This post is part of a three-part series: Read Part I to learn about the pre-pitch preparation needed for your startup; and Part II for guidance on crafting your pitch deck. In this final piece, we’ll share some tactics for kicking off your fundraising journey.
After your preparation work is behind you, it’s time to conduct outreach and deliver your pitch to investors. You may be worried that you’re not fully ready, but mastering a fundraising motion is just like any other learned operating skill — the more you do it, the better you’ll become.
Here are some tips to help optimize your chances of converting prospects into investors on your cap table.
How to conduct effective investor outreach
Raising capital is like any sales motion — to be successful, you need to know which customers you’re targeting, and how to find them (audience being investors, in this case).
First, consider which investors you’ll target
To run an effective fundraise, you’ll want to consider which investors you plan to get in touch with — ideally, these should be investors focused on companies like yours. You’ll also want to think about the type of investor you’re targeting. Are you focused on institutional VC investors, family offices, or a mix? At what stage in your process are you aiming to connect with them? Narrowing your target investor list and getting strategic about whom you plan to connect with will not only keep you organized, but help build momentum as you progress throughout your fundraise.
Second, build your investor pipeline
Once you’ve landed on the types of investors you’re targeting, it’s time to build your list. You can leverage social networks like LinkedIn and X to discover different investors and potential opportunities for warm introductions. Industry data providers like Crunchbase are another resource — filter for companies in your industry and target geography that were recently funded to find relevant investors.
Searching for investor lists that are frequently published and updated can also help you find the most active investors in different industries and geographies.
Online databases like Mercury’s Investor Database enable founders to find and reach out to investors, using search filters like check size, geography, whether the investor leads rounds, and more. As you search for prospective investors, you’ll also want to identify any competing companies in their portfolio. While this is not always a dealbreaker, it’s a useful thing to keep in mind when pitching your company.
Secure an introductory call
There are a two primary ways to approach this outreach: through referrals or cold outreach.
Warm referrals can come from immediate or second-degree connections to the prospective investor. While great business ideas and their founding team will likely find their seat at the table with some amenable investors, warm referrals can help you cut through the noise and secure an introductory meeting.
If you’re looking to expand your exposure to investors, you can submit your pitch to Investor Connect, Mercury Raise’s program to connect fundraising founders with potential investors.
If you don’t have someone in your network to make an introduction or warm referral, don’t let that stop you: you can build and send a cold email campaign to prospective investors. An effective cold email campaign for these purposes should be hyper-personalized and typically includes no more than three to five emails.
In the body of a cold email, be sure to be concise, highlighting the single most compelling statistic and value proposition of your business. Give interested investors the opportunity to learn more through a call to action to send additional information.
Tips for investor meetings
You’ve prepped your deck and complete your outreach — congrats, you’re hopping into your initial meeting with an investor. How should you manage the conversation?
In many cases, the investor you’re speaking to has likely already had a chance to review your deck, which is why they’re interested in talking to you. If this is the case, remember to avoid reading your deck verbatim.
On the other hand, you may have been connected through a warm referral or introduction, and the investor may not have had time to review your deck. You can offer the investor the choice of walking through your deck (you probably still shouldn’t just go through it verbatim — remember that you can add interesting context and color aloud) or keeping the conversation free-form. Some investors may prefer a meet-and-greet prior to any presentation; others want to see the full deck presentation quickly.
Conversational tips for investor meetings
Refine your personal story
If an investor has read your pitch deck prior to your meeting, they may prefer to use the time to have a conversation with you that doesn’t rely on your pitch deck guiding you through. At the early stages, investors are taking a bet not only on the validity of your idea, but on the potential of you and your team.
In these cases, you might want to elaborate on your personal story — the information that isn’t in your deck. You should make abundantly clear why you deeply feel the pain point, why working on the problem is meaningful, and why your past experiences have made you the ideal founder to solve the problem today. Your story should make the company “as relatable as possible,” says Ben Debonneville, Founder of Pitch Deck Creators.
By steering the conversation this way, you can build a better relationship with a prospective investor, and help “your audience better understand what it feels like to have the problem and why a solution is needed,” says Debonneville.
While you’re likely to answer questions from the investor throughout your conversation, you’ll want to open the floor for any remaining questions at the end of the conversation. Investors will want to see that you’re self-aware, level-headed, and as tactical as you are aspirational.
Practice makes (pitch) perfect
Practicing your pitch before having an investor conversation will help you uncover the gaps in your story, which aspects of your pitch are unclear, and how to frame your pitch best for different audiences.
Remember that investors are typically less knowledgeable about a given problem than you are. After all, you’ve spent significant time thinking about the given problem and potential solutions. This divergence in understanding can be especially stark in highly technical, scientific, or complex industries, and helping create clarity and conviction without being pedantic or patronizing is key.
Practicing your pitch with family and friends can help you refine how you tell your story to the broader population. Try to communicate your story crisply in layperson’s terms so it’s clear how your company will build products, make money, and scale.
Founders in Mercury Raise can attend monthly VC pitch review sessions — where investors dissect company pitch decks and provide their take on what works well, what doesn’t, and what could be improved. Apply to join Mercury Raise for access to VC pitch reviews and other exclusive events.
Refining and iterating your pitch
You’re likely to speak with plenty of potential investors during your fundraising process. By approaching your fundraising as a scientific process — testing your hypotheses, gathering feedback, and iterating after each call — you’ll start to understand the most effective framing of your pitch and techniques that work best with your target investors.
Along the way, you can implement the feedback you receive by adjusting your story framing and updating your pitch deck. And keep your deck up to date — you may experience interesting business developments during your fundraising process that could have a material impact on your framing and investor’s perception of your business’s potential.
Post-pitch best practices
Your initial pitch deck presentation is just the start of closing the prospective investor. Once you’ve made your pitch, it’s time to follow up to understand whether an investor wants to move forward with the investment process. For some funds this may mean meeting the other partners, while others may look to start due diligence — a process where investors will review your data room among other materials, and ask any outstanding questions based on your presentation.
Here are some tips to keep your fundraising process moving forward and into an investor’s due diligence period — which is when they’ll review your data room and ask any outstanding questions based on your presentation or request access to supporting information.
How to maintain momentum after your investor pitch
After wrapping a pitch, you want to keep the momentum moving forward. It’s easy for investors to become busy and forgetful about your company amongst a sea of others, no matter how good it is. Your job is to ensure a tight, fast fundraising process by getting to an answer as soon as possible following your meeting.
You can do this by staying persistent and sending follow-up emails to the investor, offering your data room if they’re interested in seeing supporting materials. There is, however, a fine balance — you want to create a sense of urgency and encourage their enthusiasm without conveying desperation or overwhelming them with emails. Including updates on your round progress and keeping the communication tight helps keep the investor interested and updated in a way that respects their time.
Ultimately, if the investor doesn’t want to move forward with an investment at the time, be gracious. And consider adding them to your investor update list to keep them engaged with your progress in the future, if it seems they might be interested another time.
Keeping investors engaged during due diligence
On the other hand, you might find an investor wants to proceed with due diligence. In this case, they’ll review any supporting materials, such as a detailed business plan, financial analyses and projections, and customer lists or contracts if you’re post-product. They may also ask for references for you and your team.
To keep momentum during the process, you’ll want to reduce as much friction as possible so that the investor can get the information they need. By preparing critical documents such as contracts, your cap table, and financial data and projections before beginning your fundraise, you’ll be able to respond quickly to keep the process moving.
Common pitch pitfalls for early-stage companies — and how to avoid them
Founders want to make their company seem as buttoned-up as it possibly can, and as a result, sometimes tell their story in a way that actually makes it harder for investors to get a clear picture. But trusting you is critical to being willing to write a check into your business — investors need to know that you’re truthful, comprehensive in your thinking, and not misleading them in any way. Some of the mistakes we’ve outlined below might seem counterintuitive to presenting your company in the best light, but can help investors trust you and your company.
Don’t: Embellish past performance or over-promise future growth
Founders want to be able to tell investors the best news possible about their company’s performance and traction, and paint a rosy picture of future projections but it’s important that you are honest and earnest in doing so.
Setting misleading expectations about future growth can lead to damaged relationships — and embellishing past performance has even led founders into legal trouble. Being optimistic is different than being disingenuous.
Don’t: Ignore the competitive market landscape
While founders may think glazing over the competitive landscape makes their solution stand out, most startups will face competitive pressures from existing solutions or new companies.
Investors expect this to happen and want to understand how you’ll address competitive differences and deliver a better solution. Presenting a thorough analysis of the competitive landscape shows that you’re aware of the market and prepared to face competition.
Don’t: Provide overly concrete long-term financial projections
As a pre-seed or seed company, your future is sure to include several pivots that will impact your financial projections. With so much unknown in your future, it’s important to avoid modeling out five to ten-year financial projections with certainty. These kinds of robust, concrete, long-term financial projections for early-stage startups can give the opposite impression of the foresight you’re trying to show — instead leaving some investors feeling that you may be a bit naive about the upcoming journey.
Instead, stick to shorter-term financial projections (e.g. three years) that also anticipate changing macroeconomic conditions.
Along the way: learn from pitch rejection
Perhaps the biggest difference between a successful and unsuccessful fundraise is your determination to test, learn, and iterate based on investor feedback.
Don’t get too down when not every investor meeting pans out — even many of the most successful startups have been told “no” by investors. And every rejection you face is a learning lesson to take to your next investor conversation. If you are intentional about understanding why an investor is passing on your company, you can fine tune your outreach, your pitch, your mindset, or your expectations — and increase your chances of converting prospective investors in the future.
Using rejection as fuel to improve your pitching process will improve your chance of fully subscribing your fundraising round and securing the capital to power your next phase of growth.
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Finding the right investors and nurturing them throughout your fundraise will enable you to learn what works for you quickly and iterate on your fundraising strategy. Apply to join Mercury Raise for free expert mentorship, fundraising support, and resources designed to take you to the next level.
Tucker McKay