At SAP.iO Foundry, powered by Techstars Accelerator we recently organised a series of great investor workshops with a number of leading Berlin VC’s and our companies. The format was a private AMA style fireside chat/workshop where our founders could ask ‘the stupid’ questions and get personal tips and advice on how to raise money from industry veterans.
We covered several of the expected topics like how to get introductions, the importance of researching your investors and how important it is to prepare your materials in advance (more on this later) but when one investor (the awesome Ricardo Sequerra from Cherry Ventures) talked about the power of a ‘Dynamic Investor FAQ’ document I was sold.
Ricardo told a story of a London based founder who they felt was a master at fundraising. The founder had very effectively used a live Google Doc as their investor FAQ to help win over more investors and build more momentum in their round.
Here is how it worked.
- Every time the founder met with an investor they kept track of the new and unexpected questions they had received.
- As this was usually a new question, the founder would often forget to include some important detail in their initial answer or else they would think of a much better answer after the meeting when chatting with their other co-founders and mentors
- Rather than leaving the investor to just rely on their original answer, the founder would then spend more time on the answer post meeting and write up a better, more concise and articulate version of the answer, including any relevant data and links to support their answer.
- They would then include this answer in their follow up email to the investor. Saying something like; ‘Thank you for your time today… really enjoyed it… You asked a great question about X during our meeting and I don’t think I did a great job of answering it. Please see the answer I would have liked to have given you. If you or your colleagues have any other questions please let me know or you can see our Investor FAQ document here’
The first thing I liked – It helps build a better impression.
The founder used this to recover from an unexpected question and have an excuse to follow up and impress the investor with a better answer later. This shows investors that the founder listened to the question and was quick to follow up (a key skill in fundraising and sales). As an investor, I like seeing this level of thoughtfulness and quick follow up with founders.
The second part I liked – It helps build momentum
Every time a new question arose it got added to the FAQ document that had been shared with all other investors they met. So when the founder was sending out their next email update to prospective investors, they could include a section that was called ‘New Investor Questions’ added to our FAQ document with a list of the 2 or 3 new questions and a link to the answers in the FAQ. This is a very worthwhile reason to be sending an update… and subtly sends the signal that your round is probably building momentum as you are meeting other investors.
The third part I liked – it helps your investors sell you internally
Once you move past angel investors, you typically have to convince or interact with an investment firm. An investment firm typically consists of other investors and partners that need to be ‘sold’ by your internal champion. This document helps them sell you when you are not in the room.
Obviously, no one knows (or should know) the business as well as the founders so your FAQ’s help ensures internal debates are better informed. I’ve seen firms pull out of deals when they got confused internally on certain core details of a deal and made incorrect assumptions. Yes, this is probably a sign that your internal champion was not prepared enough, but people are busy and a handy FAQ document they can open during a debate can help sway a deal.
Finally, it helps your existing (a.k.a. Inside) investors when they are pitching you to other investors. I know I sometimes get the details wrong when talking about my portfolio companies, so a handy FAQ would help me when I get questions from investors I know when I’m trying to pitch your business.
The fourth (and final) part – It helps you communicate internally with your team.
I know when I was fundraising I did a great job engaging with investors and managing my pipeline. I was focussed on the goal and spent weeks away from the office on road shows to either London, New York or San Fran.
However, I failed miserably at keeping my team updated on progress and all the new questions and answers I was getting from investors. An investor FAQ document like this would have been a great internal communication tool for my team and new hires. It would have helped them get a real picture of what investors were interested in and how the CEO was answering them. Equally, the team could have helped me answer these questions which would have a) provided better answers to my FAQs and b) helped the team understand and participate more in the funding process.
Fundraising is a dynamic and hectic process with several rapid-fire meetings and deep dives with prospective investors. An FAQ document is a lightweight and easy to manage tool to support your prospective investors, existing investors and colleagues to stay informed and help you close your round and get back to growing your business.