How to Communicate During Your Fundraise

This week's tip: the 3 tips on how to communicate during your fundraise.

Fundraising for your startup can be particularly challenging because investors often rely on their emotions when making investment decisions.

Many founders believe they can overcome this by showcasing their amazing product or presenting the idea of the century. However, if an investor feels that you are not good enough, they may reject you outright, regardless of how great your product may be.

You see, building a connection with an investor is crucial for securing investment. They must believe that you are one of the best founders they have seen this year and that you will create a massive company that they cannot afford to miss out on.

Making an investor believe this requires a lot of nuance and emotion, which cannot be conveyed solely through your pitch deck or product. It all comes down to how you communicate.

Although there are several articles on social media and Google about storytelling, which is an essential aspect of raising funds that founders need to keep improving, there is not enough emphasis on how to communicate effectively with investors outside pitch or intro calls.

Here’s 3 tips on how to do it right:

1. Control the conversation

The biggest mistake I see founders make with investor communications is not controlling the conversation. When a founder lacks clarity and confidence in their own experiences and vision of the company, they wait for the investor to make the moves. This approach undermines their credibility and creates an impression of desperation. This starts with your emails and also your intro meetings.

To make an investor love you, you must show them that you are a leader who is loved by others and knows what you want. You accomplish this by controlling your conversations with them. Instead of waiting for an investor to tell you their process, take the initiative by emailing them with a potential agenda for each call, setting boundaries on what you want from an investor, asking for references when you are more interested, and updating them on your progress.

This is why it is crucial to have a structured process during fundraising. Knowing what, when, and who you will be speaking to at specific times, as well as everyone's progress, allows you to have better control over the conversation. A significant part of controlling the conversation through meetings and emails is updating investors on your progress (often highlighting where they are behind and need to catch up!).

Your round is all about finding the right investor rather than waiting for them to find you. You are the prize, and you need to make sure investors know that by taking control of the conversation.

2. Follow-up quickly

At the end of the day, investors are looking for one major thing from you: execution. Unfortunately, 99% of founders lack it, and the first way investors can detect this is through a lack of speed in communication.

During fundraising, most founders take days to reply, and even then, they often fail to provide the necessary documents. The problem is that every investor has dealt with bad founders in their portfolio, who lacked communication skills or failed to execute fast enough.

Investors want fast and accurate communication. That's why it's crucial to prepare your FAQs well in advance. This helps you not only to hone how you answer the major questions but also to ensure that you have the right documents to reply quickly.

Let's take a common example during fundraising. After an introductory meeting, I would usually tell the founder our investment process and when I would get back to them (a day after my team's weekly meeting about new companies). However, most founders never asked what more I wanted to know, what I was confused about, or how I felt at the time. Even if they did, I bet most of them didn't think deeply about which areas I focused on mainly during the call.

So for pretty much all of the founders I met during my times as a VC, I never heard back from them for the whole week. It was crickets. For some this was fine, but for others it meant I ended up deciding they weren’t good enough.

But you know what happened with every single founder that I liked?

Within 24 hours, they replied back to me with more documents, extra information on my major points, and potentially an invitation for another call to discuss those points further. This type of communication showed me that they were fast executors and leaders too. This made me intrigued and want to spend more time with them.

3. Push back investors when needed

While you may not think so, investors usually want to invest in founders who are better than themselves. They want to invest in the best, which means you must be strong-willed and push back against investors. There is no harm in pushing investors for a yes or no.

For instance, just as investors want executors, you should want the same. If an investor is taking too long to reply or is taking their time with the investment, you should push back on them.

My friend Robbie Crabtree recently wrote a great post about this. He suggested saying something similar to the following:

“Hey, It appears that you are not working fast enough for our investment process, which is a great disappointment.

However, we are impressed with your thesis and fund, and we would like to continue working together. We believe that by collaborating, we can create significant value in the market. Talk soon, Founder”

This type of email to an investor is both pushing back and pulling them in to understand why they should be excited. This level of communication demonstrates that you are not an average founder, but rather exceptional. You are the prize in the end.