How to Prioritize Investors During Your Fundraise

Last week I spoke about why you should prioritize your investors.

This blog I will be speaking about how to curate your investor list.

Curating your investor list is one of the most important jobs you can do for your fundraise. Rushing this process is not recommended, as it can take 6-12 months to curate a fully-functioning list. To begin, you need to find qualified investors and have a network map of how you will be introduced to them. Your goal is to start with a list of 150 names, with as many warm connections as possible through your network. Ideally, this will result in 30-40 meetings within the first two weeks of your fundraise.

I recommend having 10-20 investors in the “High” priority bucket. These are your favourite funds: the dream investors on your cap table with the perfect size, geography, industry focus, and capacity for you and your company. Be specific and do not include tier-1 VCs like Octopus or Sequoia if they are unlikely to invest.

The “Medium” bucket should have 30-40 investors who are still prestigious and would be great on your cap table, but do not have the gravitas of your high priority investors.

The remainder of your network should be in the low priority bucket. You should care less about these investors, but would need to take their capital if everyone in high and medium rejected you.

It is important to note that your list is not static and will change over time. If you have a mediocre meeting with a high-quality prospect, they may drop to a medium or low. Conversely, if a firm that you did not initially consider as a top pick suddenly begins engaging and showing interest, you may move them up to the high bucket.

Here's step-by-step how to do it:

1. Speak to 5-15 low priority investors.

Your first few meetings may not be perfect, but like anything in life, fundraising is a performance that requires practice. To start, focus on meeting with 5-15 low priority investors. This will give you the opportunity to be asked most, if not all, questions.

After these initial meetings, work on improving how you answer these questions. Record yourself and review the videos to see how you pitch. This will help you identify mistakes and avoid repeating them in the future.

2. Reach out to the rest of your investors.

One of the most important aims of a fund-raising process is to keep similar firms at the same stage of your process.

So after you have practised with some of your low priority investors, now it’s time to focus on the real goal: your main investor targets.

This is why preparation a few weeks before to warm up your connectors is so important. So when you "officially" launch they all know they are going to connect you to investors, they know who they are going to connect you to and they know when they need to do it.

Your goal should be to be giving your high priority investors a 1 week start (no more than that), with the rest of the investors the week after.

The goal here is to create calendar density in the first 2-3 weeks. You should be aiming for 40+ meetings in this time.

3. Focus on the interested firms as a priority.

Most entrepreneurs make the mistake of allocating too much time to taking new meetings or spending time on the wrong investors simply because they keep meeting with you.

Don’t fall into this trap. Instead, focus primarily on any VCs that are high priority and are in your "analysis" or "due diligence" phases.

Sometimes engagement at later stages may seem to stall. They haven’t said “no” but they also don’t seem to be spending a lot of time thinking about whether to progress. It should be evident to you - make sure you are communicating with them well, and updating them on where you are on the progress of you round.

Your job is to create reasons for them to spend more time with you and to draw them into engaging. Because the more time they spend thinking about you, spending time with you, and getting their head around why your opportunity is so exciting, the more likely they are to invest in you.

Due diligence meetings are the hardest to secure because VCs know that these follow-up meetings create obligations for them. As a result, many entrepreneurs take the easy route of taking new meetings because they’re easier to get, easier to prepare for (you already have a deck), and it feels like progress.

But fundraising is like running a sales campaign. When you get pushback from a customer, and it starts feeling difficult, doing the above is like starting to work on selling to different customers. As dumb as it sounds, this is a very common playbook for entrepreneurs, and it usually ends in failure.

The last parts of a fundraise are hard. Damn hard. But I’d rather see your time and energy go into speaking to interested prospects, rather than taking too many new meetings.

So spend a lot of time at the beginning (first 1-3 weeks) of the fundraise meeting everyone, then focus on the interested firms as a priority after that.

4. Don't completely ignore new prospects.

I understand that I previously emphasized the importance of focusing on interested firms, but it's crucial not to completely disregard taking on new meetings. While it's essential to concentrate on interested firms, it's equally important to be decisive when you sense they might decline. You should continue to engage with new investors.

I've seen many startups put all their energy into a single investor who ultimately rejects them after several weeks, setting them back to square one and undoing all their hard work. This can make or break your startup, so even as you focus on firms further down the fundraising pipeline, don't entirely halt taking new meetings.

Instead of the 20+ introductory meetings you would’ve had for the first two weeks, once you have go to this stage, you should aim for 3-5 a week with either low priority investors you haven't spoken to, or new investors you've only come across since the round started.