Preparing for funding — how to plan for an ask before you need it
Kevin Brockland, senior investment officer at MDIF, offers practical tips on what to do if you’re looking for investment in your media startup.
Takeaways
Start early with fundraising, as it may be more difficult and take longer than you think. “It’s a time-consuming process that requires attention from the founder and from the senior management,” Brockland says. “So it’s important to be prepared and be organized.”
Make an investor pipeline consisting of three key segments: screen, connect, pitch. Check out this one made by U.S. seed accelerator Techstars.
While seeking connections to investors, create a “forwardable email” so it’s easier for your network to send introductions.
Know your market, your critical KPIs, and prepare a monthly cash flow statement. Also know your cash needs.
Context
If funding is hard in normal times, it’s even harder during a global pandemic where face-to-face connections are replaced with email chains and Zoom meetings.
At Splice Beta Online, MDIF’s Kevin Brockland, who has vast experience in investment banking and private equity before becoming a media investor, offers tips on what entrepreneurs should think and do at every step of the way.
Fundraising tips
Know what you want — when, how much, and what for. Understand the market and your value proposition to it. Don’t forget that your market may have more than one side. For example, media start-ups also serve advertisers in addition to an audience.
Figure out your go-to-market strategy. Don’t ignore the competition.
Know your milestones and your critical KPIs to know you are on track. Don’t get lost in the aggregate as the details are what make it. Prepare a cash flow statement. Don’t make unrealistic forecasts that are impossible to achieve. Investors would be harder to persuade if they think the plan is risky.
Know your cash needs and how long the money would last. Don’t plan too short-term and think you will never have to raise again; most companies will end up raising again.
Know who you want money from and why. In the screening process, know your funding types and investor types (e.g. MDIF is an impact investor). Match yourself to the investor’s criteria that may include industry, stage of the company, investment amount, and geography.
Think about what kinds of value — mentoring, experience, recruiting, network — they bring to you and what matters the most. Prioritize so that you can focus on the high probability outcomes. When connecting, figure out who you already know from your network, as well as who you need to know to get introductions.
Know what investors look for. Create the narrative so that it connects the dots from “why you” and “why now”. Customize this depending on the investor you speak to, and keep practicing, because you will get grilled.
The investors are also managing a funnel just like you. It’s important for you to understand their stages: from initial meeting to analysis and due diligence.