu, Chairman of the Board of Advisors at SeedBlink**
A fundraising campaign is not an easy job. A thoroughly planned campaign requires time, resources, and patience, dedicated to delivering the plan & the reasons why you need that specific investment. As a founder, you should make sure you dedicate enough time to prepare all the needed materials. Try also to swap places with the investors for a moment and ask yourself:
● Are your mission & the problems you’re aiming to solve clearly stated in your pitch?
● Are you transparent enough about your plans on how you’ll use the gained capital?
● Is the technology you are using explained in a way that everyone understands what’s about?
Additionally, plan your schedule productively so that you can allocate exclusive time to answer questions from investors, to reach out to new investors you want to attract, and to organize pitching sessions with those, too.
Before and during the fundraising processes, we’ve noted a few things that work great for founders to get higher attention from investors.
Pitch often and make sure you elevate the pitch each time you deliver it, improving both your presentation and the deck itself. After each pitching session, it’s crucial that you leave enough time for Q&A & feedback; this is when you can get suggestions and questions from those interested in your startup.
Sometimes, this feedback can lead you to improvements that go deeper than the recommendations themselves. You can acknowledge product features that you’re missing or business strategies that you have not explored yet.
● Your arguments should be compelling and your examples realistic
● Be charismatic & deliver an enjoyable experience
● Stay away from buzzwords or too much industry jargon
● Back your user stories with real data
Investors are ready to get involved beyond money if you let them in. Show them regularly (e.g. monthly or quarterly) how your startup journey is progressing, how have you used the money, and what have you achieved. Don’t be afraid to ask for help if things are becoming overwhelming.
Your blind spots might not be so visible to you, but investors are bringing in a more independent, external perspective. They need to be aware of your needs, strengths, and weaknesses.
Giving and receiving feedback is a challenging exercise for many of us. Startup founders and their team are no exception.
A common mistake that many people make is letting their ego become their enemy in unhealthy behaviour. If you are not open to receiving any type of feedback you’ll hardly find the flexibility needed to adapt your business to your client's needs, on the targeted market.
Be open. Be coach-able. Open yourself in front of the community you want to get in, in front of the people whose money you want to attract.
Vanity metrics will help you look good in front of other people but they will not help you attract investors’ attention, or discern how you really perform along with the roadmap you planned. Defining and understanding your core metrics will help you understand if you are on track, and what type of potential is really visible by the investors. Investors can see through the veil. They have experience and will not fall for some shiny metrics.
Another common mistake noted in the Founding Committees of the past 50 campaigns is that, when startups run their campaigns and pitch in front of the investors, most often it’s not clear who’s the CEO. Co-founders tend to define their team roles in a very vague way.
Radu Georgescu, Chairman of the Board of Advisors at SeedBlink
This comes bundled with unclear time allocation, i.e. an unclear balance between:
● How committed the founders are?
● How much time do they allocate? Is it in equal shares?
● How easy is it to get distracted by other commitments or their personal life?
● What expectations do they have from each other?
● Is their vision aligned towards the same goal or do they see things differently?
A startup company works can be compared to a mechanical system: it requires all parts to function in good order and in alignment. Many startups miss most often one or few parts in this mechanism and this can lead them to:
● Try to deliver a product with the wrong choice of technology
● Lacking few technical elements in their processing chain
● Be very bright on the tech side but lack business knowledge
● Lacking the needed skills to run the operational processes smoothly
On top of this, the team covering the whole skillset should not present any dark areas in their reputation, be it of legal or integrity nature.
Investors check the team’s track record before investing in a company, and it’ll be much better if they don’t find something to scare them away.
Investors don’t expect first-time founders to know and grow the business, as well as leading entrepreneurs from the tech industry do. If you don’t know the answer to some problems you face, it’s okay to acknowledge it. Nobody is an expert in everything. Investors look for honesty, a genuine desire to find a solution, and the passion needed to work towards it. Don’t purposely mislead or assume you know everything.
As a founder seeking investment for your startup, you should do your research and get to know more about the investors you aim for, before approaching them. Take a look at their past investments, understand how their thesis aligns with your startup and business plans, and show empathy towards them if you want to start a positive and fruitful conversation.
Do you have domain expertise in the industry for which you’re building your product? The more in-depth knowledge you bring to the table, the better you’ll connect with your future customers. You need to understand their pain points and offer the best solution through the product or service you’re building.
Challenges can have multiple solutions; we found out that, to implement the proper one, founders need to know how to make a decision on the options.
If this is not your first time running a fundraising campaign, include your past successful campaigns as examples of what you can do, what you can achieve.
Radu Georgescu, Chairman of the Board of Advisors at SeedBlink
SeedBlink investors were facing many times situations in which a startup founder could not deliver a successful pitch, either because he lacks the knowledge or because his public speaking skills are not his best. Find the right people for the right job before going into practice.
There were cases when founders had zero or a really low social media presence for their companies or their own. This can be an issue especially for B2B & B2C areas, where LinkedIn or Twitter reach can make a difference.
Social media accounts and their activity can bring an extra layer of credibility, being the place where investors can validate their assumptions and learn more about the founders. Besides social media, founders should have a good presence in the industry-specific publications and events, featuring their expertise.
Make time to attend events, record videos, or run interviews. If writing is something you are comfortable with, many niche publications accept guest post articles. They will consolidate your expertise and credibility in front of investors.
We know things are complicated when you are just starting. We know how difficult it is to delegate. We know it’s your baby. But don’t do it all by yourself. You need a team and you have one. You have a crowd of investors - ask for their help as well.
As a founder, you’ll have to find people who know more than you already do, empower them, and unleash their creativity. Validating different business and marketing actions is not about who’s right between you and your team expert; it’s about constantly experimenting and learning what works best. __
Hey, thanks for reading! That's it for the first part. In the coming days, we will give you the following hot recommendations for running a funding round. See below for a taste of what's to come.
By SeedBlink Knowledge
PublishedOctober 19, 2021