It’s harder to raise money in 2022. Use these tips to impress investors

By Elena Mazhuha, investment director at F1V

The year 2022 has made fundraising even more challenging.

The war in Ukraine and the prospects of a possible recession in the U.S. have made investors more cautious about investing in startups. All the same, the founders are sending 30% more pitches since the start of the year.

That’s why in 2022 you’ve got to be smarter with how you approach fundraising. Here are several tips that will help you get prepared for raising a round and impressing investors.

Know the process

Talking to investors takes time and effort. About 60% of the startups raise money within 12 weeks, while the rest do it in more than 3 months.

Step 1: Founders meet an investor. It can happen on social media, at a conference, via email or through an introduction from someone else.

Step 2: Founders send a startup summary and presentation to an investor. Investors check if the startup’s focus corresponds with their criteria: the industry, stage, and location. Each fund has its expertise in a particular industry and market—they reject startups that work elsewhere.

Step 3: Investors and founders have their first call to talk about the details. Investors ask more questions and check if it’s generally interesting to talk to the founders. A call lasts for about an hour.

Step 4: Investors check the startup’s data room and follow up with more questions. Early-stage startups aren’t profitable and spend all their money on growth. It’s OK. But investors need to check if the startup spends money and plans wisely.

Step 5: The fund makes an offer. At this stage, the parties discuss money, terms, participation of other investors, etc.

Create a 5-slide presentation

A slide presentation helps to say “hello” to an investor. But startup founders often overthink it and spend months making a 20-slide pitch deck, involving designers and making thousands of iterations. Often, it’s a waste of time.

Statistically, an investor spends less than 3 minutes on a startup presentation, so it must be concise. Try to make it 5 slides long.

Slide 1. Problem & How You Solve It

Slide 2. Business Model & Sales

Slide 3. Numbers

Slide 4. Team

Slide 5. Summary & Round Info

The presentation should convince an investor that the startup’s metrics are growing and the founders are professional.

Before sending the presentation, it’s a good idea to show it to friends, who know little about venture capital and fundraising and see if they understand it.

Prepare 5 things before talking to investors

Build your data room. It is a virtual space with all the necessary documents that demonstrate the capabilities and performance of your startup. The docs can be stored in the cloud, using Notion, Google Drive, ClickUp, DocSend or DropBox.

Collect feedback. If your startup is at the pre-revenue stage, investors will want to get feedback about the founders and the product. Ask your colleagues, previous business partners, investors and former clients for a reference. Provide their contacts, as well as contacts for 2-3 current clients who can tell more about your product.

Study your competitors and peers. You need to know what’s going on in your market—read news about recent investment deals and new launches.

Know your numbers by heart. Investors can ask about your startup’s MRR, retention and churn rates. In the game industry, for example, it’s vital to know the retention rate for 1, 3, 7, 14 and 30 days. If you don’t know your numbers, investors will be disappointed.

Prepare a list of target investment funds. It’s best to have a table with the contacts and notes about how to get an intro or investors’ feedback after the previous conversation with them. If an investor said “no” in the past, she may say “yes” later.

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