We just can’t contain our excitement about the Taylor Swift concert series in Toronto and Vancouver. As a tribute to the concert series of the decade, MT❯Ventures will be publishing a series of Taylor Swift-inspired blog posts. This is the second post. We hope this advice will be useful as you grow your startup in this exciting era.

For startups raising capital, the last 24 months have been quite difficult. The venture capital market has faced substantial corrections, mainly due to macroeconomic factors like high inflation, rising interest rates, and post-pandemic adjustments. Establishing a relationship with a VC is a lot like dating… finding a “love story” if you will. As a result, securing funding can seem daunting, but it doesn’t have to be.

We’ve asked some of our favourite investors for their advice and tips with respect to raising venture capital. We believe that if you consider this advice, you will succeed. Here are five key tips to help you hit the ground running.

1. Handle fundraising like a sales process.

Raising VC funding is much like a sales process. It takes time and effort. As a result, you need to be all in until you’re done. As Farzin Mou, Program Manager at MaRS Discovery District, says “Don’t be half-raising, all the time.” You need to maintain processes like an investor CRM and be disciplined about follow-ups. Just like a sales process, be prepared to speak to hundreds of prospects before you land that first strategic sale or investor.

As Melissa MacInnis, Founding Director at TenLira, reminds us, “Business travels at the speed of trust”. If your investors are in it with you for the long haul, they will take their time to do their diligence. Anyone familiar with sales will recognize that sales cycles can be long. The slow relationship building process is just part of the ride.

2. Understand your numbers

Understand your business thoroughly, including revenue model, traction, and future plans. Know your customer acquisition cost, market size, total addressable market, and current valuation. Stay updated on your financial situation to be ready for investor meetings.

Understanding key metrics within your company is essential. Even if funding is not immediately secured, this knowledge allows for adjustments to promote growth. For instance, if the customer acquisition cost is $100, you can project future growth or identify methods to reduce this figure.

Mandy Potter, Co-founder and Managing Partner at Misfit Ventures, explains that you should only go after VC funding if you are VC-backable. Once you understand your numbers you will know if you are VC-backable Moreover, Winnie Zibiri-Aliu, Director Investment Programs and Innovation at MEDA, insists that “Founders considering VC investments should position their company as having the potential to attract follow-on capital subsequent to the current round they are raising for. They should be thinking of how to exit and prospective buyers at exit because it shows that they are aligned with the VCs on building an exit strategy and that they intend to deliver an attractive return.”

3. Do your Research

The typical VC/Startup relationship can last upwards of 7 years. Just like a marriage, you’ll want to know about the other person before tying the knot. Katrina Paddon, Co-founder and Managing Partner at West Coast Angel Network, explains that you need to “Do your research on VCs as much as they will do their research on you. This is a relationship that will have major impact on you and your company. If your values are misaligned, it’s going to be incredibly challenging.”

Vinod Khosla, co-founder of Sun Microsystems and founder of Khosla Ventures, made waves earlier this summer with his assertion that “90% of VCs do not bring any value to startups, and 70% even harm them.” Make sure you’ve done your diligence. There are countless venture capitalists in the world with different interests and theses. As you embark on this journey to obtain VC funding, research different VC firms in your industry.

4. Establish a comprehensive data room

Investors will want to validate what you have shared in your pitch deck and will be looking for more granular information on your company, business model, traction and financials. Of course, you need to be careful that you do not include proprietary information or trade secrets within the data room; only share the information pertinent to the VCs to make an investment decisions.

Many VCs love to see an FAQ document in the data room. This document should contain questions that have been asked of the company before. Not enough founders have this type of document, but it is one of the first documents many investors look for. It demonstrates transparency and coachability of founders. Some founders believe that they shouldn’t flag anything negative or do the investor’s work for them, but VCs often see this as a strategy to address concerns upfront.

5. Practice Your Pitch

Finally, a well-crafted pitch to investors is critical. In a recent blog, we put together five key things to remember when crafting your pitch:

• Know your audience. Tailor your pitch to each investor to ensure it aligns with their interests and previous
• Define the problem you’re Explain the problem, why it needs solving, and how you and your company are best suited to solve it.
• Highlight your founders. We all have unique strengths and experiences that we bring to the table. In your pitch, show them off!
• Show traction and potential. Provide clear evidence of your traction, growth metrics, and potential for scale.
• Prepare for tough questions. You’ll be asked about your competition, risks, and more. Know your weak points and be ready to show how you are addressing them.

If you follow these tips to craft your pitch and practice it until it’s perfect, you’ll be ready to impress investors.

MT❯Ventures: Your Backstage Crew

Just as Taylor Swift has achieved immense success in the music industry, we want to help your startup reach its maximum potential. Every new business has its own unique needs. At MT❯Ventures, we strive to provide the legal smarts and strategic counsel that startups need to help you grow and focus on the vision. We will guide you through the VC funding landscape, helping you capitalize on your biggest opportunities and tackle the challenges you'll face on your entrepreneurial path.