Dan Martell - How to Find Investors When Raising Money

00:00:00.000 Hey there.

00:00:00.500 I'm Dan Martell, serial entrepreneur, investor,

00:00:02.540 and creator of SAS Academy.

00:00:04.160 And in this video, I'm going to share with you how to connect,

00:00:07.760 not fight, connect with investors

00:00:11.460 in when you're raising your next fundraising round,

00:00:13.720 even if you feel like you don't have a network

00:00:16.860 or you're more introverted, et cetera.

00:00:18.960 And be sure to stay at the end where

00:00:20.460 I share with you how to get access to my Fundraising

00:00:22.320 Like a Pro training, where I walk you

00:00:24.320 through the three phases of fundraising

00:00:26.600 to help you with your next round and crush it.

00:00:30.000 So fundraising can be one of the most stressful, frustrating,

00:00:45.100 uncertain moments in your startup life.

00:00:47.940 And I know for me, when I was starting off,

00:00:50.000 it was me and my co-founder, Ethan,

00:00:51.340 we were building Flowtown.

00:00:52.320 And we were just like, OK, should we raise?

00:00:54.300 Should we not?

00:00:54.800 We were ramen profitable at the time.

00:00:57.720 And we decided to go all in.

00:01:00.720 And we just started cold emailing investors.

00:01:03.680 And unfortunately, or maybe obviously, nobody replied.

00:01:07.620 I mean, I just thought, OK, well, they're an investor.

00:01:10.040 We're a startup.

00:01:10.740 Of course, they're going to want to meet with us.

00:01:12.780 Turns out that's not the way it really works.

00:01:16.200 And luckily, we had some really incredible advice.

00:01:18.840 We read a lot of the books, the blog posts,

00:01:20.520 listen to the podcast.

00:01:21.640 And it was Nivy, who is Naval from AngelList's co-founder,

00:01:26.920 who gave us some incredible advice about how

00:01:29.020 to get introductions.

00:01:31.600 So here's the big idea, and I'm going

00:01:33.400 to share with you how that has led into not only raising

00:01:36.860 two rounds from my last two companies, Flowtown,

00:01:39.000 and Clarity Clarity closed my round in three days.

00:01:42.960 This process can help you move a lot faster than probably

00:01:45.600 what you may be going through.

00:01:47.160 And make sure there's certainty in the process.

00:01:49.940 But I've also helped over 200 million.

00:01:53.480 200 million.

00:01:54.520 I've helped 100 plus of my coaching clients

00:01:57.260 raise over $200 million in funding.

00:01:59.800 And the big idea behind all of that, as I share with you today,

00:02:03.020 is investors don't want to know you.

00:02:06.340 They want to be introduced to you.

00:02:07.840 OK?

00:02:08.340 So they don't want to meet you.

00:02:09.340 They want to be introduced to you.

00:02:10.640 So let's get into it.

00:02:11.700 Step one, research.

00:02:13.760 So number one is you need to know the space that you're in.

00:02:16.760 So if you're building a B2B SaaS product that's

00:02:19.360 got a marketing band in the MarTech space,

00:02:21.580 then you need to find the investors that have already

00:02:23.460 invested in those kind of technologies.

00:02:25.800 Now, you might be living in middle America,

00:02:29.400 and you don't know any other investors.

00:02:30.880 Well, the good news is you live in a world where they're online.

00:02:34.340 A lot of the lists are available on AngelList, Crunchbase,

00:02:38.240 in the press.

00:02:39.660 And yes, it's going to require some time and energy

00:02:42.060 to actually do that research.

00:02:43.580 But one of the easiest ways is to actually

00:02:46.740 find other companies like yours that have recently raised money

00:02:50.040 or go on AngelList, see who they raise money from,

00:02:52.680 and start putting that list together.

00:02:55.020 So the first step in connecting with investors

00:02:58.360 is building a targeted list of investors that,

00:03:02.320 and here's one of my filters, one of many,

00:03:04.180 is one they've written a check in the last 12 months.

00:03:06.240 I can't tell you how often entrepreneurs go

00:03:09.100 and they try to meet with an investor.

00:03:10.480 An investor is going to take the meeting,

00:03:11.640 because it's his job to, like, he doesn't want anybody

00:03:14.640 to know that maybe he's ran out of capital

00:03:16.500 or he's not interested in your space

00:03:19.120 and he doesn't have the heart to tell you.

00:03:20.520 And it's a big waste of time.

00:03:22.820 So I want you to just really focus

00:03:25.360 on understanding the investors in the space, what space you're

00:03:28.360 in, who likes to invest, what size of check they like to write.

00:03:32.260 If you're like, well, how do I get them to answer that?

00:03:34.480 Just ask them.

00:03:35.280 Hey, I'm just curious.

00:03:36.120 Last time you invested in this company,

00:03:38.080 I was just curious at what level of commitment

00:03:39.920 you were involved at.

00:03:40.960 That's a really soft way of saying,

00:03:42.600 how big of a check do you write?

00:03:44.140 Reason is, if you're trying to put together a million dollar

00:03:46.260 round and the person only writes 10k checks, you don't know,

00:03:50.220 That's a whole lot of people that you're

00:03:51.380 going to have to talk to.

00:03:52.380 But they might only write $1.5 million checks.

00:03:55.300 That happened to me when I was putting my round together

00:03:57.420 for Clarity.

00:03:58.520 And I thought the person wrote like 100K checks.

00:04:01.420 And next thing you know, he's like, hey,

00:04:03.780 we're giving you $500,000 and we're not seeing our allocation.

00:04:07.240 And I was like, well, we're oversubscribed.

00:04:09.400 I don't have room for another $400,000.

00:04:11.900 And he said, well, if you can't make that work,

00:04:14.720 we can't do it because that's the way our structure works.

00:04:17.660 And I had to go and, unfortunately,

00:04:20.120 ask some other people to not participate,

00:04:22.000 which is horrible if you've ever gone through that process

00:04:24.400 of having somebody.

00:04:26.000 You do all the work to get them in.

00:04:27.980 Then you got to go back and tell them that they can invest.

00:04:30.480 It's kind of crazy.

00:04:31.580 It's a high-quality problem, but it doesn't feel good.

00:04:34.660 So you want to ask using that language.

00:04:37.220 Do your research.

00:04:38.040 Make sure they're writing checks.

00:04:39.160 Make sure that you understand what size.

00:04:40.880 And understand who's investing in your space.

00:04:43.400 Number two, track.

00:04:45.720 You got to track it.

00:04:46.680 You've got to track the progress, like a sales process,

00:04:50.340 like a business process, like a recruiting process.

00:04:53.920 On the left side of your spreadsheet, or your Trello

00:04:57.620 board, or your pipe drive, whatever tool you want to use,

00:05:01.240 these are the opportunities, the investors.

00:05:03.720 And on the other side is money in the bank, invested,

00:05:07.340 deal closed, OK?

00:05:09.380 So to me, that is the effort.

00:05:12.300 What information do you put in that to track, right?

00:05:14.920 Well, here's what I do.

00:05:15.920 and it's going to help you with the connect phase,

00:05:19.100 of really trying to reach out and connect

00:05:20.900 to these investors, is you need to understand who they've

00:05:23.220 invested in, their check size, et cetera.

00:05:25.460 And you put all that information.

00:05:26.680 If you can get their email, if you can get their cell number,

00:05:29.300 I want you to collect.

00:05:30.080 I put Twitter accounts, Facebook accounts, LinkedIn accounts.

00:05:33.080 Why?

00:05:33.580 Because if we decide to move forward

00:05:35.300 and they're part of the round, I

00:05:36.500 want to be able to quickly communicate with them.

00:05:38.600 I want to be able to, what I've learned

00:05:40.640 is some investors love Twitter.

00:05:42.380 Some investors are on Facebook.

00:05:43.920 Some investors are on LinkedIn.

00:05:46.100 And yes, you might send an email as you're

00:05:48.420 going through due diligence or some kind of fundraising docs.

00:05:51.880 The email is not getting replied to.

00:05:53.860 Well, if you're already doing the research on the investors,

00:05:56.780 write it down.

00:05:57.400 Put it in the spreadsheet.

00:05:58.340 Put it in your CRM.

00:05:59.860 Put it wherever you're tracking it.

00:06:01.760 But the key is, is you've got to track it.

00:06:03.460 So if somebody comes to me and they're saying, yeah,

00:06:05.220 we're raising around, and we'd love your help,

00:06:07.300 because that's what, you know, I'm a coach.

00:06:08.840 I'm not a fundraiser.

00:06:09.800 Do not reach out to me to help you raise around.

00:06:11.500 But if you want my strategies and processes, et cetera,

00:06:14.420 I'm totally cool with that.

00:06:16.740 And I ask you to show me your spreadsheet

00:06:18.460 and you don't have one or you don't have a CRM,

00:06:20.320 then I know you're not that serious.

00:06:22.180 Because to me, you wouldn't do that for recruiting.

00:06:24.660 You wouldn't do that for your sales process.

00:06:27.360 And you definitely don't want to not do it.

00:06:29.900 I think that's a double negative.

00:06:31.300 Regardless, that's the way it works.

00:06:32.860 You want to make sure you're doing it

00:06:34.700 for your fundraising process.

00:06:36.620 Number three, connect.

00:06:38.460 So here's the key.

00:06:39.600 This is the way to do it.

00:06:41.600 And I'll tell you, even when you've successfully

00:06:44.360 raised in the past, like I have, I don't avoid this step.

00:06:47.660 I respect it.

00:06:48.600 I had one of my friends, really successful entrepreneur,

00:06:51.340 built, sold his company, was raising his round

00:06:53.140 for his next startup.

00:06:55.240 And he was just going to go direct to all these investors.

00:06:57.880 Some of them he kind of knew.

00:06:58.880 Some of them he didn't know.

00:06:59.880 And I was like, don't disobey the rule of how investors

00:07:06.420 want to get to know you.

00:07:07.180 They want to be introduced to you.

00:07:08.400 They do not want to meet you, OK?

00:07:10.740 So the way you connect is, if you

00:07:13.320 have your list of research of the investors

00:07:15.480 and you know who they recently raised money from,

00:07:17.400 I want you to reach out to them.

00:07:19.200 I don't know their email address.

00:07:20.380 Yes, you do.

00:07:21.000 It's firstnameatstartupcompany.com.

00:07:23.560 It's their first name at their company.com.

00:07:26.140 Reach out to them and just say, hey, John,

00:07:28.280 I noticed you recently raised a round of funding

00:07:30.400 for XYZ product, incredible.

00:07:34.260 Looks like you had a great round of investors.

00:07:36.600 We've been thinking of raising a round.

00:07:38.300 I would really love your advice.

00:07:39.700 Here's who we are.

00:07:40.700 And then I call these bullets of credibility.

00:07:42.660 Like, show them traction, da, da, da, da, da, da.

00:07:45.480 Do you have seven minutes to get on a quick call

00:07:47.340 to kind of walk through where we're at and see

00:07:49.380 if we're ready to raise a round of funding?

00:07:51.580 All entrepreneurs had somebody show up in their world

00:07:54.580 to give them advice on how to raise,

00:07:56.420 so they're more than eager.

00:07:58.240 Well, not super eager, but it's almost

00:08:00.940 like they have to do it.

00:08:02.580 I mean, that's why I put together the training.

00:08:04.560 That's why I've probably helped.

00:08:05.980 I say 100.

00:08:06.640 It's way more than that, because I've given talks at events

00:08:09.980 on this topic.

00:08:11.640 But it's almost like once you learn it,

00:08:14.500 you've got to give it back.

00:08:15.920 So if you reach out to two or three entrepreneurs that

00:08:19.780 have raised rounds recently with that kind of language

00:08:21.980 in your email, short, concise, really focused,

00:08:24.440 not asking too much, they will get on a call with you.

00:08:26.600 Now, here's the deal.

00:08:28.160 On that call, treat it like an investor call.

00:08:30.940 They're going to say, oh, how'd you get started?

00:08:32.400 Have a really good origin story.

00:08:33.800 Have a really good product story.

00:08:34.980 Have a good traction story.

00:08:36.060 Have all your answers ready to go.

00:08:38.740 And just say, hey, what do you think?

00:08:40.480 Should we raise?

00:08:41.240 And look, it's funny, because in the three phases

00:08:45.080 of fundraising, the first phase is pre-marketing,

00:08:47.840 which is this weird thing where you've

00:08:49.180 got to pretend like you're not looking to raise

00:08:50.980 because you want to get advice.

00:08:52.140 But that's just the way the world works.

00:08:54.420 Ask for advice, get money twice.

00:08:56.180 Ask for money, get advice.

00:08:58.160 That's a pit bull line, actually. 0.94

00:08:59.960 It was in one of his songs.

00:09:02.480 And I digress.

00:09:03.540 Make sure that you go after the entrepreneurs that recently

00:09:07.200 raised money from those investors.

00:09:09.000 Because here's what happens.

00:09:10.100 After that seven minute that turns into 15

00:09:12.520 or 30 minute conversation, they're

00:09:13.780 going to say, wow, this hopefully, they're

00:09:15.280 going to say, wow, this is really interesting.

00:09:17.220 How can I be helpful?

00:09:18.560 This is your in.

00:09:19.660 This is where if you're in fundraising mode, you can say,

00:09:21.800 hey, I noticed Mark invested in your company.

00:09:24.360 And we really like his background

00:09:26.360 because of these reasons.

00:09:27.620 Would you mind making an introduction, right?

00:09:29.740 If you're not fundraising, you say, well, here's the deal.

00:09:31.740 If we decide to move forward and fundraise,

00:09:33.580 I'll be sure to circle back.

00:09:34.780 I would love some introductions, because I

00:09:36.240 noticed that this person and this person was invested.

00:09:38.780 Don't go for the most notable.

00:09:40.140 And Ashton Kutcher invested in the round, or Mark Cuban.

00:09:44.320 Don't ask for those ones.

00:09:45.980 Ask for the real investors, the strategic people

00:09:48.860 that you know is their profession.

00:09:51.160 And not that those, like now I'm going to get in trouble,

00:09:53.420 because Mark Cuban invested in my last company.

00:09:56.220 Just don't ask for super notable people,

00:09:58.640 because it might turn them off.

00:10:00.340 Do your research, look educated, and ask for the right people.

00:10:03.480 And the key is, and these are some of the tips,

00:10:05.480 is one, if they say, yeah, I'll make an introduction,

00:10:08.300 say, OK, cool, I have an email that I've already

00:10:10.940 put together to help make it easy.

00:10:12.460 I'll send it over.

00:10:13.340 Feel free to edit and send over the introduction.

00:10:15.820 And you write that email.

00:10:17.300 It's one line of who you are, what you guys are doing,

00:10:19.920 three bullets of awesomeness.

00:10:21.660 You want to go four, so this is press, traction, team,

00:10:24.900 customers, et cetera, so just awesome stuff.

00:10:27.580 And just send it to them, because all founders,

00:10:29.600 including myself, we're busy.

00:10:30.920 We would love to make introductions all day long

00:10:33.140 to support other people's dreams and goals.

00:10:35.820 But unfortunately, we have our own.

00:10:38.060 And if you make it easy for us, then we have no problem copying,

00:10:42.140 editing some stuff.

00:10:43.080 Just met them.

00:10:43.620 Had a great call.

00:10:44.420 They're incredible.

00:10:45.080 I think you really like it.

00:10:46.160 Hit send.

00:10:47.060 The introduction is made.

00:10:48.060 So that is how the process works,

00:10:51.540 is you go through the entrepreneur, get a call with them,

00:10:55.700 get them involved, offer for the intro,

00:10:57.940 ask for the intro, write the email.

00:10:59.480 It sounds long and convoluted.

00:11:01.880 But if you want to close your round,

00:11:04.480 and on average, my clients do it in about 90 days,

00:11:07.520 meaning from pre-marketing to money in the bank in 90 days,

00:11:11.460 if you want to take the long route

00:11:12.960 and be out in the market for 6, 9, 12 months, 16 months

00:11:16.460 trying to close your round, here's what I know.

00:11:18.600 It's like fruit.

00:11:19.380 Over time, it goes bad.

00:11:20.640 So if you're trying to raise a round,

00:11:22.180 and I don't see you, and 12 months later,

00:11:23.740 you're still trying to put that round together,

00:11:25.720 even if I have no understanding of what you do or how you do it,

00:11:28.440 It just sends a bad signal, because it means you've been,

00:11:31.620 A, you don't know how to get stuff done.

00:11:33.440 B, you're probably talking to people,

00:11:34.780 and they don't like it, so they're passing.

00:11:36.200 And you're trying to find anybody

00:11:37.700 that's willing to write you a check.

00:11:38.700 So you kind of come off as desperate.

00:11:40.280 So don't do that.

00:11:41.460 Follow this process.

00:11:42.540 And that is how you can reach out, research,

00:11:45.580 and connect with the best investors in the world

00:11:47.560 to be supportive in your round of funding.

00:11:49.720 So the three steps to connect with investors

00:11:51.860 when you're fundraising, even if you're a bit of an introvert

00:11:54.640 and you're nervous about it.

00:11:55.880 Number one, do the research.

00:11:57.260 Know who the people are.

00:11:58.380 Number two, track it in a spreadsheet.

00:12:00.780 Manage it like a pipeline.

00:12:01.920 And number three, connect.

00:12:03.320 Get the introductions from other entrepreneurs.

00:12:06.720 That will get you 100% of a meeting,

00:12:09.680 because the investor knows and they trust that person.

00:12:13.900 So as I mentioned at the beginning of this episode,

00:12:16.040 I want to share with you my Fundraising Like a Pro training.

00:12:19.060 You can click the link below to get access to that.

00:12:21.560 But this is based on what Travis Kalanick, the founder of Uber,

00:12:25.080 taught me.

00:12:25.580 He was an investor and formal advisor

00:12:27.340 to my startup, Flowtown.

00:12:29.780 And literally, if you can just look like,

00:12:31.760 I mean, I think it was like billions of dollars

00:12:33.800 fundraise for Uber.

00:12:35.480 He is one of the world's best.

00:12:36.760 He taught me everything I know.

00:12:38.100 I've dissected all those steps.

00:12:39.720 I think there's like 10 of them.

00:12:41.000 And I go through them in that training.

00:12:43.040 So you click the link to get access to that.

00:12:45.560 And if you like this video, I would encourage you,

00:12:48.060 I would ask that you click the like button,

00:12:50.020 subscribe to the channel, and leave me a comment.

00:12:51.860 Let me know what aspect or what tip or insight

00:12:54.540 was the most important or resonated the most with you.

00:12:57.480 And as per usual, I want to challenge

00:12:59.040 you to live a bigger life and a bigger business.

00:13:01.240 And I'll see you next Monday.

00:13:02.600 Do you want to give me money?

00:13:06.040 Do you want to give me money now?

Dan Martell - September 23, 2019

How to Find Investors When Raising Money

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