- Overview
- Startup Funding 101: How to Get Started with Adeo Ressi - October 22nd, 2014
- Onevest Startup Fundraising 101 Webinar - August 13th
- Before You Start
- The Anatomy of a Fundable Startup, by Naval Ravikant
- How to Quickly Validate your Start-Up Idea
- The Ultimate Guide List for Startups applying to Y Combinator
- Do You Really Even Need VC?
- Prospecting Investors
- The new reality of venture capital
- What I Would Look for When Choosing a VC – Knowing What I Know Now?
- Inside The Jobs Act: Equity Crowdfunding
- 5 Key Points To Know About Equity Crowdfunding
- Top 10 Benefits Of Crowdfunding
- Pitching to Investors
- ‘The money is out there’: How to craft your your pitch for angel investors
- Take Your Fundraising Pitch from Mediocre to Memorable with These Storytelling Tips
- The only way to raise money: Make them believe
- Creating Offers
- Due Diligence — Getting Funded
- How To Close Investors
- Next Steps
- Have an On-Going Dialogue with VCs
- Hungry for More?
- GA & Onevest Present: From Founding to Funding - Building a Team and Raising Capital
- How to Fund a Startup
- The Startup Master List of Resources (1,000+ resources)
The only way to raise money: Make them believe
Ignore what you’re reading about the current investment climate. Yep, there is plenty of VC money out there and it’s aggressively looking for a home. But that doesn’t mean it’s so much easier to raise money than in prior years. The number of startups vying for those dollars is greater than ever. With so much noise in the market and so many companies in which VCs can invest their cash, raising money is still about the one thing it’s always been about: making a VC believe.
There are many perceived reasons for why VCs make investment decisions. But the reality is that it’s actually emotion that leads most VCs to invest. A VC only invests when she finds a quality in a startup that touches upon something personally meaningful or important to her; a quality that creates an irrational belief in the startup’s ability to succeed. I refer to this feeling as “emotional resonance”. There are only three qualities that enable a startup to create emotional resonance with an investor. If you don’t create “belief” based on one of these things, take your pitch and go home because there’s no term sheet coming your way.
People: The best way of creating emotional resonance is through your team. Despite popular opinion, VCs are people too! Just like entrepreneurs and employees, they also want to surround themselves with people they love to work with and can learn from. They want to support founders who they deeply feel deserve tremendous success or who compel them to believe in the likelihood of their success. Belief might spring from any number of team characteristics, including the team’s story, chemistry or insights. Given this, it’s no surprise that most VCs will tell you that they invest in people first. And that’s true. It’s the emotional connection to those people that leads to the investment.
Potential: The second way of building an emotional connection is via the potential of your business. The potential might be captured by the mission or the market opportunity or the product. But somehow you need to leave the VC feeling that he or she absolutely wants the problem you’ve identified to be solved or what you’re doing to exist in the world and that it will be big. This is why VCs have a hard time investing in products and companies that aren’t targeted towards them. Something that’s not relatable is impossible to connect with emotionally. It’s the promise of an early stage startup that can help a VC make the emotional decision to ignore the difficult reality that most startups fail.
Proof: If you’re an early stage company, you don’t have it. Move on.
So have only one goal in your pitch to VCs. Make them believe. Create emotional resonance with your people or your potential. If your story doesn’t do that, rework it so that you focus on establishing one of those connections. Present the opportunity in a way that reinforces the excellence of the team or the enormity of your potential. Because the only path to a VC’s money is still through emotion.