3-Month Fundraising Plan — Priced Equity Round

Photo by Cara Fuller

Once your business is ready to fundraise a priced round to propel your expansion, be sure to create a clear plan. Raising money for a priced equity round, often called a Series A, requires a methodical approach; and by separating your process into clear steps, you give yourself the best chance of success. Here are the steps to fundraise in 3 months:

Step 1. Prepare

Week 1–2

Preparing for your fundraise is critical in organizing your outreach, to maximize the efficiency of your time.

• Select fundraising point person (e.g., managing partner, founder, or CEO)
• Deprioritize all other business activities for point person — expecting their full attention to yield the best results
• Engage and prepare lawyer to receive term sheet in 60–90 days — requesting a 72-hour response turnaround
• Set fundraising start date and consider holiday conflicts (e.g. Thanksgiving through New Year are challenging for meetings)

Step 2. Build Prospect List

Week 1–2

Extensive prospect lists give you a higher chance of “Yes” conversions and hitting your fundraising goals. Expect an average “Yes” conversion of ~5%, thus, raising $1M from 10 investors at $100K each will require outreach to ~200 prospects — as 10 is 5% of 200.

• Create *long* prospect list of ~100–200 contacts that may be angels/family offices/funds (e.g., friends, family, ex co-workers, advisors, and peers)
• Search personal databases (e.g., LinkedIn, contacts, email list, alumni networks, online communities, etc.)
• Search across similar profiles (e.g., location, community, etc.)

Step 3. Create Fundraising Materials

Week 1–2

Fundraising materials provide a library of comprehensive content that outlines your growth potential and state of the business — enticing investors to say “Yes”.

• Create pitch deck of 10–15 slides
• Create teaser deck of 3–6 slides, if needed
• Create one-liner, elevator pitch, and company description paragraph
• Prepare document database (e.g., investors may request diligence materials or financials)
• Confirm with references that they’re comfortable giving positive feedback to investors — giving references highlights to discuss ahead of time

Step 4. Research Prospects

Week 2–3

Research on prospects help you target the right investors, demonstrates your preparedness, and helps you answer tough investor questions.

• Research and qualify prospects to determine:

>>>Average check size
>>>Process and timing to make investment decisions
>>>Decision-maker contact
>>>If they lead rounds vs. participate
>>>Number of new investments this year and last investment
>>>Further info needed to make a decision

• Prepare responses to investor FAQs (e.g., growth trajectory, use of funds, valuation, references, other investors, etc.)

Step 5. Meet Existing Investors & Friendlies for Feedback

Week 3–9

Feedback conversations give you useful insights on your value proposition, help you improve your pitch, and double as a time to secure soft commitments where possible.

• Meet with and get feedback from existing investors and friendlies (e.g., other entrepreneurs and investors with whom you have a personal relationship) — if feedback is positive, ask specific question “Are you interested in investing?”
• Update pitch deck based on feedback
• Collect any introductions received and add contacts to prospect list

Step 6. Meet Potential Lead Investor

Week 4–10

Your lead investor will anchor the execution of your term sheet, moving you towards closing your round.

• Identify and meet with ~20–60 potential lead investors (e.g., appx. ¼ of your prospect list, see “Step 2”)
• Secure term sheet from the potential lead investor
• Consider moving to “Step 9” if no lead is secured
• Meet with additional prospects (e.g., angels, family offices, and funds) to continue filling up round and gauge market response before your first closing

Step 7. Review Legal

Week 8–10

Your legal team will review and ultimately finalize the lead term sheet you’ve received, so you can sign it and begin the closing process.

• Send lawyer lead term sheet for review
• Send existing investors term sheet for review
• Verify with lawyer the minimum fundraise amount needed to close round
• Consider performing multiple closes within the same round, if needed (e.g., Tranche A and Tranche B)

Step 8. Inform Potential Lead Investors & Select Lead Investor

Week 10–11

Notifying other potential lead investors of receiving a term sheet helps create competition and urgency that will close your round faster.

• Inform all potential lead investors of receiving term sheet, and push for decisions
• Secure additional term sheets from all potential lead investors
• Select lead investor
• Finalize valuation with lead investor
• Confirm lead investor’s commitment in writing

Step 9. Meet & Select *Additional* Prospects

Week 10–11

Securing commitments from *additional* prospects will assist in fill up your round before closing.

• Meet with additional prospects (e.g., angels, family offices, and funds) to continue filling up round before the closing
• Search networks of all investors and get intros
• Ask prospects the specific question “Are you interested in investing?”
• Be prepared to pitch in casual settings (e.g., dinners, talks, events)

Step 10. Close the Round

Week 10–12

Close your round to begin receiving the committed capital.

• Sign term sheet
• Introduce your lawyer to investors’ lawyers to conduct first closing, convert outstanding notes/debt, and send documents for counter-signing
• Produce diligence documents for investors, if needed (e.g., revenue, customer lists, etc.)

Step 11. Follow up

Week 12

Sending follow-ups to new and existing investors is a great way to say thank you, and to initiate your investor reporting.

• Send thank you emails/cards
• Send regular investor updates (e.g., monthly or quarterly) — including recent good news, product releases, and requests for help

Schedule Press

Optional Week 12–24

Press can drive new prospects, new investors, and help with hiring.

• Schedule press releases to coincide with product releases, and maximize your chance of coverage

Running a fundraising process can be challenging for business owners. Following these steps when fundraising allows you to move quickly and optimize your time; giving you the injection of capital you need now to grow.

Kaego Ogbechie Rust is CEO at Foresight Advisors — working with foundations, investment firms, non-profits, and for-profit ventures — offering comprehensive support across vision & strategy, investing & financing, and operational planning during critical periods of your growth.
If you’re looking for help, contact kaego@foresightadvisors.com or visit www.foresightadvisors.com.

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