How to Fill Your Investor Funnel | Raising Venture Capital

Fundraising is difficult. Pair that with your countless day-to-day tasks as a founder and fundraising can feel impossible. At Visible, we have helped thousands of startups with their investor relationships over the past four years. Our biggest takeaway when it comes to fundraising? Your best chance of fundraising success is having a process in place. 

Getting Started — The Fundraising Funnel

When it comes to fundraising, we like to think of it as similar to a traditional sales and marketing funnel for a B2B enterprise business. In its simplest form, a traditional sales and marketing process can be broken into 3 steps:

1. Attracting and adding qualified leads to your top of the funnel on a regular basis.
2. Nurturing and moving the leads from through the funnel with the goal of closing them as a customer. (aka get them into a buying process)
3. Serving customers and creating a great experience until they become evangelists or promoters.

You can easily translate the 3 steps above into a similar funnel for fundraising:

1. Filling the top of your funnel with qualified potential investors. These investors generally come from cold outreach, warm introductions, or inbound interest. You want to make sure these fit your “ideal investor persona” — right sector, stage, geography, check size, etc.
   
2. Nurturing and moving investors through your funnel. While you may not be actively trying to close new investors and add capital you should constantly be working the top of your funnel. Staying fresh on the mind of potential investors 365 days a year using traditional marketing tactics will pay dividends when it’s time to pull the string on a new round of capital. Pro tip: send them a lite version of your quarterly investor update. ‍
3. Building relationships and communicating with your current investors. Customer success is key to maintaining a strong relationship with customers once they reach the bottom of the funnel. The same can be said for your investor funnel. As a founder, one of the first places to look for capital is current investors. One of the first places a new investor will look to for guidance will also be your current investors. At the end of the day your current investors should be the ultimate evangelist for your business. 

Filling Your Funnel

Fundraising is a challenging, time consuming process for startups. One of those major challenges is finding the right investors to fill the top of your funnel. 

For well-networked and experienced founders, filling the top of a fundraising funnel usually comes naturally. Past investors, customers, co-workers, friends, etc. are generally eager to help a seasoned founder. 

For those founders who are not as well networked, filling the top of the funnel can be more of a challenge. On top of their day-to-day tasks, founders spend countless hours finding investors and trying to understand: 

• Is this investor active? What deals have they done recently?
• Will they lead? Take a board seat? 
• What geographies do they invest in? What stages? What verticals? 
• What size checks do they typically write?
• Have they raised a new fund recently? 
• Do they have certain traction metrics or growth rates they like to see? 

The current patchwork of data sources & resources lack the founder first mentality, can be cost prohibitive and lack insightful data for founders who are fundraising. That is why we built Visible Connect — our free investor database to help you find qualified investors for your business. Find investors and add them directly to your Fundraising Pipeline in Visible. Give it a try below:

→ Use Visible Connect

Or learn more about Visible Connect here. 

Moving Investors Through Your Funnel

Having a list of investors to target is a great start but only half the battle. Now it is time to reach out and start pitching these investors. If you’ve done your research — they should be a fit and are willing to sit a meeting. So how do you get in touch?

• Warm Introductions — One of the best ways to get in touch with a potential investor is a warm introduction. If you have your eye on an investor, search LinkedIn, find mutual connections, reach out to your network and find a way in the door. 
• Cold Outreach — If you can’t find someone to introduce you, don’t be afraid to reach out cold to a new investor. There are countless blog posts for best practices for reaching out cold to potential investors. This post from the Founder Collective is a great place to start.
• Social Media & Events — Given the lack of physical events more VCs are turning to social media. Don’t be afraid to interact with VCs on Twitter you are eyeing to get on their radar and build a relationship over time there.

Ultimately, getting connected with an investor is no different than hustling to find your first customers. 

Managing Your Funnel

Once you have momentum at the top of your fundraising funnel, the real fun starts. This is when you start building and tailoring your unique fundraising process. Just as you test different outreach and collateral in your sales and marketing funnel, the same can be said for a fundraise.

Naturally, some potential investors will be of higher quality and priority for your business. To get organized we recommend splitting your investors into 3 tiers. With Tier 1 being the firms you believe are most qualified, followed by tier 2 and 3. From here, we recommend taking on your top-of-funnel investors in “sets.” This means grouping investors in sets of ~5 (we suggest trying to keep sets to 5 investors or less) so you have the opportunity to better evaluate and tailor your pitch.

As a rule of thumb, you'll want to make sure you mix in Tier 1, 2, and 3 investors in each "set." For example, if you pitch all of the Tier 1 investors in the first set, you'll potentially miss an opportunity to tailor your pitch and only be left with less qualified (Tier 2 and 3) investors.

Once you have your pitch tailored you can continue reaching out to “sets” of investors to keep up the momentum in your process. Staying on top of these interactions and conversations is key to an efficient process. Just as you have a CRM to track customer interactions, the same holds true for fundraising. To help track and manage your fundraise, use our free Fundraising CRM — give it a try below:

→ Track Your Fundraise in Visible

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To get your fundraise off the ground be sure to check out our Visible Connect Database + Fundraising CRM. To learn more about fundraising and what comes after filling the top of your funnel check out our “All Encompassing Guide to Startup Fundraising.”