How to Win at Startup Funding and Harvest Investor Interest

Okay, so welcome everyone to Fundraising to Funded. My name is Will Sachs. I started and founded a Founder Institute company called Kindara, which is a women's health tracker. We help women understand more about their cycles, get pregnant, avoid pregnancy, understand hormone irregularities. I also, and I'll tell you more about that story later, I also founded Get Funded this year, which is a fundraising accelerator for entrepreneurs. And I've personally raised about $6 million in early-stage capital, and I've helped other founders and CEOs raise about another $6 million. So I'm going to tell you what I've learned through doing that, through going through that process, and highlight some of the mistakes that I made and that I've seen other people make. So hopefully you won't make them and you'll be able to get through your own fundraise quickly and relatively easily. So just to kind of meet you guys where you might be at, I know that when I was fundraising, I had a whole lot of emotions, and you might be feeling frustrated at the slow pace of your raise, or you might be feeling overwhelmed at the process, or overwhelmed by doing investor meetings, you may be feeling dejected or demoralized or like you're going around in circles. And I want you to know that this is totally understandable. And I would say like pretty normal. You know, I felt the same way when I was raising the early rounds for Kandara. And there's just not a lot of great information out there to help founders step by step go through the fundraising process and get through it successfully. So if you've been concerned in the past that maybe you, you won't be able to raise this round or you won't be able to get the terms you want, or you won't be able to meet the right investors, I want you to, I want to put those fears to rest today. And I want to tell you that you can do this and I'm going to show you how. You just need the right person to, to show you the process and how it works. Um, sometimes as founders, we think we have to bend over backwards to make ourselves appeal to certain investors or to make our company appeal, you know, be a certain way. And I wanna tell you that you don't need to bend over backwards. If you apply the process that I'm gonna show you today, you can find the right investors for your company and stay in your truth and your authenticity and still raise a round of funding. So, you know, personally, I believe in entrepreneurship. I believe that as entrepreneurs, we create the future. and if we want a bright future that's different than what we have now, we need entrepreneurs. So I believe in your dreams. I believe in you. I'm going to show you how to succeed today. So this process that I'm going to go over today, I've called the Funded Founder Formula. It's to help founders quickly and reliably raise money without wasting massive amounts of time. You're going to learn how to raise more money in less time from better investors on better terms. That's my promise to you. If, if you're in the middle of a fundraise, uh, this process will help accelerate that raise. If you haven't started your raise yet, this process will show you how to get started and what to be thinking about. And if you're at the end of a raise or you just closed a raise, I'm going to also go over some common mistakes and things to keep in mind to operate powerfully in that post-raise Period. So my goal for today is to show you 2 things. 1, the best way to raise money quickly and efficiently is to follow a proven process, and 2, the best proven process available is the Get Funded process, which I'm going to show you and give to you today. And this is similar to the process that, that other people have come up with. I think the Funding Lab uses a very similar process at FI, so I'm excited to show that to you today. And before I dive into that, I'm gonna tell you a bit about me and why I'm qualified and a little bit about my story. So this is the story of how I went from knowing nothing about business to founding a company that ended up raising over $9 million and impacting the lives of millions of people. So in 2008, I met my wife, Katie, And she introduced me to fertility charting, and I thought it was the coolest thing I'd ever seen because I, for the first time in my life, understood women somewhat. Like, I understood her better, she understood her fertility better, and we were able to avoid pregnancy without her being on the pill. And I just wanted every couple in the world to experience the same level of intimacy and power and connection that we were experiencing. So we built an app. Actually, we raised a friends and family round, and then we built an app and we started to get traction. We started doing some promotion. Here we are on This Week in Startups. And we started getting users, but we needed money to really scale out the product and hire people to keep the thing growing. So I went out and raised an angel round, a $350,000 angel round. We made the app better. You know, our user base continued to grow. We hired a team. I went out and raised another angel round. I think the next one was $600K. We grew the team and then we decided we wanted to make hardware. So we wanted to create a connected Bluetooth fertility thermometer that synced with the phone. And this was going to take some serious money. So I went out and I raised a seed round. Here's some shots of the thermometer. Here we are at CES, the Consumer Electronics Show in Vegas. We hired a bigger team. There are some of the workers in Thailand where we were manufacturing. And yeah, closed that seed round. It got reported by TechCrunch. You know, it was very exciting and we had money to grow the product, to get the hardware to market. And then finally, we got an offer— or sorry, then I left as CEO and we hired a new CEO and I helped him raise another $4 million. And then eventually got an offer from PrimaTemp, which is a medical device company here in Colorado. And they acquired Kindara in 2018. So a quick rundown of funding at Kindara. I raised $100,000 friends and family round, then a $350,000 angel round. Then a $650,000 angel round, then a $700,000 angel round. And by that time, I was getting sick of these angel rounds because what I noticed is every time I'd raise money, we'd have a few months and then I would need more. I need to go back out and raise again. So I said, forget this, I'm going to go raise a proper seed round. So then I raised the $3 million seed round. Then I left as CEO. I stayed on the board, helped the new CEO raise another $4 million, and then it was acquired. So I've been through this process a number of times, and I'm gonna show you guys what I learned doing all these rounds and helping other people do rounds today. And then after Kindara was acquired, I'm like, okay, what am I gonna do now? I could start a new company, but I thought about my experience at Kindara, and I realized, well, raising money was really something that I love doing, that I was good at, and that I'm already helping some of my friends do. So why don't I found an accelerator to help entrepreneurs understand how to raise money, and then I can have a much bigger impact. I can help maybe 100, maybe more companies actually get funded and get built and make the world a better place. So I founded Get Funded with that goal, and, uh, it's been a really rewarding experience so far to help entrepreneurs go from that place of frustration maybe, or just feeling stuck to having the money that they need in the bank and being able to launch their products and hire their teams. So, you know, here's the thing about Kindara is I fell in love with fertility charting and empowering women. But the thing is, I didn't have any money and I didn't know any investors when I started the company. And then I went in a few years to having an office in Boulder, a team, and raising money from really awesome investors. And it was an incredible transformation that I went through. And the aha moment, or one of the aha moments for me was, wow, there's a process to raising money. It's not random. Like there's a very tight process that I figured out over these various raises that allowed me to be successful. And, and then when I thought about it more, I realized, well, most entrepreneurs try to raise money without any kind of process at all. Like we go and we do meetings or we make a pitch and we go to an event and do a pitch and it's all kind of willy-nilly. And I realized that while most people get lucky, most, or some people get lucky, most founders don't succeed. And it's really a tragedy because there's thousands of founders out there who really deserve to be funded. Like they have good companies, they have the ability to be effective CEOs and leaders and creators. but no one has taught them a winning fundraising process, and so they don't succeed at fundraising. They don't get funded. Their companies never flower. And I thought, I just think that's silly. And so I'm gonna show you today is a winning, proven fundraising process. And if you have a process and you follow it step by step, I can almost guarantee that you will succeed at raising money. It may take a while, it may be hard, but if you follow the process step by step, you should succeed. You remember, I was a first-time male founder running a women's health company that was building hardware that had no revenue. So there's like a number of strikes were against me, but because I had a process, I was able to just stick with the process and eventually succeed. So I know this process works. It will work for you if you follow it. And I know that because I've helped other people now. So this is Virag. She founded FindMyInvoice and she applied this process and raised her pre-seed. This is Mark from Expectful, a meditation app for moms. He raised $875,000 using this process. So we know it works and let's just dive into it. I want you to think about a cake. So if I was to say to you, to you, here's the cake that I want you to bake. Go for it. What's one of the first things you do? Well, you'd probably go and find a recipe. And what is a recipe after all? It's a series of steps that you follow one after the other in order, and you end up with the cake, right? It's a process. Without the recipe, I don't know about you guys, but I would be like, there's no way I would be able to produce any kind of thing that looked anything like a cake without a recipe. Another example is like, here's a deck. Like if I was to say, build this deck, like one of the first things that I would do if somebody said that to me is I would figure out what materials I need. I would make some plans. I'd maybe try to buy some plans. Like I'd get a process and the steps figured out before I just went out and started hammering boards together. But then again, the thing is most founders don't take the time to find and follow a winning fundraising process. And so they end up in trouble. Another example is a football game. Like, if you were the coach of a football team and you wanted to win the game, you would come up with a game plan. You'd make sure that everybody on the team knew the game plan and that it was a winning game plan, and that's gonna help you win the game. And so these metaphors I'm giving to you guys because to succeed at fundraising, your biggest weapon is a winning process. If you have a process that you're following and you know what you should be doing every step of the way, you're going to be head and shoulders above 95% of other entrepreneurs out there. And yet again, most entrepreneurs like don't realize that they don't have a process or not following a process. Whoops. And I know this because when I started, like, I didn't, I didn't get this until I had done a handful of rounds and I realized, oh wow, there's like steps here that I need to be following because every time I try and skip a step, I would end up stalled out. And as I honed this process, my results got better and better. So just this pre— you know, I spent this preamble to really hammer on the importance of process. And now I'm gonna show you this, the process that I've used and the process that you can use to get your raise done. So I use a farming metaphor, and the metaphor is we are farming investor desire, okay? We're growing investor desire, and eventually the investor desire gets big and strong and we can harvest it. And this process of farming investor desire has 5 steps, and successful founders know that they need to Grow and Harvest Investor Desire. So here's the steps along the top. I noticed this morning that instead of tilling, I've got tiling. So just pretend that says tilling. So the first step is tilling, then planting, then watering, then harvesting, then closing. And each of these steps can't be skipped and they need to be done in this order. And if you look along the bottom, you can see the goal of each step of the process. So the goal of tilling or tiling is to prepare your internal environment to get to certainty around your raise. The goal of planting is to plant the seeds for successful raise, which could also be seen as orienting yourself to understand how the raise is gonna be successful. What kind of investors do you need to raise money from? Do you have a list of all the investors that you're planning to reach out to? Do you have funnels set up? Have you figured out exactly how much you're gonna raise and what you're gonna use the money for? Is your pitch strong? Et cetera. Then in watering, the goal is to find and sign on a first mover, like a first investor that's gonna take a nice chunk of your round. And I'll talk a bit about how to do that. And then in harvesting, the goal is to fill out the round. So getting all the other people that you've got lined up around the table to come in and join the round. And then finally in closing, the goal is to get cash in the bank and close it out. And I'm gonna go through these steps in order in a minute. And the reason I like this metaphor is 'cause just like when you're growing crops, you know, if you skip the planting stage, if you try to go just to watering, you're not gonna have any crops. If you skip the watering before harvesting, you're not gonna be successful. So it forces entrepreneurs to think in a sequential way and make sure that they've got the foundation of tilling and then planting and then watering and then harvesting in order, in order to close the round out officially. Efficiently. Here are the steps on a timeline with desire or investor desire and money on the, on the vertical axis and time on the horizontal axis. So as you can see, there's a lot of preparation in the early stages, and then in watering, harvesting, and closing, we get this spike in investor desire, the spike in money coming into the company, and we close the process. We close the raise. So really successful fundraisers tend to go like this. They follow this type of line. Less successful fundraisers don't have this kind of ramp at the end. I'm gonna show you how to get that ramp. Okay, so let's go through the steps. Step 1, tilling. So in tilling, you need to accomplish 4 things, and the first thing is, You gotta understand the 5-step process, like understand what's gonna happen in each step of the process so that you can know where you're at and when you're done each step and you can move on to the next one. If you don't understand the process, you won't be able to follow it. Second is internal preparation. You really wanna get clear on success, that you're going to succeed, that you're gonna do this raise, that you have a clear vision for exactly how much money you're gonna raise or around how much you're gonna raise, what you're gonna use the money for, how this supports the long-term vision of the company. And this internal preparation gets you into a place of certainty. And I like to say that certainty is the foundation of every fundraise. If you have certainty in your body about your company, about your raise, about where you're headed, about the market opportunity, about your team, if you're just, rock solid certain about all of that, that's gonna really communicate in every interaction you have. And a lot of entrepreneurs, they go into the raise, I know I was guilty of this, without certainty. So when I learned this, I would spend the time at the beginning of the raise to really get to certainty, do all the research that I needed in order to feel rock solid in everything that I was doing and be able to move into the rest of the raise using that certainty as my foundation. And then the last thing in tilling is simplicity, like getting your pitch and the way you communicate about your company down into a very simple communication that gets people excited, that gets you excited, that feels true. When you're there, you're ready to move out of tilling. So tilling is done when you have certainty about your company and the process, and you can communicate that certainty with words, energy, and feeling. Then you're ready to move into planting. Okay, so in planting, you're creating your investor avatar. You know, a lot of founders make the mistake of saying any investor is the right investor for my company, and what I've learned from doing this is that's just not the case. You want investors that are aligned with your mission, that are interested in your market, that are a chemistry fit with you, that you want to spend time with, that you want to you want to get their phone calls, that you want as part of your community. And so building your investor avatar and planting allows you to just focus on people that are going to have a higher percentage of saying yes, and that you're going to want to hang with over the next, you know, 5, 10, 15 years, the life of your company. Once you have your avatar, you're making your investor list. Again, too many entrepreneurs, they don't make a list, they just kind of go after the people that pop up on AngelList or in their email or through acquaintances. What I like to do is I would make a long list of 200 people that seem like they would be a good fit for my— to invest in my company, and I would figure out how to get intros to all of them, and I'll show you in a minute how that comes in handy. And then making a plan to prime your list, so to get in front of them, to get introduced to your list. If you have a plan, you're gonna get in front of these people. If you don't have a plan, it's unlikely you're gonna get in front of everybody you wanna get in front of. And then lastly, making a traction plan for the company so that as you go through the raise, the company is also making progress and moving forward. So that's planting, and planting is done when you know clearly who should invest in your company and why, and you have a targeted list and a plan to get your list excited. So once that's the case, you're ready to move into watering. Watering is when investor desire really starts to grow. Because in watering, you're now finally lining up investor meetings. And you remember how I said I used to make a long list of 200 people and figure out how I was going to get introduced to all those people? Well, what I would do is I would line up those intros, but I wouldn't actually get the intros until I had a critical mass of people that I was— that I knew I could connect to. Then I would get all these investor meetings. And I would just be in a place of natural abundance because I would have so many meetings. And a lot of entrepreneurs don't realize the power of abundance in a fundraise. So in watering, we're lining up investor meetings, we're interviewing investors to figure out if they'd be a good fit like this. I could, if someone wants to ask me about this, I'd be happy to talk more about this, but you really want to find out if people are a good fit. In watering, you're, you're really laying the groundwork for your raise. So The way to communicate that, or one way to communicate that, is we will be raising soon. I'm doing some initial conversations, wanted to understand your interest level, wanted to learn more about you. And really what you're doing in watering is you're lining up a first mover. So you're building traction for your raise with the investors that you're talking to, and you're trying to identify a lead investor or a first mover, somebody who can jump in the pool first and get everybody else to jump in. And so if you follow this process of doing meetings and warming people up, investor desire will start to increase. And the thing to do is to keep watering it until the investor desire gets big and strong. And watering is done when you have a confirmed first mover or a lead and enough investor desire to fill out at least half your minimum round size. And when that's the case, You're ready to go into harvesting, and this is when things get really exciting. So in harvesting, you're finally opening your raise. And the reason that you can do this confidently is because you've lined up all this investor interest in watering, and you've got all these people that are primed and excited. You now have a first mover. You're in a place of abundance. Maybe you've got like 50 people interested. So you open the raise, you set a timeframe. And this allows everybody on the list to really get the sense of, wow, this raise is moving forward. Maybe they're gonna feel a little bit of FOMO, fear of missing out, about the raise. And if you do this correctly, it makes it easy for everybody to kind of jump in all at the same time. In harvesting, you're doing tons of meetings. You're doing all your meetings at once. You're in a place of abundance. The nos aren't slowing you down. You know that you, that you have to get, maybe you gotta get 4 nos for every yes, maybe you gotta get 10 nos for every yes or 15 nos for every yes, no matter what that ratio is, if you're in a place of abundance, you're doing a lot of meetings, you're gonna get those yeses. And then you wanna have some momentum makers in harvesting, things you can announce about your company that get everybody excited or make investors feel like, oh, this is, I'm making a smart decision, and we can talk more about that. And then so harvesting is complete when you have enough commitments to cover your minimum round size. So basically your round size, your minimum is committed now, and now, you know, okay, I can move into closing. And closing, of course, is when things get the most hectic. Closing is when you turn commitments and investor desire into cash in the bank. And Here's some things to think about during closing. You always wanna have a plan A, a plan B, and a plan C for the amount of money that you're gonna raise, 'cause you don't know exactly what's gonna happen in closing. People could drop out, people could show up with a big check and want in. So you wanna have a plan A, a plan B, and a plan C. One thing that I always thought of is I always wanted to close now. Like if I could close this round, if I saw, okay, I've got enough around the table, Everybody's ready to go. I would focus on, okay, let's get this round closed now because I had a few experiences where things in the external environment would happen and it would— investors would get shaken and then the round would falter. So I learned like, if you can ever close, close now, blast through the finish line and pick up stragglers. Often at the end of a raise, I would get people showing up who maybe said no before, or, you know, they're the kind of people that just want to jump on the bus right before it leaves. Well, great. I would grab those people, blast through the finish line, and get the round done. And then, of course, I would celebrate. Now you've done— you've made it through the 5-step process. It's time to celebrate. And then it's also time to remember that fundraising is really a beginning. It's not the end of anything, and to be stingy and see if you can get profitable. And then I wanted to include some, you know, my top 4 mistakes that founders make after closing a raise. And these are mistakes that, that I made. And so number 1, going on a shopping spree. You really want to think about not spending the money. I think it's Paul Graham that said, when you raise money, don't spend it. And I really agree with that advice. You've just bought yourself a breather. So better to take the breather, sit with yourself, with your leadership team, with your strategy, figure out how you're gonna make this money last possibly forever, or how you're gonna make it last as long as possible and get the most value out of it. Don't go on a shopping spree. The second biggest mistake is hiring quantity over quality. When you have a lot of cash in the bank, it can be tempting to speed up your hiring process and get a whole bunch of new people in. And think that they're gonna be able to get up to speed and get a whole bunch of stuff done. Well, everybody knows that the people in your company are the most important resource in the company. And if you start to focus on quantity over quality, it can cause all kinds of problems down the line with your team. So I would say continue to focus on quality with hiring, even when you're flush. Number 3 is launching multiple simultaneous initiatives. Instead of focusing on one thing and doing it well. I like to think about the most valuable resource in any company is the CEO's attention or focus, or the attention and focus of the leadership team. And one thing you'll notice is raising more money does not produce more attention or focus in the leadership team. So it's much better to just focus on one thing, get everyone focused on that, the one thing that's gonna move the company forward and do it well. and it can be really tempting when you're flush, you have all this cash in the bank to think, well, we can do this thing and we can do these 3 other things that we wanted to do for a long time. I would say to resist that impulse and keep it focused and simple. And then the last is putting the wrong people on your board. So it can be tempting in a fundraise if investors are offering big checks to agree to a request from an investor to add them to your board, even if you don't feel like a heart connection with them or chemistry with them. And I would say that is definitely a way to kill your company is to put the wrong people on your board. It's very hard to get someone off your board. You're essentially marrying the people that are on your board. So if you don't love and feel super excited about the people that are joining your board, maybe extend the raise, find somebody else who you do love, and get them on the board or resist the board seat request. Like, do whatever you can to only add people you love to your board. All right, so that's the process. It's a 5-step process: tilling, planting, watering, harvesting, closing. And the place where a lot of people screw up that I see is moving forward into a step before you've completed the previous step. So an example of that would be doing investor meetings before you have a big list and before you've really figured out who would be your ideal investors. Or people move into harvesting, they try to close people before they have like a lot of interest and excitement around the table and they've lined up a lot of interest. Or people try to— another one would be like closing on people before you have a lot of interest. Well, if you're raising $1 million and you close close somebody for $25K doesn't necessarily help you that much with the raise. It would be much better to keep that person warm, find 10 other people like them who are also warm, find a first mover or a lead investor who's going to put in half a million and architect the raise so that when you close, you close the whole thing. So I hope that that's helpful for everyone on the phone and everyone watching this later. Think about it in terms of steps and always know where you're at. If you're in tilling, it's about preparing, getting your pitch solid, getting to certainty, your internal preparation. If you're in planting, it's about identifying your ideal investor, making lists, and lining up intros. If you're in watering, it's about finding your first mover and building excitement among all the investors that you're talking to. If you're in harvesting, it's about opening the raise and really getting everyone excited and in a massive place of abundance in terms of investors and conversations so you can close it. And if you're in closing, the name of the game is getting the thing closed and getting the cash in the bank.