Creating FOMO in Your Fundraise

Why Read: Gain valuable insights on effective fundraising strategies, including leveraging social proof, creating investor interest, and pitching techniques.

Featuring: Nathan Beckord (@sailornathan), CEO of Fundingstack.com 

Link to Article: “Creating FOMO: 9 Fundraising Tips From a Master Networker”

Key Concepts and Tactics:

• Leveraging Social Proof:

  • Point: Use endorsements from respected individuals to build credibility with investors.

  • "Social proof is a way to show traction from interested funders. Brian describes this in a somewhat crass way: 'This kind of famous person believes in me.' If you can get an investor who is well-respected or famous in your community to vouch for your startup, you're off to a great start. When you're out networking, talk about your idea. Brian did this and garnered the interest of one of the early investors in Ring doorbells."

• Capitalizing on the Early Stage:

  • Point: Take advantage of the concept phase to attract investors before hard data is available.

  • "There's actually a good honeymoon period right at the beginning, when the dream is there, and you have no data to disprove the dream. I encourage people to lean into that. Some investors actually prefer opportunities like these, because often the entry price is lower than what it would be once there's traction. You can position it as a chance for them to get in on the ground floor of an idea."

• Streamlining Investor Outreach:

  • Point: Keep initial communications with investors brief and focused.

  • "Brian recommends keeping it brief and to the point. 'This is what I do. This is what we're making. Is this interesting? Do you wanna have a phone call? Super concise, a couple points.' There's no need to reinvent the wheel with investor outreach. And like with many things, simplicity is best."

• Preparing for Extensive Meetings:

  • Point: Expect to have numerous meetings before closing a funding round.

  • "Brian admits that he underestimated how many meetings it would take to close a round. If you're thinking it'll be in the tens, think more hundreds. Even AirBnB and Square had 120-plus meetings, and those are massively popular concepts. If you've got something more fringe, it could take many more."

• Finding the Right Investors:

  • Point: Focus on finding investors who naturally align with your vision.

  • "You're not trying to convince people of stuff, you're actually trying to find your true believers. You're out there looking for the people that already see you and understand you. You're not trying to change or fix someone into believing in you. Just like your one true love, the right investor will be on your wavelength without you having to sell it too hard."

• Projecting Confidence:

  • Point: Present yourself confidently to investors, emphasizing the opportunity you're offering.

  • "Investors see thousands of entrepreneurs, and they can see through your fears and all your baloney. Have confidence. You've created a startup from nothing. You are impressive and have a good investment opportunity to offer."

• Creating FOMO:

  • Point: Use tactics to create a sense of urgency and momentum around your fundraising.

  • "Another FOMO inducer? Asking for slightly less money than you need. It's better to oversubscribe a round than to not make your goal. That looks more impressive from a momentum standpoint. Just make sure not to blow it completely out of proportion by three or four times. Then you're diluting everyone's stake."

• Balancing Transparency and Mystery:

  • Point: Be truthful but strategic in how you present information to investors.

  • "Don't lie to potential investors or fudge projections. That's bad news all around. However, you can build on the hype you've created with the right language. Part of that is making investors feel important. No one wants to know if they're the last people you've pitched to. A better way to frame it? You're the first round of investors we've contacted."

• Making Your Pitch Relatable:

  • Point: Use specific, tangible examples to make your pitch more impactful.

  • "Once he started using a customer testimonial, walking through all the real headaches that Loop alleviated, he found something a lot of investors with families could relate to. Telling one person's story brings a product to life in a way that bullets on a slide can't. And that touch of reality can make all the difference in reaching the right investor."

The State of AI Sales Reps

Why Read: Understand the AI SDR market's rapid growth, potential challenges, and long-term viability concerns. It provides valuable insights for navigating this emerging sales technology that has the potential to revolutionise how startups grow.

Featuring: Marina Temkin (@MTemkin), Senior Writer, Venture and Startups at TechCrunch

Link:“AI sales rep startups are booming. So why are VCs wary?”

Key Concepts and Tactics:

• Here are the main points of the article, following the format you've requested:

  • Understanding the AI SDR Market Boom:

    • Point: Recognize the rapid growth and adoption of AI sales development representative (SDR) startups.

    • "In some markets, we're seeing five to 10 companies all have success in a pretty short period of time," Shardul Shah, a partner at Index Ventures, said of the AI SDR boom. "When one studies any of [these startups] individually, it's like 'wow, that's stunning product market fit'. When all 10 of them have stunning product market fit, it's hard to answer 'how is that going to play out?'"

  • Evaluating the Long-Term Viability of AI SDR Solutions:

    • Point: Consider the potential for AI SDR tools to be discarded once the initial excitement fades.

    • "Index has yet to invest in any of these companies, many of which are less than a year old, because even though the whole category is on fire, and customers are using them, it's still too early to know whether their growth will continue over the long term. Or will they be discarded, like so many other AI pilot projects, once the wow factor fades, because they don't prove to be more effective than human outreach, as they claim to be."

  • Assessing the Appeal to Small and Medium-Sized Businesses:

    • Point: Understand why AI SDR tools are particularly attractive to smaller businesses.

    • "Over the last two years, the reply rate on cold emails fell at least 50%," Pillai said. "Now that there are a bunch of companies that claim they can improve this rate, everyone is willing to try their service."

  • Considering the Data Limitations of AI SDR Tools:

    • Point: Recognize the potential limitations of AI SDR tools due to access to limited data.

    • "To create a truly personalized outreach message, an AI SDR needs to have very specific data about each prospective customer. But what's known about each prospect is limited and all of these companies have access to the same public information, he said."

  • Evaluating the Threat from Incumbent Companies:

    • Point: Consider the potential for established companies to offer similar AI SDR features.

    • "Chris Farmer, partner and CEO at venture firm SignalFire, said he believes that AI applied to sales and marketing is a large opportunity, but without access to differentiated data AI SDR startups risk being overtaken by incumbents like Salesforce, HubSpot and ZoomInfo. Those companies' main products are the keepers of their customers' data. So if they offered bots that let their customers tap into their own data, such bots could be more effective."

  • Assessing the Stickiness of AI SDR Adoption:

    • Point: Question whether the rapid adoption of AI SDR tools will translate into long-term use.

    • "Investors are not surprised by the rapid adoption of AI SDRs; they are just doubting that adoption is sticky."