Finding and targeting the right investors
The FAST Fundraising System: Find, Assess, Show, Transact
Fast Fundraising - Success In 60 Days
Business owners and first-time capital raisers who want a simple step-by-step process for finding investors and closing an investment.
What you will hear
Three questions sit at the center of Ray's FAST fundraising system from Exit Experts. How does the company make money? How does the investor make money? Why is it unlikely the investor will lose their money? Ray says that if investors can repeat those answers to a spouse, the chance of an investment rises. He built the system over about 30 years of running small companies and raising capital.
The system has four steps: find, assess company value, show the opportunity, and transact. Ray stresses building a qualified investor list before a pitch deck, testing the value proposition with unbiased outsiders, rehearsing for five to 10 hours, and following up with polite persistence. He also covers keeping closing documents simple and calls fundraising a marathon, not a sprint.
- 1Find and qualify investors
- 2Assess company value
- 3Show the investment opportunity
- 4Transact and close the investment
The 5 big lessons
- Answer three questions for investors. Investors need to understand how the company makes money, how they will earn a return, and why they are unlikely to lose their money. Ray notes no one can guarantee the outcome, but the case should be concise and clear.
- Find and qualify investors first. Ray says the first step is building a list of qualified investors, not writing a deck. Set criteria such as investor eligibility, industry background, location and minimums, then grow the list through referrals.
- Check three things before pitching. Before spending an hour or more presenting, confirm the investor has capital now, has invested in early stage companies, and has an interest in or knowledge of your industry. Ray gives the example that doctors often back medical device companies but not a hair salon.
- Test your value proposition. Identify what sets the company apart in its technology, team or way of reaching a market. Then get critical feedback from unbiased third parties who have knowledge but no vested interest.
- Make closing easy and follow up. Ray prefers simple closing materials, which many sponsors prepare with their advisors before presenting, and he offers options such as mail, electronic signing or wire transfer. Ray also follows up at every step with standard thank you and reminder messages.
Quotes from the session
"There are only three critical questions that you need to effectively answer for your investors to increase the chances of them investing."
"Don't be afraid to send five to even 10 emails or text messages, which are becoming increasingly accepted by potential investors."
"You want to make sure that these agreements are simple and minimize the amount of effort the investor has to make."
On the record
- Ray's Aravipa impact technology venture capital fund was founded in 2008 as a 15-year fund and has raised over $135 million.
- Of that total, $25 million went into the venture fund and $110 million came from sidecar investors.
- Ray cites investment agreements of over 100 pages that require investors to sign in 10 different places as an example to avoid.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Fast Fundraising - Success In 60 Days. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around investor eligibility rules, closing documents and offering documents. Do not use AI to write your own legal agreements.
Related questions
- How do I close a funding round?I close a funding round by focusing on investors who fit the opportunity and moving each interested prospect through clear, consistent follow-up.
- What documents do investors request during due diligence?Prepare a clear, organized package covering your operations, investments, compensation, team, and track record.
- How do I raise capital for my business?I raise capital by building a repeatable system for attracting the right investors, establishing credibility, and developing relationships before asking for money.
Questions about this video
What are the four steps of the FAST system?
The steps are find potential investors, assess company value, show the investment opportunity, and transact to close the investment. Ray says the first step should be finding qualified investors before building a pitch deck.
How much should you rehearse before meeting investors?
Ray says to rehearse at least five to 10 hours and to record yourself because feedback is critical. He says fewer than five hours does not do you justice.
How should you follow up with investors?
Ray suggests sending five to even 10 emails or text messages and also using the phone, since people often return calls more readily than emails. His approach is polite persistence, getting more polite and more persistent each time.
Put this into practice with the ready to raise checklist. See all finding and targeting the right investors resources.
