Many founders will have kicked off the new year with a new fundraising round. In previous years, March, October and November were the months when Investors were reviewing the most decks. But the COVID-19 pandemic has ground to a halt many industries, and there are even warnings that this will affect the next two quarters in regards to fundraising.
Expectations have shifted and will continue...
If you were about to kick off a fundraising round, you should have been prepared to contact 50 or more investors, have 20-30 meetings and spend somewhere around 20 weeks before you signed your term sheet.
If you’ve already started your round and are wondering if you should push through, I believe the same effort can be performed virtually. Many factors play into navigating a successful fundraising round, and the expectations of investors are constantly changing.
During Covid19 Investors are now looking for market-ready products and want to see pitch decks that feature the content they’re expecting. We expect to see this focus intensify over the coming months as investors have more time to spend not just to review pitch decks, but on due diligence for companies in which they plan to invest.
Strategic search is key, as it is not always a numbers game...
Another area that could benefit from reevaluation is the number of investors contacted, virtual meetings held and the number of weeks spent in a funding round. When it comes to fundraising, there are diminishing returns for investor outreach. You shouldn’t need to send your deck to more than 60-70 investors and have more than 20-30 meetings. If you’re doing more than that, the ROI on your time just isn’t worth it. Because the current crisis is affecting investors’ willingness to invest, you’re better off finding a small list of investors who are active and targeting your pitch to them.
If you’ve reached out to more than 70 investors, but you’re still faced with a wall of “nos” you’re better off pausing your fundraising and addressing the feedback you’ve received so far.