Techstars recently hosted part two of its fundraising series, diving deep into the tactical aspects of securing investment. Marketing Manager Jessica Kaing kicked off the session by introducing the speakers: Christine Hong, Senior Investment Manager for the Techstars New York City Accelerator, and Dave Cass, Managing Director of the Techstars Workforce Development Accelerator.

The session, designed to be highly interactive, followed a "Ready, Set, Go" approach to fundraising, building on the strategy discussed in the first session. Christine and Dave provided invaluable insights into preparing materials, managing the process, crafting effective pitches, and understanding the investor toolkit.

"Mise en Place": Everything in its Place

Dave introduced the concept of "mise en place" to fundraising, ensuring all materials are prepped and ready before "cooking" (i.e., actively fundraising). This strategic preparation allows founders to focus on timing and momentum during the fundraising process, rather than scrambling for documents.

This includes:

• Pitches: Multiple versions tailored for different stages.

• Investor Pipeline: A well-researched and organized list of potential investors.

• CRM Setup: For efficient tracking and relationship management.

• Forwardable Emails: Pre-drafted and personalized for warm introductions.

• Financial Model: A thoroughly developed model, crucial for demonstrating financial understanding.

Dave stressed that fundraising begins long before the "round is open." The "ready set" stage, with its focus on strategy and comprehensive preparation, is the foundation for success.

Process Management: Keeping the Funnel Moving

Fundraising, much like business development, requires a structured process. Christine highlighted that this effort often consumes 70% of a CEO's time, emphasizing its critical importance for closing rounds.

Key aspects of effective process management include:

• CRM for Fundraising: Treat investor relations with the same rigor as sales, maintaining a clear funnel.

• Genuine Momentum & Scarcity: Build authentic excitement around your progress and attract investors organically. Avoid faking these elements, as trust is paramount and difficult to regain.

• Overcommunication: Keep investors updated on traction, good news, and even challenges. Honesty about struggles demonstrates a realistic understanding of the startup journey.

Defined Timeline: Establish clear start and end dates for your fundraising round to maintain momentum and prevent it from "dying on the vine."

Fundraising Timeline: A General Flow

Before Week 1

All materials (decks, one-pager, financial model) are prepared and ready. Initial outreach to investors (warm intros preferred) is completed.

Intro Meetings

Schedule investor meetings. Objective: confirm alignment and secure the next meeting. Founders should set their own objectives for the meeting and communicate them.

Deep Dive

Investors delve deeper into the business and team. Founders can subtly ask for soft commitments, which may be contingent on specific milestones. Focus on creating momentum and genuine scarcity.

Diligence & Close

Investors review the data room and ask follow-up questions. Co-commit to a timeline for closing. Communicate the lower end of your fundraising range; oversubscribing is a positive. Aim to close the round on the communicated date.

Closing

Secure soft commitments and finalize the deal.

Essential Fundraising Toolkit

Dave and Christine outlined critical tools and materials for successful fundraising:

• Target List & Investor Pipeline: Prioritize meeting with less ideal investors first to refine your pitch.

• Investment Memo: Understand that investors write these. Your pitch should naturally feed into their memo, crafting your company's narrative.

• One-Pager/Teaser Deck: A concise (max 10 slides) document to pique investor interest and secure an initial meeting. It should be quickly skimmable and understandable without a presenter.

• Investor Deck (Longer Deck): Used during the meeting to present your company's narrative (max 10 minutes, expect interruptions).

• Drill-Down Deck: Contains more detailed information, answering frequently asked questions, to be used in later-stage meetings or for associates presenting to partners.

• Financial Model: Not just for investors, but a crucial tool for founders to understand their business drivers and scenarios. Always offer to walk investors through it rather than simply sending it.

• Elevator Pitch: A concise (20-30 seconds) summary covering who you serve, their problem, and your solution/benefit. Seek consent before launching into it.

Warm Intros & Forwardable Emails

Christine emphasized the power of warm introductions over cold outreach. To facilitate these, founders should:

• Provide a Forwardable Email Template: Make it easy for connectors by providing a clear subject line (e.g., "Intro for [Your Name] to [Investor Name]"), a brief update on your company, your fundraising purpose, and a list of relevant investors you'd like an introduction to (after researching their portfolios).

The Investment Deck: Key Content

The investment deck should cover:

• Vision & Mission

• Problem & Solution

• How It Works: Simple steps (no need for live demo in early stages).

• Business Model: How you make money.

• Go-to-Market: Only if you have an unfair advantage.

• Market Size (TAM): Use a "bottom-up" calculation. Aim for at least $20B in potential annual revenue.

• Competition & Differentiation: Include direct and indirect competitors, both large enterprises and seed-stage startups. Clearly articulate your unique wedge.

• Moats: How your company will remain defensible over time (e.g., network effects, proprietary tech).

• Team: Highlight founder-market fit.

• Traction, Milestones & Roadmap (Use of Funds): Focus on the milestones you'll achieve with the raised capital, not just expenses.

• Financial Projections: A version of your financial model.

Investor Meetings: Engaging for Success

• Ask for Preference: At the start, ask investors if they prefer a deck presentation or an informal chat. Most lean towards informal.

• Embrace Interruptions: If presenting, interruptions are a good sign; it means investors are engaged.

• The Critical Question: At the end of the meeting, ask, "Based on what you've seen today, what are the top reasons you would not invest in this company?" This forces honest feedback.

Data Room: Timing is Key

The data room, containing granular information like cap tables and contracts, should generally be shared only when close to the investment committee stage or after a soft commitment. Some founders create an "introductory data room" with a one-pager, investor deck, and potentially a financial model, but a full data room tour should be reserved for serious interest.

Q&A Highlights: Deeper Dives

The session concluded with Q&A, addressing key founder concerns:

• Traction for Pre-Seed vs. Seed: Pre-seed focuses heavily on team strength and balance, an MVP in customers' hands (even pilot/non-paying), and the team's learning ability. Revenue, while a positive signal of sales capability, isn't the top priority at pre-seed. Seed rounds may see companies with zero traction, especially in hot markets, but generally expect more validation.

• Traction vs. Story: Both are crucial. A strong story (vision) is essential for getting in the door, but evidence (traction) proves your capabilities. Pre-seed can lean more on vision, but still needs evidence of a working product and learning.

• Fundraising Timing & Typical Round Sizes: Start fundraising 3-6 months before running out of money. Typical pre-seed rounds are $1.5M-$2M, aiming for 1.5 years of runway. Seed rounds range from $3M-$5M.

• NDAs with Investors: Not a red flag, but can signal a founder's inexperience. Most investors don't sign NDAs as they want to discuss businesses and are not in the business of stealing ideas.

• Angel Money & VCs: Generally, VCs are not put off by prior angel investment unless the cap table is messy or the terms are unfavorable. Angel investment can even be a positive signal, especially from notable names.

• Deep Tech Technicalities in Pitches: Start high-level (30,000 feet) and offer to dive deeper into technical details as the conversation progresses. Keep it digestible and understand that investors often prioritize team and market initially.

• Traction Signals (General & SaaS): Beyond specific metrics, investors look for velocity (e.g., 20% month-over-month growth). Quantified LOIs (Letters of Intent) are a strong signal of demand. Paid pilots, even with discounts, are crucial as they demonstrate customer commitment and product validation. Unpaid pilots can be distracting and less indicative of true product-market fit.

The Techstars team hosts virtual events regularly. These events are free and invaluable to anyone looking to develop their skills. Visit the Techstars events page to find out more about our upcoming events.

The Accelerator Hub is another great resource for founders interested in learning more about Techstars and the programs we offer.

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