1 Network. It’s often a friend of a friend of a friend or associate who may know someone with the right kind of wealth looking to fund a good idea. It’s also beneficial to talk to as many people as possible who have sought and received financing to become familiar with the process.
“We just kept reaching out to more and more people. Every time we talked to one person we learned something … it really became this educational series of meetings that led us to really get a good grasp on the next steps to take,” said Whitney Trujillo, co-CEO and co-founder of Daily Deals for Moms, which began seeking financing in April 2011 and closed on the first round in June.
2. Get a good lawyer. Find a lawyer, preferably one who is familiar with your specific industry and the investing process.
“It’s not something to use a family friend on,” Trujillo said. “This is something to really find a lawyer who has done this before and has a good understanding on how to structure it. In the end, they end up giving you a lot of good advice.”
3. Know your idea/product inside and out before putting forth a proposal. “It’s easier for me to pitch an idea if I’ve got it up and running and a demo – something I can show I take it a step further than just PowerPoint slides,” said Nina Sodhi, CEO of mobile startup Blu Trumpet, backed by IAC and owned and operated by Hatch Labs, Inc.
Putting together a prototype of your product helps investors – and you – get a better sense of how it all works. “Why would they invest if I haven’t bothered to build it?” Sodhi said. “Have something to show when you go in to have an investor conversation. I get confidence from that, and I understand more of what I’m talking about.”
4. Be confident in yourself and your business or idea. “We really knew and still believe we have something really, really special here and that really helps,” said Daily Deals for Moms Co-CEO Ashley Kingsley. “It’s certainly a big learning curve, but once you’re passionate and believing in what you’re doing … it sort of seems to move along.”
5. Keep it short. “The more you say in an investor pitch, the more there’s risk of confusion,” Sodhi said. “Keep it simple. Keep it to the high points and put an effort up front to understand what the high points are.”
6. It’s not all about money. Seek out investors who can bring something other than money to the table, such as a social media or marketing background.
“We just really picked the people we wanted to work with,” said Trujillo. “With each of our investors, we really tried to make sure they were aligned with what we were, but also that they each had something to bring to the table to grow our business. That made it less intimidating because we had a really great group of investors.”
7. Follow up. Be sure to keep in contact with anyone who might know a potential investor or can put you in contact with probable funders.
8. Expect your first proposal to bomb. “Very few people are successful in their first attempt,” Sodhi said. “Just get through your first four attempts as quickly as possible so you can get to your fifth” successful attempt. “I think that’s one of the things men have figured out – they just throw themselves at a problem over and over again and don’t get hampered by the results.”
9. Practice…a lot. Pitch your idea as much as possible before your “real attempt” in front of an investor board – that can include elevator pitches, or informal pitches or demos to potential investors.
10. Don’t sell yourself short. Many women may take less money than what their idea is worth in order to make sure their business gets off the ground