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Raising Capital vs. Pitching: You Need an Investor Relations Strategy

March 23, 2019

This content is for educational purposes only and should not be considered tax, financial, or legal advice.

 

Who doesn’t love Shark Tank? But statistically very few early-stage investments are the result of a single pitch.

 

Most angel and seed investments are the result of a months- (if not years!) long process of diligent relationship management with a well-selected group of investors.

 

How is raising capital different than pitching?

 

It’s conversational.

 

After initial contact with an investor, you’ll be alternating between sending her updates and meeting via phone or in-person.

 

From this point, you wont use your original pitch with that investor (though you will continue to use your pitch deck for visual support). You’ll be discussing updates, sharing changes / failures / learning opportunities, and importantly, asking for help beyond capital.

 

It’s in-depth.

 

Your pitch deck (and pitch) is the first communication of many with your investor. If you were a chef, it would be the first of a 10-course meal. You’re prepping the investors’ palates, growing interest, and setting the tone for the meal.

 

After your initial pitch, you’ll need talking points on every aspect of your business model and execution plan.

 

A favorite prep exercise that we use at Greenprint: “Walk me through your financial model.” If you’re thinking, “That will take 2 hours!”, you are correct--and your talking points should be prepared to that level of detail.

 

(Note: 2 hours sound like a lot? Your category analysis or financial model may not be complete)

 

It’s long.

 

Typically there’s a minimum of 4-6 months of startup-investor communications before the startup gains the trust of the investor and an investment is made.

 

For seed and series-A rounds, you’ll want to have around 25-50 relationships in the trust stage in order to close the round.

 

To illustrate: 25 investors x 4 hours x 4 months = 400 hours.

 

The Good News?

 

If you’re strategic about your investor relations from the earliest stages, your later rounds will benefit from both cumulative and network effects:

  • The relationships you nurture early may participate in later rounds; and

  • They will provide warm intros to new capital partners.

 

Greenprint Growth Partners LLC is a boutique consulting firm specializing in corporate development for early-stage companies and investors.

 

 

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