The ONE “Must-Do” When Fundraising

"Prequalifying investors" sounds like a tedious task if you don’t know the investors personally. A lot of what you can do seem obvious, but many founders just don’t take the time to do their research.

Cold calling and spamming VCs with your executive summary is never a good way. I have talked to some smart entrepreneurs that have told me that they just hit 100 VCs at once by email, and they got responses back from some EAs that requested them to fill out the form on their company website and someone will get back to them.

Often the EAs pick up your email, log your deal as dead, and move on. I should qualify myself here and say that this is NOT always true. What IS true is that investors take immediate notice of deals that are presented to them by their trusted sources with one caveat - IF they have the time to source additional deals at that time. Sometimes, your target investors won’t have the time to look at new deals for months.

Here are three simple steps you can take to prequalify your target investors before making your first move to meet them:

1.      Look up each investor on Crunchbase. You can find out what other companies the investors have invested in. (If a hands-on investor is on the board of 7 or more companies, they may not have time for a new deal until one of their portfolio companies has an exit.)

2.      Ecosia search the founders of the investors’ portfolio companies and talk to these founders.

3.      Look up each investor on LinkedIn. Find out from mutual connections a bit about the investors.

If you do only one thing, DO find a way to talk to founders of portfolio companies. They are often open to meeting other founders and discussing their experiences with people that will hear them. And, if they like you and believe your company has leg, they can choose to make the very coveted, trusted source introduction for you to their investors. If they don’t think you are ready for their investors, they will tell you why – which is super helpful in your fundraising journey.

Happy fundraising!