8 Things I Learned Raising Money During COVID-19
2020 has thrown enormous challenges down to entrepreneurs and innovators.
A worldwide pandemic, economic uncertainty, and political turmoil would each, in and of themselves, be difficult obstacles to overcome when raising investment capital for a company. Putting all three of those phenomena together in a 6-month window has, understandably, lead entrepreneurs to believe that fundraising is a hopeless undertaking in 2020.
ClearCam is proof that this is not the case. We just raised $2.6M against a planned raise of $2.25M. We maintained our pre-money valuation and preserved value for our Seed Series “1” investors while opening up additional opportunity for new money. Here are 8 things I learned raising our Seed Series “2” round from January to July of 2020:
1. There is a lot of money in the market
Despite what people fear, there is a substantial amount of capital in the market looking for great investments. With low interest rates, volatile stock markets, and a prolonged pandemic recovery, investors who pulled money out of the markets in 2019 are open and ready to invest in ventures with a strong team and track record of execution.
2. Team and product are on equal footing
Investors are looking, more than ever, to mitigate risk in these uncertain times. To protect against uncertainty investors are focusing more than ever on the company team. Has this team shown fiscal responsibility, the ability to execute consistently, and the intellectual honesty to bring in the right people and services to fill the gaps? Lead with Team, Product, and Execution.
3. Everyone is looking for a deal
While there is money in the market, some investors are looking to score big “deals” or discounted valuations. I am sure there are companies that have lost value through this tumultuous period but if you can actively defend your value through investment against a term sheet, and then grow those investor commitments, then the deal-seekers will, in all likelihood, convert to ardent supporters of your venture or you will grow past them.
4. Over-communicate, stay calm, and believe in your pitch deck
During periods of uncertainty communication is key. Over-communicating is particularly important today. The more touch points and contact you have with your investors and target investors the better your chances of closing your round successfully. Updates on the raise and product development, with pictures, help the investor feel connected to the project. Be confident about the work you are doing and stay incredibly focused on execution and investors will see the team’s value. Remember, your pitch deck is your north star- believe in it and let everyone know how the journey is going- often.
5. Be prepared for a longer raise
Just like grocery shopping takes a long time now, so does raising money. It is more important than ever to get ahead of your round and start communication early. We thought, based on previous raises, that we would close in mid-May. We closed at the end of July. Make sure you have the cash to keep the lights on as your raise gets prolonged.
6. Non-Dilutive cash is helpful
Any opportunity that can provide non-dilutive cash should be pursued within reason. Grant writing can take up quite a bit of time and resource from the organization so you need to balance company progress with grant writing. Essentially, see #5 if you need justification for pursuing non-dilutive funding!
7. Some investors will leave, others will step-in and up
Not every investor who wants to invest can invest right now. Their particular circumstances may limit their opportunity to join the round, or they may not want to participate in the round for other reasons. “Why” is not important, what is important is staying in touch with them and keeping them in your company investment circle. They may want to come back later and you want them to be up to speed with you when they do. What we found happened was that many current investors and new investors surprisingly stepped-up in their investment in the company. This accelerated our round and built investor confidence for the rest of the field.
8. Be Thankful
Take the time to let every investor know how much you appreciate their belief and support of your company and vision at this time. It is all but impossible to hold events right now so we send investor communications every month or so- that is how we show our gratitude. We will meet any investor at any time (within reason) to discuss the company and progress with them- that is also how we show our gratitude. Go back to over-communicating.
Most important thing to do is just keep focused, break your big goals into little tasks, and advance the company and product every day.
Doug Stoakley
President + COO, ClearCam
