How to raise funding for your Startup

Are you looking to raise money for your startup? There is a ton of information out there on different funding options,  how to structure your deck, or how to pitch in front of investors.

In this post, I want to focus on how to establish and nurture good relationships with potential investors. Instead of just trying to pitch investors straight away, the following suggestions are more relationship based. They require more time and effort, however, they can greatly enhance your chances of sealing a deal.

Wondering why?

Well, our decisions are often influenced by emotions, and we tend to make instinctive choices. By delaying the discussion about your company until an investor already feels a personal liking and trust towards you, you create a positive bias that makes them more inclined to invest in your venture. It's all about fostering that genuine connection and building a solid foundation of trust.

But how do you earn the investor's trust and likability?

Let's reflect on the people you genuinely enjoy spending time with. Would you prefer those who constantly talk about themselves without showing any interest or curiosity in you?

Or do you find yourself naturally drawn to those who take the time to inquire about your life, listen attentively, and sincerely want to understand what motivates you?

If you are like me, you probably prefer the latter!

Be genuinely curious

So with that in mind, make sure you really get to know the potential investor. Ask them about themselves, be curious, and ask plenty of questions.

Show your active listening skills by summarizing their responses and confirming your understanding. After the meeting, make a note of any details you remember about the person. So that in subsequent meetings, you can reference what they shared during previous conversations. For instance, you can say something like, "If I recall correctly, you mentioned that...". Encountering someone who genuinely cares about the intricacies of our lives can be incredibly heartening, and this personal touch will leave a lasting impression.

Leverage the principle of familiarity

Another crucial tool for building trust with a potential investor is the principle of familiarity. That means, uncovering shared interests, values, or backgrounds with the investor, generates a sense of familiarity and connection.

For instance, if both of you have a mutual love for football, it can instantly create a bond. So, engage in conversation and ask open-ended questions to uncover their passions. By doing that, you establish common ground and strengthen your connection.

Establish reciprocity

Reciprocity is another amazing tool you can utilize to build rapport with an investor. It's all about creating a positive give-and-take dynamic. When someone receives a favor or benefit, they naturally feel the inclination to reciprocate. In your specific situation, imagine if the investor mentions wanting to connect with a particular individual, and coincidentally, you know that person.

You could offer to make a call and arrange a meeting. By extending this gesture, you lay the foundation for reciprocity. In the future, the investor may be more inclined to return the favor, possibly by considering an investment in your company. It's all about fostering a mutually beneficial relationship where both parties support and uplift each other.

Practice Gratitude

Above all else, it's essential to express your genuine gratitude towards the investor. Let them know how much you value and appreciate their involvement. Even simply acknowledging their willingness to meet with you can make a significant difference. These small gestures play a crucial role in building rapport and fostering a positive relationship.

Having said all this, you might still wonder: how do I secure an initial meeting?

The Triangulation method

You've probably come across the saying, "First impressions matter." With the Triangulation method, you can make a positive impression even before your first meeting.

Here's how it works.

When seeking an introduction to an investor, start by identifying two to three individuals within your network who know the investor. Ask each of them to send an email to the target investor, expressing their high regard for you and recommending a meeting. When the investor receives multiple such emails, it prompts them to reach out to you proactively. It's uncommon for someone to receive two or more recommendations for the same person, reinforcing the impression that you and your company are exceptional. It increases their inclination to invest in you even before meeting you.

On your end, aim to generate all referrals within a relatively short period, preferably within a week. The goal is to create a critical mass and make your referrals stand out among the flood of other recommendations.

It's crucial to avoid providing identical text for each referrer to send onward. If they end up using the same language, it becomes apparent that the referrals were orchestrated by you. Therefore, either offer distinct suggested language to each referrer or refrain from providing suggestions at all.

If the Triangulation method is not available to you, there is always the option to send a Cold Email. I will dedicate a separate post to crafting the perfect cold email. Stay tuned!

I'm confident that this article will be of great help in securing your funding. If you need any assistance or simply want to have a friendly discussion about the topic, feel free to reach out. I'm here to support you!