Fundraising can seem like herding cats. You get some initial momentum, potentially from a pitching event, and have a bunch of conversations but can’t seem to get the funding commitments to roll in. I heard one person use the analogy that nobody likes to be the first one on the dance floor. Well, many investors don’t want to be the first one to write a check. Worse yet, some want to be the last check written. Think about it from their perspective. If they write your first check and you don’t get anything else (or only get to 25-50% of your target), their investment is suddenly a lot more risky than the investor that writes the last check knowing exactly how much you’ve already raised and what you can do with it.
I commonly advise startups to think about toppling dominos that are setup like a triangle of bowling pins. The first domino is anyone that will invest, the next row of dominos are investors with at least some reputation and behind that are the investors you’d love to have on your side.
Said a different way:
- Get anyone to invest
(of course, within reason)
- Get someone to invest
- Get someone specific to invest
- Get the rest to close out the round
Over-simplified, but you get the idea to keep in mind.