Like politicians, asset managers and entrepreneurs spend an inordinate amount of their time fundraising. It’s hard, really hard, and you’re often left without an investment or an explanation. We’ve spoken to many, many investors. You want to know what makes them pass on investing in your firm? Read on to find out.
Your deck sucks. This is a short and sweet one, but I do understand there can be some nuance around the word “sucks.” What makes a deck suck? Lots of things, but the one that is easiest for you to address is this: it’s hard to read. Speaking as an investor myself, if I open a deck and my head starts to hurt, the chances of investing drop precipitously. Now, I frequently read on anyway because I’m always curious to learn about a new company (and to pick up some pitch deck do’s and don’ts for our clients), but many investors will not. Even for those of us who muscle through, you’ve already started with a negative impression.
Your data room is worse. If you’re looking to raise capital, many of the people writing you checks will want to see more than your deck. They want to see some real detail about what’s going on at the company. Data rooms are an excellent opportunity to continue to persuade potential shareholders, but one that plenty of people miss. This is a relatively simple way to convey to potential investors that you are organized and trustworthy. Instead data rooms are often treated as an afterthought. Things are dumped in a Google Drive and investors are sent a link and left to sift through a jumble of poorly labeled, badly-foldered documents. If you want someone to invest, make life easy for them. Give them a data room that is pleasing to the eye, easy to understand, and that contains all key documents. None of us are happy when we have to go back to companies three or four times to gather key documents that should have been in the data room. It takes time and we start to wonder if you’re hiding something, or just couldn’t be bothered to pull everything together.
They have concerns about your team (or lack thereof). This one is particularly relevant to asset managers. Many of us have been parties to conversations with people who expressed a lack of interest in investing with a “solo GP.” Some people will never change their minds, but for the rest, anticipate what their objections are going to be and have an answer. Are they worried that you won’t have time? Are they worried about succession planning? Are they worried you lack certain types of expertise? Have answers. For those with larger teams, investors want to see that the team is going to function at a high level. How do they determine this? Well, they’ll look to see how thoughtful you have been about forming your team. Do you have experience managing a team? Have you committed to team building or team assessments to ensure you work cohesively together? One LP shared as we were prepping for a panel on fundraising that one manager shared with her that they had gone through personality assessments to improve their chances of working productively as a team. That impresses. Be ready to tell an investor (with specific supporting information) why your team is going to be more West Wing than House of Cards.
You have no USP. There are some things that are universal to sales, regardless of what you're selling. This is one of them: you need a unique selling proposition. What is so special about your product that people cannot get anywhere else? It doesn’t have to be an entirely new category, but it does need a unique feature, a unique angle, or a unique audience. As I’ve heard many LPs say: don’t just tell me you’re another middle market PE shop with a great pipeline. Yawn. Tell me there is something magical about you . . . and have it be true.
They just met you. A gentle reminder that this is a relationships business. As a brilliant fundraiser recently told me, there’s no secret, it’s about staying in touch and following through. How do you do that? It’s three oh so sexy little letters: CRM. That’s right. Commit to a client relationship management tool and start using it (Hubspot has a really nice free version). Turning up at someone’s proverbial door and asking for money is a sure-fire loser. As Susan McPherson describes in her fantastic book, The Lost Art of Connecting, be helpful–not when you need something, but when you don’t need something.
Fundraising is hard. Really hard. Extra really hard for women and people of color. But there are certain things you can do to make it easier on yourself (i.e., slightly less extra really hard). What else do you think should be on this list? Drop us a note at firstname.lastname@example.org and let us know. We’ll cull them together and send them out in our next newsletter or LinkedIn post. Until then, happy raising!