At KU Innovation Park’s capital raise boot camp last fall, entrepreneurs had the unique opportunity to learn the nuances of fundraising directly from Taylor Clauson of Abstraction Capital. Here are some highlights from Clauson’s session that every founder should keep in mind as they embark on their own capital raise.
Understand Your Investors: Principal vs. Agent
Clauson emphasized that understanding an investor’s role—whether they’re a principal (investing their own money) or an agent (managing others’ funds)—is crucial. Angel investors often have more flexibility than venture funds, who must answer to their backers. Knowing this distinction helps tailor pitches to align with each investor’s expectations.
The Right Tools for Fundraising
Founders should come prepared. Clauson recommends a concise, compelling 10-12 slide deck covering the essentials: problem, solution, traction, team, and funding needs. Complement this with a detailed data room to handle due diligence and a CRM tool to track investor communications. These tools streamline the process, helping founders stay organized and focused on potential investors.
Build Your Network and Start Early
Successful fundraising is about relationships. Clauson shared his journey of having 800 conversations over two years to raise capital. Founders should reach out to past colleagues, mentors, and even family members as initial steps. Gathering feedback early strengthens the pitch and builds a network that founders can lean on throughout the capital-raising process.
Be Persistent—Rejections Are Part of the Game
Clauson didn’t sugarcoat the challenges: founders will face many rejections. Staying resilient and learning to move on quickly are essential skills. Rejections often aren’t personal. It’s about finding investors who truly believe in your vision. Monthly updates to investors and potential backers help keep momentum and showcase progress.
Create Urgency and Show Momentum
Generating investor interest requires urgency. Clauson advised that founders can maintain momentum by showing tangible progress at each touchpoint. When managing larger investors who may take longer to commit, keep them engaged and informed, gradually building excitement around your venture.
Legal Matters Matter
Choosing between SAFEs, convertible notes, or priced rounds isn’t one-size-fits-all. Clauson stressed that founders should seek legal advice on these options to avoid costly mistakes. Early legal support pays off in smoother rounds and fewer complications down the road.
Deliver an Authentic and Focused Pitch
The final takeaway? Keep pitches grounded, focusing on realistic projections and immediate goals. A pitch should be authentic, reflecting the founders’ passion without overpromising. Clauson also emphasized the importance of a “team slide” to show investor confidence in the founding team’s experience and dedication.
Take Action:
- Build Your Deck: Prepare a concise, polished pitch deck.
- Stay Organized: Track investors and follow up systematically.
- Nurture Relationships: Keep investors engaged with monthly updates.
- Seek Legal Guidance: Invest in legal advice to avoid pitfalls.
Ultimately, it’s about persistence, preparation, and building a strong network. For founders ready to raise, these steps are invaluable as they work toward their next big milestone.
Need help with capital? Start here to connect with KU Innovation Park.