How to Raise Startup Capital Without a Pitch Deck

Shafqat Islam is the co-founder and CEO of NewsCred, a platform that connects publishers and brands with the world’s best journalism. Follow him @shafqatislam.

My company has gone through three rounds of financing, with our latest Series A closing in the fall of 2011. We did the Series A fundraising without a pitch deck, also known as your sales pitch.

It’s true that the deck is often considered the main piece of fundraising collateral. But I would argue that the main marketing collateral while fundraising is you: the founder. Below are the lessons we learned from raising a series A round without a pitch deck.

1. Date Before You Marry

Finding a great investor is like finding a great spouse. You would never decide on your life partner after a week of frantic courting. Why do that when finding an investor? Remember, you can’t divorce your investor. So select investors that you think will make great long-term partners.

My number one criteria: only date people you really like spending time with. In our case, we “dated” our lead investor for more than a year. During that period, I kept in touch, had occasional coffees, sent interesting links, engaged him on Twitter, and kept him up to date on the company. As a result, our story had a nice, positive arc and our investor had a lot of context. As Mark Suster says, VCs invest in lines, not dots.

2. Don’t Ever “Start Fundraising”

The added benefit of the “date before you marry” approach is that you never have to go into “fundraising mode.” There is no flipping the switch one day. When you think funding is on the horizon, you can increase the frequency of your meetings and start sending stronger signals — more numbers, charts showing growth, news of key hires.

In our case, the occasional meetings slowly turned more serious, and when it was time to start thinking about fundraising, the transition was natural and the investor already knew that things were going well for the company. Instead of pitching him on a general offer, we were in a position to share the product road maps, pipeline, and financials.

3. Create Urgency

Once you have the interest of investors and it’s clear that you are raising a round, the most important thing is to create some sense of urgency. Deals don’t close by themselves. Salespeople close deals, and in this case, you are the salesperson. If you don’t know about sales, this is probably a good time to pick up a good sales book or find a sales mentor.

Also, don’t forget that VC’s have little incentive to say “no” right away (although the best VC’s give quick responses), because it’s usually in their interest to drag on the process to collect more information and know the investment has little risk. You should try and create some sort of forcing function, whether it’s based on time, an important hire, a deal closing, or product milestones.

4. If You Create a Proposal, Don’t Send It Early

Think of your pitch deck as your sales proposal (or wedding proposal!). In a normal sale, you would never send a proposal to a prospect before you’ve spent enough time getting to know them, understanding what they are looking for, and finding out if your solution is a good fit. So why do it differently here?

Keep the deck to yourself, and customize and send it when both sides are comfortable that there is a deal there. In our case, the only time we actually used any slide was on the day before we got the term sheet, just so our investor had something to show his partners during the Monday morning partners meeting.

5. Ask for Help

My entire fundraising approach is predicated on the fact that you have to build relationships with investors first. That said, we initially built our company in Switzerland, and I did not know a single investor. As such, not knowing investors is not a valid excuse. Hustle and figure out a way to build those connections. Cold email people, go to events, comment on VCs’ blog posts, ping them on Twitter, set up your AngelList profile, do whatever it takes. Once you build some initial relationships, even if they are informal, nurture the hell out of them.

If there is one takeaway, it’s that fundraising is not a one-time thing. It’s an ongoing process, and the most important part of VC fundraising happens when you aren’t actually raising money. VC’s invest in you, so return the favor and invest in your relationships with them. Ultimately the relationships will matter more than an amazing pitch deck.

Image courtesy of iStockphoto, andrearoad

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