Building a fundraising database, a perfect subject for an incredibly lovely Monday morning in the ATX. Cool, crisp, sunny — ahhh, on Earth as it is is Texas!
So, you are ready to begin fundraising. You need a target list, a database of potential investors. This is true whether you are in the family & friends, angels, syndicated angels, seed funders, or venture capitalists arena. You need to identify the funders.
So, how do you do it?
In our example, I will build on ten such campaigns I have assisted entrepreneurs in the last year.
It is hard work, but it is not a difficult task.
How do we create a fundraising database, Big Red Car?
First, let’s make sure we are on the right wavelength, shall we?
Go back and review this blog post on FUNDRAISING. In it, we make short shrift of the issue of building your database. Today, we will dig deeper.
OK, Big Red Car, what is our objective?
Here is why you need a fairly large target list:
1. You should start with a goal of 200 targets in your database. Let’s sneak the word “qualified” in, shall we?
2. Of these 200 targets, 10% — 20 — will have an initial interest in your endeavor. Don’t fret, that is normal.
This also means that 180 will pass on the idea. But, you are focused on success, not a bit of rejection, right?
3. Of that 20, half will come to a meeting (remember it is a 5-7 touch process like everything in sales) with a checkbook.
4. Of that 20, 5 will write you a check.
That’s the way it is — 200 qualified targets, 20 initial interest, 10 checkbooked meetings, 5 checks. Voila!
The fundraising database, Big Red Car?
OK, sorry. Here’s the mechanics of what you are going to do:
1. Create a database format using your favorite bit of software. You can use Excel or Access or some other bit of wizardry.
You will need the normal stuff — name, email, phone, physical address, point of contact. “Notes” would be nice.
2. Pick target cities which have some connection to your endeavor — Silicon Valley, New York, Boston, Chicago, Dallas, Houston, Austin, San Antonio, Raleigh, Phoenix. They don’t have to be the hottest of the hot spots, but make them relevant to your endeavor or industry.
Always start local first. If you live in Austin, start with Austin, Dallas, Houston, San Antonio.
3. First wave, go to the business journals of your target city and identify every deal that has gotten funded in the last two years. Sort them by size and industry.
Be careful to understand where the funder is actually located. If they are in Austin, but the deal was done from San Jose — know that.
4. Go to the local accelerators and incubators and chat up the person in charge. Once you have gotten the locals, do the same thing in other target cities.
You are fishing for who comes to their “deal day” and fits your endeavor and industry. This is done best face-to-face.
Done right, this is an exceptional source of information. One of the reasons to do it face-to-face is you are asking for a taste of their secret sauce. If you make the right approach, they will assist you.
5. Work all the Internet publications — Tech Crunch, Crunchbase — and go through the same process identifying whether you are in the right church and in the right pew.
Size, industry, endeavor.
6. Only then, begin to work your contacts and ask for suggestions.
[Note: This is where most entrepreneurs start. They want to get into the pitching with such eagerness, they don’t do the work. End here when you have done the heavy lifting of building the larger fundraising database. Have some damn restraint. Touch all the bases. Sorry.]
7. Do some research and get the points of contact in your particular endeavor in the funding target. Don’t pitch your eCommerce deal to the medical device guy.
8. Run your list by as many well-connected folks as you can and try to get an introduction – email is good. Phone call is better. Cup of joe the best.
This work can be hard as it is painstaking. Might be something you hire a freelancer to do. I had great luck with a couple of guys I found on Upwork. They worked magic at $15/hour.
That’s all, Big Red Car?
Yes, dear entrepreneur, that’s all there is to it; and, yet, many entrepreneurs fail to do this foundational work.
Recently, I had the great pleasure of working with an entrepreneur who took this very seriously. He made a fundraising database of 400 targets.
The list was incredible. He went the extra mile and delved into each target and found the right point of contact.
The document he produced was a thing of beauty.
It ended in a funny way — he picked a specific city, went there, had 23 meetings, got his deal funded on exactly the terms he’d set out.
Later, he said, “It was premature fundraising. I was so psyched to use my fundraising database. I never got to do it.”
This is a problem you want to have.
Pro tip, dear entrepreneur?
OK, you are going to be pitching a bunch of people who are going to tell you “NO!” That does not bother you because you are tough as nails, right?
When you are at the end of the pitch and realize it isn’t going in the win column, ask, “Who do you know that might be interested in this idea?”
It takes a little moxie to do it, but you have moxie coming out your ears. Just ask the damn question.
I have had entrepreneurs who raised ZERO from their target list and all the money they needed from the referrals from the target list.
Remember, at that instant in time, the person who is quashing your dreams probably feels a little bad. This is the moment they will try to assuage their own guilt by a bit of gratuitous assistance.
Then, of course, they will be back to drowning kittens.
Bottom line it, Big Red Car
Building a fundraising database is a simple thing. Like a lot of otherwise simple things, it requires painstaking work.
The key to success is getting to that magical 200 targets BEFORE you start pitching your deal.