In fundraising, there comes a time when the investor must decide to join or pass on the round.

Many investors hesitate to join as they try to decide.

Here are some steps founders should take to overcome the hesitancy:

Start the outreach to investors well ahead of launching the campaign.

Begin six months before contacting potential investors and indicating you are preparing a fundraise.

Use the six-month window from first contact to campaign launch to educate the investor and provide a few updates.

Craft a strong story and use case for your company.

Take the investor on the journey with you by keeping them up to date on the ups and downs of the business.

Show how short the time from launch to break even will be and how well-defined it is.

In the very early stages avoid forcing the investor to climb the valuation wall.  

The valuation wall is the challenge the investor undergoes to determine the correct valuation.

Instead, use a convertible note with a valuation cap which effectively kicks the valuation question down the road. 

Consider these steps to avoid the investor hesitancy phase.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.