Whether you’re in corporate finance, biotech, pharmaceuticals, or any other sector, generating investment funding is a fact of life. Raising capital is never easy, whether you’re representing an established company or a startup, and the fundraising climate has the power to warm things up or chill them right down.
Fundraising conditions can fluctuate depending on current economic and geopolitical climates. Inflation can cause budgets to tighten, making valuations grow more realistic. Political changes can affect regulations on fundraising and other deal activity, which may increase caution.
Despite how changeable the landscape can be, fundraising remains a critical part of business development and growth. There are good ways – and better ways – to achieve it, especially in tough years. And they all start with the investor relationship.
When the pressure’s on, the way you communicate with your investors is critical.
The pitch is key, but preparation and follow-up are critical
It makes sense for beginners in the fundraising space to fixate on the pitch. It’s the big drama moment. You get to weave a compelling story and share your passion. It might not be the secret fantasy of every fundraiser to seal the deal in the room like they do in the movies, but it’s crossed everyone’s mind.
Those with deeper experience see the pitch as one part of the puzzle. That instant score happens sometimes, in some industries, and in some fundraising climates. What’s more important is to extend that energy, excitement, and professionalism to every single investor interaction – before and after the pitch. This longer-term perspective recognizes that each and every moment counts. The goal is not to raise capital one time, but to nurture a longstanding relationship.
- Seamless transition from pitch to pitchdeck
Good pitch or bad, in person or remote, investors will ask to see your pitchdeck. That document should be ready to view and share the second the pitch is over. In fact, the more successful your hook is, the quicker you’ll need to follow up. Investors may want to see videos, illustrations, market research, and demos. Some may even request to see a term sheet or due diligence right away.
Anyone overly focused on the pitch but not ready with this kind of documentation could strike out. Any delay or glitch in access is a break in investor communication. However, the way the documents are provided is critical, too. Emailing is an outdated option that won’t cut it for large files, financial statements, trade secrets, Intellectual Property, and financial data that needs safekeeping.
- Prepare your virtual data room ahead of time
A better choice is to host your pitchdeck and diligence materials in a virtual data room (VDR). These are virtual depositories for sharing and collaborating on documents securely and efficiently.
With a VDR, investors and stakeholders can access your support documents easily from anywhere while you monitor who’s accessing them, gaining valuable intel about investor interest. You can even require viewers to sign an NDA before viewing your deck.
Having support materials available before your pitch enhances investor communication and improves your chances of securing funding. Not having them available is a strike against you.
How to strengthen your fundraising case
Documentation is your cornerstone in the fundraising game. Beyond the pitch – whether it’s an email, newsletter, or presentation – investors need a paper trail to make the case to their boards and stakeholders. Leading fundraisers nurture the investor relationship through each interaction. That includes interactions with individual investors and interactions with their stakeholders, boards, customers, and even vendors.
- Build a strong narrative
Good stories are easy to remember, relate to, and share with others. Find the value proposition in your offering and make it clear, concise, transparent, and honest to your investors. The clearer your narrative is to the investor, the easier it will be for them to move the story down the line and motivate key behind-the-scenes decision-makers who can make or break your capital raise.
- Demonstrate impact
Many investors want to leave a positive impact on the world. Find something that demonstrates how investing in your venture helps the community, makes a difference, or reduces environmental harm. Revisit your founders’ stories to rediscover their leadership goals, mission, and values.
Research your investors to see what impact areas have drawn their interest before and if there are overlaps. However, always be truthful. If your missions don’t overlap, the commitment to making a difference might be motivation enough.
- Build consistency among your team
Once you’ve established your narrative, identified your value proposition, and chosen your impact areas, clarify your messaging with everyone on your team. Ensure that narrative consistency extends to the diligence and materials you use to support your case.
For example, create a workflow that makes it easy for team members to use the same data and metrics, share the right versions of documents, and reference the same research. VDRs are an essential tool for this purpose. They give teams a collaborative space with version control, access management, and a single source of truth.
- Respect investors’ time
Successful fundraisers never miss meetings or show up late. It wastes everyone’s time and disrespects those you’ve arranged to meet with. Exceptional fundraisers take that courtesy one step further. Respect doesn’t only operate face-to-face. It’s also demonstrated through the tools and platforms one uses.
If networking and collaboration tools are difficult to use, glitchy, or frequently offline due to low SLA, it’s a sign of unprofessionalism. When faulty or ineffective tools force investors to contact the help desk, pore over technical FAQs, or spend time wading through poorly organized diligence documentation, that shows disregard for your investor’s time.
Savvy fundraisers need to find ways to accelerate deal flow by selecting platforms and vendor services that merge seamlessly into the investor’s busy day, making interactions efficient, easy, and enjoyable.
- Solid due diligence
If you believe in the investment opportunity you’re offering, your job is simple. As a fundraiser, you need to help your investor understand your organization as intimately as you do.
This understanding is a function of the diligence process, in which diligence and market research documentation are an extension of your communication skillset. Every data point and document you provide help investors lift the hood on your organization, understand what makes it tick, position the product and its future, measure growth, and calculate their potential ROI.
Start by providing a realistic valuation supported by the right documents. The following checklist can get you started.
- Financial statements: A financial snapshot of your organization’s performance and position
- Market research: A clear picture of the product and its position in the market
- Business strategy documents: An outline of your organization’s goals and projections
- Legal agreements: Contracts, NDAs, leases, etc.
- Intellectual Property documentation: Patents, trademark, and copyright information
- Organizational chart: An outline of your internal structure that sketches out roles, responsibilities, and relationships
- Other supporting documents: Industry awards, certificates, customer testimonials, etc.
Aside from being prepared and gathering all the necessary documents, it’s important to be patient when confronted with today’s smaller investment rounds and longer timelines. Build time into your schedule for investors to review and ask questions. The more time you spend nurturing the investor relationship, the stronger your case will be during the next pitch round.
How VDRs help meet communication objectives in fundraising
If there’s one clear takeaway from the above strategies, it’s that a considerable part of the investor relationship is built offline. The pitch is important, your personal relationship is important, and shared values are important. However, at the end of the day, deciding whether to invest is based on how you’ve presented your case through documentation.
Everything about managing and sharing documentation is part of your collaborative relationship. In today’s digital world, our relationships are cemented through online interactions.
Top-level VDRs are equipped with banking-level security, preventing documents from getting stuck between firewalls and causing timely delays. They help manage collaboration and diligence efficiently to nurture the investor relationship and strengthen your chances of a successful capital raise.
- A VDR is a vital information hub that allows you to organize and share large volumes of confidential documents with investors, lenders, auditors, and limited partners.
- A VDR is a due diligence touchpoint that makes the due diligence process easy, efficient, and secure for stakeholders in different geographical areas
- A VDR acts as a secure document vault. Top VDRs feature bank-level encryption and advanced security features, which demonstrate integrity. Complying with security and privacy protocols such as GDPR, SOC 2, and HIPAA shows respect for your personal and data privacy and that of your investors and stakeholders.
- A VDR is a secure space for document sharing and collaboration. Leading VDRs have sophisticated user management and permission controls to protect privacy and secure documents while allowing for stakeholder review. Built-in collaboration features such as Q&A and notifications help fundraisers move their case forward, stay on track, and keep stakeholders engaged.
- A VDR provides a valuable audit trail that helps you identify, understand, and manage your investment prospects. Seeing how parties engage with your documents – who’s looking, for how long, and when – helps you identify serious investors and focus your energies.
- Industry-leading VDRs provide evidence of professionalism. VDRs with high SLA (over 99% uptime) and full-time expert customer support build trust, reliability, and dependability. Look for VDRs that offer branding support, letting you customize your data room to make a lasting impression and help investors remember your colors, logo, and brand.
Nurture the investor relationship with a Firmex VDR subscription
A Firmex VDR subscription gives you unlimited access to your own virtual data room for fundraising, document sharing, collaboration, and other purposes. A subscription supports today’s investment timelines – there are no added fees when things take longer to set up or finalize.
Firmex prides itself in providing the features you need and none you don’t. Efficiency features such as bulk upload, data indexing, file/folder naming, and version control help your teams get set up quickly to manage documents, so you’re ready to impress investors instantly after the pitch.
Branding and customization features help you stand out so investors see who you are, remember your story, and support your case. The Firmex VDR is an essential fundraising tool that helps you showcase honest valuations and craft a narrative within your business records for potential investors to see.
With 4200+ clients across 180+ countries and 20,000 data rooms opened yearly, Firmex is a clear winner in the VDR landscape. Discover how a Firmex VDR subscription helps showcase your investment potential and strengthen investor relationships.
Book a demo: https://fir.mx/DEMO
