At one time, almost all startup fundraising happened in person. Investors wanted to see the founders face-to-face to get a read on their passion, intensity, and integrity. With COVID, all that changed, and the industry quickly pivoted to conduct virtually all pitching and investing over video conferences, mostly Zoom. I don’t think we will ever go back to pitching entirely in person, so mastering remote fundraising is critical.

A comment by Munly Leong on an earlier video prompted me to create this episode. He asked how he could find angels and VCs making investments using 100% virtual and remote processes. Before addressing the general advantages, disadvantages, and key tips for virtual pitching, I want to address his question specifically.

Finding people willing to invest 100% virtually

There are two aspects to Munly’s question, finding investors with virtual workflows and determining if they are actually making investments that way. Fortunately, you can easily find lists of early-stage angels, groups, and funds online. I put a list of resources at the bottom of this blog. Almost all of the investors I know moved quickly to an entirely virtual process. All VCs, most groups, and many angels provide information about their application and selection process on their websites. A quick check will tell you if they can handle this kind of interaction. If they don’t say on their website, reach out to ask the.

The data I have seen suggests that the level of deal flow returned to normal quickly after the initial COVID lockdown. Most of the groups I have talked with are still actively writing checks to pre-seed companies. Sites like Signal and Crunchbase have data on investment activity for many investors. If you can’t find out whether a particular person is still actively investing through those pages, it’s appropriate to reach out and ask about that as well. Inquire about how many deals they do each year, when they wrote their last check, typical check sizes, and any areas of focus or types of business they avoid.

Finding investors for companies outside North America and Europe

One complication for Munly is that he lives in Thailand. That can be an issue for North American investors. Many of us are unfamiliar with the laws, regulations, rules, and protections in other countries. With enough opportunities at home, that can lead to quickly rejecting international deals.

One step you can take is to incorporate your company in the US as a Delaware C Corporation. That is the gold standard for US investors. Almost everyone knows how they work and will be far more comfortable investing if the company is structured that way. That will reduce resistance, but many investors will still shy away if the company is physically located outside the US. However, some angels and funds specialize in international investments. They realize that these markets are often green fields with little entrenched competition, and the valuations are often very attractive compared to Silicon Valley startups. These people usually promote their international focus and in what regions they invest.

Upsides and downsides to virtual fundraising

In most respects, pitching remotely is similar to pitching in person. The most significant advantage of remote fundraising is the ability to reach a much larger audience. It does not make financial sense to fly across the country, or the world, for a 20% chance of raising $50k. However, online the cost of fundraising anywhere in the world is just the effort to create your materials and the time it takes to pitch and follow up. You could easily deliver dozens of presentations per week where it would be hard to do more than five in person. Your pool of possible investors got many times larger when everything moved online.

That is one of the downsides as well. Everyone is reaching out to many more possible backers, so investors are all getting many more applications. Therefor the competition for attention is even more intense. The other disadvantage is the difficulty of forming relationships over zoom. When you meet face to face, you have time to talk and develop a personal connection. Your personality can help sell them on your company. Over Zoom, you only have the pitch.

Pre-screening matters more

Investors eliminate most applications before you even get a chance to talk to a human. That is even more true with a virtual process because of the increased volume of requests. That puts even more weight on your deck and other materials. Creating a video can help re-introduce the human element into this distanced process. Investors need to understand your business model, customers, and opportunity immediately. If anything is missing or confusing, they will probably just say no rather than following up with questions. The deck absolutely must be understandable without you speaking over it. I wrote a blog a while back on why you should have two pitch decks, one for reading and one for delivering.

The pitch is everything

With less human interaction, the pitch now carries all the responsibility for getting a second meeting. Because you don’t have time to create a relationship, the presentation absolutely must stand out over all the others they will see.

With no opportunity for conversation before and after a presentation, everything the investors need to know must be in that deck. You can see my list of nine things angels want to see here.

I believe narrative can make up for the low fidelity of communications over Zoom. Our computers are incredibly distracting environments. It is easy to drift off and stop listening. However, people are hardwired to listen to stories. Narratives hooks your audience emotionally, conveys information more effectively, and helps keep their attention on you.

Present, Converse, Demo

A pitch where you simply deliver a slide deck for your whole allotted time can feel dull. Switching between the deck, a conversation, and demos can keep the energy up and ensure the audience stays engaged. Encourage questions and discussions. Practice switching between your deck, backup slides, and demos quickly and smoothly. Create backup slides for all of the likely questions and digressions that may occur because you can’t simply run to a whiteboard.

One danger of this approach is the investor may pull you down a rabbit hole that takes you off message and might cause you to run out of time before hitting your key points. Memorize the concepts you need to communicate during these meetings and steer the conversation back to them as quickly as possible. You may need to say that you will be happy to provide more information after the meeting, which you can then discuss in the next call.

Improve your A/V setup

If you look or sound bad, it reflects poorly on your company, even if just subconsciously. Find a quiet location for your sessions with good lighting and fast, reliable internet. One of the most common mistakes I see is when a founder looks like they are in the witness protection program because they sat in front of a bright window. I have also lost track of the number of times I have seen founders freeze on screen when their internet becomes problematic.

Even more important than the image is your audio. It is harder to hear and understand a speaker over Zoom than in person. That gets much worse if you sound like you are at the bottom of a deep well or talking through a pillow. Invest in a decent microphone. A $50 mic will make a massive difference if you place it close to your mouth.

Turn off all alerts, popups, and reminders both on your computer and on your phone. Hearing constant Slack alerts or text messages is distracting and unprofessional. Even worse is when a message appears on your shared screen, sometimes containing something embarrassing or inappropriate.

Watch your audience

Virtual meetings make it much harder to gauge your audience’s reactions. You need to know if they are bored or confused and what aspects of the business light them up. Make the windows showing attendees as large as possible, even if that covers much of the slides on your screen. You know them by heart, so you don’t need to see them, right?

Slow down and check-in with the investors frequently. Ask if they have questions or for confirmation that they followed some vital point you are making.

Virtual pitching not so different

I don’t know if the original question was driven by experiencing a change in results following the move online or whether it was the result of more general frustration with the process. No doubt, startup fundraising is frustrating. It was hard before, and it is still hard now. If you don’t have an investment after ten pitches, welcome to the club. You are just getting started. If you are at one hundred pitches and still don’t have traction, that might suggest the company is not appropriate or ready for investment. Many investors will be willing to give that feedback if you ask.

I would love to hear about your experiences with online fundraising. Please let me know what you have seen, or any great stories, in the comments below.

Till next time, Caio!

Resources

Websites with Lists of angel investment groups and seed funds

https://www.angelcapitalassociation.org/

https://angel.co

https://signal.nfx.com/

https://crunchbase.com