How to get a Lead Investor for your Deal I often have startups come to me saying they have five investors interested in their deal but no one wants to lead the deal. Leading the deal means taking responsibility for the initial due diligence and terms negotiations. There are syndicates in which investors will lead the deal and then take a carry on those who follow but for the most part, you need to find a lead. Asking an investor to lead your deals is tantamount to saying, “how would you like to do 40 hours of work uncompensated?” When you see how much work it is, it’s not surprising that most don’t jump at the chance. Convertible Note Instead of finding a lead, I recommend starting with a convertible note with friendly investor terms. There are many investors who want to be in the deal, but aren’t investing enough to put the terms sheet together. The key is to make it easy for them. Put together a convertible note (or SAFE) with the terms so it’s ready for signing. The Convertible Note doesn’t set valuation and doesn’t include most of the terms you’ll find in an equity raise so it’s simpler. Some investors don’t like convertible notes. They want valuation set and equity ownership established up front. For an investor who will invest more than $100K, we invite them to lead the round. It’s too much work for someone investing only $25K. They won’t find the time to do it right. You just don’t know when that lead investor will come in so you run the Convertible Note till they do. Once the lead investor sets up an equity terms sheet, all the Convertible Note holds convert over to the equity round. Please note: if you only want a loan and not an equity investment, then you should use a Promissory Note, not a Convertible Note. A Convertible Note implies you are going to convert to equity in the future. Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more. Connect with him about fundraising, business growth, and emerging technologies

When startups run out of cash and need dollars, they often seek funding. They can find it difficult to get interest from investors. Investors are on the lookout for good companies and what you need to raise funding comes down to two words: team and traction. Traction Investors look for teams that are achieving traction at some level. In a pre seed deal building out the IP, the product and the customer interest in the form of LOIs, freemium use cases, and more count as traction.  With Series A companies, revenue growth and unit economics coming into focus counts as traction. In Series B companies, scaling growth and expansion into other verticals counts as traction. In each case, the investors look for the team coming together to support the growth. They look for teams that have the right skills. The team includes C-level executives, advisors, mentors, partners, and consultants. The investor constantly looks for evidence that it is working. Those raising funding must demonstrate that the team is achieving traction. Most startups talk about the promise of the business, while this is okay for the first pitch, afterwards the investor no longer wants to hear about the promise and the forecast, they want to see progress happening. Before launching your fund raise campaign ask yourself: Can I show a growth story now? Can I show customer interest? Can I demonstrate I have the right team? Team members don’t necessarily have to be on staff at full salary and many team member slides are filled with those who in reality are working part-time. It demonstrates you know who will do the work when the demand increases. Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more. Connect with him about fundraising, business growth, and emerging technologies

There are a million articles on how to pitch a VC and negotiate a valuation. There are a million more on how to ask for funding from family and friends. Unfortunately, this is not how you start a fundraise. Getting Started   The real work starts weeks in advance. Build up a network of investor prospects who know what you are doing and find it interesting. You start with those you know and those who are investing in startups. You craft a list with name, email, and phone number. Every week you should be adding ten or more names to your investor prospect list. For those you know well, you can ask them for a call/coffee. If someone is unfamiliar, it’s best to give them an idea of what you are doing via email first. Then ask for permission to keep them informed of your progress.  After one or two months they will have a good idea of what you are doing and how it’s going. At that point, you can ask for their interest in a call/coffee. If you ask too soon in the process you may be met with puzzlement or flat out no. They can’t say yes until they understand the deal well and have some sense that there’s traction behind it. There’s an old saying in the investment world, “If you want funding, ask for advice. If you want advice, ask for funding.”     Ask for advice, referrals to other investors, and general business assistance such as “who would be a good CFO?” Keep in mind, this process takes several months (not weeks). Ultimately, it’s a numbers game and in order to find the 10% to 15% that will actually invest you have to meet a certain number of investors and keep them updated . Just like sales, fundraising is a slow building process. It takes seven touches to close a sale, so it takes seven touches to close an investor.   Food for thought It’s rare to hear an entrepreneur say the funding process went by faster than they thought it would. Universally, they say, it took longer than we thought.  Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more. Connect with him about fundraising, business growth, and emerging technologies

When I started angel investing, there were venture capitalists, and angel investors. VCs were the “professional” money that was usually provided by someone else and Angels were the “novice” money and were provided by the investor himself. VCs had access to larger amounts of capital and were the go to group for later stage funding. While there are many more angel investors by headcount, their investments are smaller. Startups approached angel investors in the early stage because most VCs wanted to see more traction and there were usually angels in one’s network. Today, the world of startup investing is quite different primarily because of the rise of the internet and the shift of practically every business function online. Five years ago, I had a startup complain to me that they could run every function of their business (sales, marketing, finance, etc) online except fundraising. For angel funding they had to make the rounds of the local angel networks. They had to meet investors in the coffee shop to progress the raise. As the world increasingly moves online so too does the fundraise. Today there are numerous sites that let the startup access investors. I receive calls daily from startups across the US (and increasingly Europe) wanting to access my investor network. An established startup that has raised some funding already, now expands the fundraise to include other networks across country. In fact, it’s an exercise of funding investor networks online and engaging them as part of the overall fundraise process. I tell startups they need to have a fundraise strategy that goes national from day one. It helps greatly to have some funding from your local community. If your message to the investor networks is that no one in your local community would invest, then this will be a difficult raise. It’s best to show up with some funds raised. Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more. Connect with him about fundraising, business growth, and emerging technologies