Doing it Right – Tips to Fundraise in 2009

Two weeks ago I had the pleasure of attending Astia’s Doing it Right program in NYC.  It was a three day event to help women entrepreneurs gain important skills & insight into developing an effective fund raising strategy, negotiating savvy term sheets, navigating the due diligence process, and leading a successful company.

Here are some takeaways:

• First impressions are important
  When you present your idea you have to WOW the VC.  Dress appropriately and know your pitch in and out.  The first impression that a VC gets of you will tell him how you run your business.
• Network a LOT
  Who introduces you into the conversation, is a big deal.  VCs get tons of business plans on a daily basis.  If your business plan comes with a recommendation from someone that a VC knows, it is guaranteed to be looked at before the other plans. Also, it was recommended to build a relationship with a venture capitalist before you start working with their firm.  A venture capitalist that “gets” you and your idea will help you sell your idea to their firm.
• Do your homework
  Always do as much homework as you can.  With all of the information available online, market research is almost FREE.  You can get a lot of insights from read blogs and blog comments.  Also, who you are, who knows you, and your experience will allow the VCs to “forgive” or overlook the things that you’ve missed.  Here are some DOs & DONTs to ensure you have a great meeting with a VC:
  • Tell us what your product or service does in really simple terms (2-3 mins).  If people can’t repeat your pitch,  then your pitch is not good.
  • Tell us what problem you’re solving.
  •  Keep your power point pretty short.  Don’t talk and drive (have someone else change slides)
  • Highlight what you’ve already done with the company.  Don’t just focus on what you WILL do. Traction, customers, what you’ve already built
  • Have a couple of financing alternative … this puts you in a stronger position to negotiate and get the deal that you will be happy with.
  • Know your market & potential partners
  • Don’t put your valuation expectations on the PowerPoint.
  • Don’t say you have no competition
  • Don’t put your EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) on your PowerPoint.
  • Don’t ask a VC to sign an NDA unless you have a hard science product
  • Have a sales strategy, sources of revenue & marketing plan with a timeline.
  • Specify the use of funds
  • Lay out the exit strategy
  • Know the answer to: what are your capital needs over time?
    Correct Answer: I’m raising 5M now and in one year we can both figure out how much more we need to move forward
  • Know the answer to: What is your thinking about running the company.
    Correct Answer: I have the fire in the belly…we will find the right scaling CEO (The role of the CEO is to have the knowledge power & experience to scale the business…VCs invest in the CEO)
• Bring a Man with you
  It is harder for women to raise money because most of VC money is in the hands of men and it’s harder for men to identify with a woman and understand what she’s doing.  Advice: When you show up to do your pitch, bring a man with you…an adviser or someone who is a part of your team.

The venture capital market in 2009 is pretty slow but I was pleasantly surprised to hear a lot of the venture capitalists say that a great idea with a great management team will get funding in ANY economy.

I was very impressed with the event and all of the panelists that were speaking and presenting.  Are you an entrepreneur in a high growth market looking to raise capital?   Apply to Astia to access the fund raising program that it provides for women-led companies.

Related posts:

1. Inspiring Women Series – Female Internet Heros
2. Women 2.0 Business Plan Competition
3. What Venture Capitalists Are Investing in for 2009
4. All Things Media Venture Capital Forum
5. 40 tips to transform your business