I spent the last few months of 2014 raising a seed round for Deckee and I’ve honestly had more fun at funerals. After finishing the Slingshot Accelerator earlier in the year I focussed on this process wholeheartedly instead of more common goals like increasing revenue or our monthly growth rate.
Why? Well, in almost all other cases I probably wouldn’t advise this path, but as a solo, nontechnical founder funding was always going to be essential for me to take Deckee to the next level. I genuinely believed that my determination and the strength of my idea would be enough to get me over the line, and fortunately, it was.
It’s critical to have the right people involved at such an early stage of a startup and I couldn’t be happier with the investors and advisors that eventually became a part of Deckee’s inner circle. They have since brought industry experience, a valuable network and can personally relate to the problem we are trying to solve. This proved to be a great advantage as we prepared for our launch during last Summer’s boating season.
The tips below will be most useful for founders or startups that don’t quite have enough traction to qualify for ‘angel’ investment. The irony is that you should definitely be working on those two things rather than reading this.
Two essential documents
Websites like AngelList are great but adoption in Australia is still low and they aren’t useful when you are really early stage. You should be trying to raise from highnetworths that are interested in taking a punt. Most of them will understand that investing in an early stage startup is no different that betting on a racehorse – the good thing here is that you can determine what information goes in the form guide.
A one pageris not a pitch deck. It’s a one page PDF that should address all the key questions your potential investor may initially have. If you don’t have any design skills, software like Canvawill allow you to put together a visually striking doc which will usually be enough to convince someone that your startup is legit and it is worthwhile to meet you for a coffee.
If coffee goes well, and for me they generally did, I then had a detailed Information Memorandumready to send in a follow up email. This is essentially your business plan which provides a thorough overview of the all key aspects of your company. I had comprehensive breakdowns of our product, market size, financial forecasts, advisors, competitive analysis, potential exit strategies and how the investment will be used.
If you don’t have this level of information prepared you are virtually no chance of progressing discussions any further with your prospect beyond the cappuccino.
Exhaust your network
This was one standout piece of advice that Jeremy Colless from Artesian Capital gave several Slingshot companies last year. In hindsight it is an obvious thing to do, but you don’t really think about how many people you know until you write down a list. I started with friends, family and former colleagues. I then moved to anyone that had some kind of commercial or personal affiliation with the industry I am targeting. These people will quickly grasp your concept and if your idea truly is something that people want, they will be more easily sold on its potential.
It should be easy to come up with the names of at least forty people. If you organise five facetoface meetings a week and ask for at least three referrals from each person, you will quickly form valuable connections and ultimately discover the potential investors you are looking for.
Find your champion
It is highly advantageous to have a well connected individual from your industry that is an advocate for the vision of your business. They can bridge the gap between contacts that were previously unreachable and add a whole new level of credibility to your idea.
Follow up and persevere
I can’t emphasise this enough. Be forward. Ask the right questions. Finish every meeting by saying, “with some further consideration is this something you can see yourself getting involved in?” and agree on the next steps to be taken. Follow up in the next 24 hours with an email that covers any key points discussed. If you don’t hear back after a week, don’t be scared to pick up the phone. People are busy with their own businesses and families and simply forget, even if they do really like your idea. If anything they will appreciate your determination and see it as a good judgement of your character.
At times I went days, even weeks feeling like I had made no progress. In hindsight I realise that is normal. But when the right people came along and everything fell into place, Deckee received its first round of funding in a matter of days.