I'm Francisco Baptista, Founder and CEO of an AI sports startup, TeamSportz. I wrote this article to help other founders that are bootstrapping their business and realise that they need funding, but don’t know where to start. I would like this article to give you a practical insight of the things that worked for me, with examples, tools, tips that will help you kickstart your funding.
The short story is that fundraising is very difficult even in the best of circumstances. What I have learned is that hidden inside the word ‘circumstances’ are things like race, background and connections. The kind of things that never cross my mind when I wake up. When I wake up I am a dad, a husband, and self-made immigrant (or as my wife put it, bloody minded and stubborn) foremost an individual determined to use his life experiences and knowledge to achieve his ambitions and help others in the process.
Being a black founder, without holding a PhD in AI and having started an AI business with global ambitions, to put it mildly the odds are not in my favour. Just reading the headlines around race, gender and educational background makes for grim reading. The report, by the not-for-profit community interest company Extend Ventures, looked at how VC has been invested in the U.K. between 2009 and 2019.
If you think the figures above are bad, then think again because the figures for black or female lead startups are soul crushing!
Here are my top top tips and the tools that enabled me to navigate and to raise a pre-seed round without a rulebook.
I started fundraising during the lockdown caused by the COVID-19 pandemic. I started where everyone does, looking at YC deck format, for all the great reasons they outline. However, when I met Richard Olver, I tried the classic pitch. Throughout the pitch, I knew in my gut that it didn’t land well. So I talked to him about me, my background and the real reason why I founded TeamSportz. Richard said to me - That’s it! That is the passion! Don’t ever lose that.
I knew I had stumbled into something no deck will never have: authenticity. What I had done was to show myself without any gimmicks, without masks, without pretending. Once Lisa Paasche said exactly the same thing to me - That is the passion that I wanted to see. From that moment on, when I was in front (Zoom calls) of a potential investor, I started with me and my ‘why’. In fact when I pitched to Rob Walling I never opened my deck.
To quote my investor Ashish Parikh
Think about it... you and I have never met each other but there was a transference of trust between your relationship and Tony's. You built on this by ALWAYS having your camera turned on and being real.
Oren Klaff, the author of Pitch Anything wrote in his book that getting attention is more about understanding and leveraging emotions rather than reasons. I can assure you that in my case that was true.
I am not saying don’t have your deck, forecast or any other supporting documentation ready.
People invest in people first so be yourself and be authentic because that translates into trust.
Start with your close network, speak to friends and family about raising funds. I don’t have a family that can invest in TeamSportz. However, speaking to family and friends helped me practice my pitch and answer questions in an informal setting.
Like most underrepresented founders, I did not know any investors. So I knew that I needed to prepare in advance. I spent nearly one year pitching to family and friends, work colleagues, pitching in small meetups, pitching at conferences etc.
In June 2019 my friend Jana kindly shared with me a list of names of people that were potential investors. After some research, I reached out to two of them, Lisa and Toby as I felt they were the people I should speak to.
Lisa then introduced me to Rand Fishkin so I could get more advice on how to raise a pre-seed round. Rand himself raised an unusual round and open sourced his documents.
Rand then introduced me to Rob, the CEO and co-founder of TinySeed accelerator.
I clearly remember a conversation I had with my friend and advisor Amanda McKenna back in Nov 2019. When I thought I had “started fundraising”. She asked me how many emails I had sent to my contacts and network. I responded proudly “about 10 or 12 this month”. Amanda, responded firmly - You are not taking this seriously enough (I love that about Amanda, I can always count on her for her honest advice even if it is not what I want to hear). She continued, you need to send about 100 emails per week.
By the end of that month I sent 500+ emails to my network. Searching in my inbox in the first 3-months I had sent 2039 emails.
My advice to you, allow for plenty of time to fundraise as it is a full time job.
You need to allow yourself enough time when you embark on a fundraising journey. Here is my rough timeline:
Another important lesson here is that you should assume the funding will not arrive all at once which in itself creates some challenges for example on hiring. You might have forecasted to hire a senior developer but you only have money in the bank to hire a junior at best.
Do some research before sending each email. I searched on Google, Twitter, Instagram, Facebook and LinkedIn to understand the following:
Once you are confident that you can get that angel investor’s attention, send your email. For example:
In order to track everything you will have to pick the right set of tools to enable you to understand what is working and what is not. I have used the following tools to help me stay organised and keep track of progress.
Let’s start with Trello where I have created a board called Investment Pipeline
Make sure that emails sent from your inbox BCC the respective trello card. This means that all your communications with that potential investor will be added to the Trello card.
Google docs have some activity reporting (see below) but I have not found it to be very useful.
.png)
Bit.ly provides a better click track than Google Docs so make sure to create a Bit.ly short URL for every link to your pitch deck you send per potential investor.
.png)
OnePager.cv provides you with a public investment page and a comprehensive breakdown of every access to your investment page. You get the opportunity to reach out to investors that visit your onePager page often.
If you are fundraising in the UK I strongly recommend using SeedLegals.com. SeedLegals is an on-demand legal platform. A vast majority of early stage start-up investments take place on the platform which means your investors are familiar with the process, but also it gives them confidence because they know you have ticked all the legal requirements.
Without sounding like a debbie downer, in my experience I spent countless hours researching and speaking with VCs, even the ones that said they did do early stage investment. On one hand, the calls were just them doing a tick box exercise on their diversity quota so they could say "we speak with this many under-represented founders'' - how petty and humiliating. On the other hand, TeamSportz was too early for VCs. It was also evident that they were looking at growth at all costs despite the vision and impact.
Thomas Tcheudjio makes a good point - VCs are inundated with investment requests. Picture the following diagram that shows the broad process from when you speak to an analyst until your business becomes a viable investment opportunity in the eyes of a partner of a VC firm.
This is something I had to learn with Rand Fishkin, I don't want TeamSportz to do “growth at all cost”. Of course TeamSportz is growing (look at our user acquisition) but we want to grow without incurring high-risks in the long-term.
Over a period of 9-months, TeamSportz raised £345,000 from 15 individual investors and Hatch Ventures (Angel Network) against a 2.4m pre-money valuation. We are still looking to raise £150,000 to close our pre-seed round. This investment corresponds to 13% of the business.
We set ourselves to raise £300,000 and we already exceeded that by £45,0000 and we are looking to close our pre-seed round with £495,000.
I sent out about 2500 requests for investment and spoke informally with around 150+ people. That's only a 6% engagement and ⅓ of those did not invest because of their personal circumstances, plus the lockdown did not allow them to and ⅔ just didn't want to invest.
You shouldn't give up when you hear no. It really helped to keep people updated with progress, for example Tony Aug initially said no, but after a few updates he got back in touch and invested. Furthermore he went on to introduce Ashish who also invested.
Before I started my fundraising there was so much I did not know about myself as a CEO and about our business, about division of shares, about tax break incentives for investors (in the UK this is called SEIS/IES). For many days it felt like guess work and driving blindfolded. It is still not my favourite activity - I would much rather write code. I am also glad that I have done it because it enabled me to meet some incredible people that not just invested in an unlikely founder, a stranger and against the grain but also went above and beyond to promptly share their network, take time to coach me, take my calls anytime, help me with my existential crisis (CEOs know what I am talking about), support me emotionally and help me with more practical matters such as hiring.
As always, don't hesitate to reach out if you want to dive deep in any of the topics above or simply to say hello!
