Welcome to another day of growth hacking unlocked. One common trend that I saw was, most companies that were leveraging growth hacking and were succeeding at a very rapid rate, had venture capital to help put more fuel on the fire. So I thought I couldn’t truly create a growth hacking course without including raising capital, just in case you want to raise capital. So in this lesson, I’m going to talk about how to raise capital, and I’ll also be diving a little bit more into that in the next lesson as well.
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When you think about funding, there’s a lot of different stages from self-funding to seed. Then you get into venture, things like series ABC, or even venture debt. And then there is your IPO. And when companies go public, they’re typically raising money as well.
Then you also can get into later stage deals. You can get into M and A, leveraged buyouts. You can get into secondary offering. These are all different ways that you can end up raising money. So now let’s take a look at some examples.
One of my companies that no longer exists was called Kissmetrics. I ended up raising $16.4 million over seven rounds, a little bit too many rounds. And one of our competitors, Mixpanel, they raised 77 million over five rounds. At least from some of the articles I read, I don’t know how accurate they are, and they’ve done it in a lot less rounds.
When you think about series A, B and C’s, typically a series A round, it can range a lot. In series A funding rounds, investors are not just looking for great ideas, they’re looking for traction, they’re looking for money-making businesses.
The average estimated capital raised in a series B round is roughly $32 million.
Series C rounds are typically for scaling, growing even faster. When you think about D, E and F, it all just starts blending in. This is when companies just take a lot of money and they don’t want to go public right away and they want to stay private longer.
There’s a lot of institutional investors out there. There’s private equity companies, firms. There’s also venture capital companies like Sequoia Capital, there’s investment funds. Some of them are like hedge funds. There’s pension funds, there’s custodian banks, sovereign wealth funds like Saudi Arabia invest quite a bit into startups. There’s insurance companies and family offices. A lot of people are getting into startup investing. And you’ll want to create a potential investor sheet. You want to think about who your competitors are, who could be potential investors for you, and that’ll give you ideas. And where I get a lot of my data from is a site called Crunchbase.
You can search around and you can just keep going. You can see who are the biggest players. And from there you can do initial outreach. And what I found is technically getting warm introductions works better, and then you’ll have to do a pitch deck. And then with your pitch deck, you’ll have to present it.
And I have some resources to create pitch decks for you. And going over and creating a list of all the venture firms that you can potentially raise money from. But you can find that at Neilpatel.com/training, click on growth hacking unlocked, then go to week one, lesson one and you’ll see the worksheets I have for you that’ll help you with your pitch deck.
Some key questions to answer in your pitch deck is, what does your company do? How’s it different? How big is a market? Do you have any traction? What is it? What are the unit economics? If you have churn, what’s your churn? And during your meetings, you want to make sure that you introduce your investor to yourself, your product services.
It’s not just about optimizing for the least dilution, you want to optimize for who’s the right fit. And you want to have clear next steps at the end of a meeting such as they’ll think about it, they’ll follow up with questions, maybe schedule another meeting. And after the meeting, make sure you follow up.
And keep in mind that you may get no’s. I’ve got a lot of no’s. A no doesn’t mean no, a no just means not right now.
And now you should have the answer to all of these and look, no matter what people are telling you, you can raise money even if you’re in a hard industry.
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