Ten early-stage founders gathered this week to kick off an exclusive masterclass by Edmonton Unlimited designed to demystify one of the hardest parts of building a company: raising capital.
Fundraising is like dating, says workshop leader Shaheel Hooda, a venture capitalist, serial entrepreneur, and general partner at Sprout Fund. Maybe it’s awkward, but you meet someone and learn about each other to see if the chemistry is there to ultimately tie the knot. Don’t try to date a bunch of people at the same time — the investor community is small. Don’t ghost, pester, or treat it like a hookup. Focus on building rapport and following up regularly to see if sparks fly.
It’s just a glimpse into the many lessons from session one of Masterclass: Get Ready, Set, Raise, a three-part series that focuses on the investor mindset in evaluating opportunities, creating a compelling elevator pitch, and the best practices for structuring a pitch deck narrative. Only 10 founders were selected to participate.
Tanay Kumar — founder of Aqtiva, which manufactures machines that enable farmers to create their own nitrogen fertilizer — applied because he saw Hooda’s name attached. Hooda previously coached Kumar through Edmonton Unlimited’s Venture Pilots: Built World Tech program, where he trained all participating companies on pitching.
“He talked about how it’s more about emotions and storytelling, and that’s what connects us all, irrespective of whether you’re an entrepreneur or a farmer or a student — you’re a human,” Kumar said.
“You have emotions at some level, so if you connect to that, people will resonate with what you’re trying to do.”
Kumar wants to soak up all the information to set his company up for success.
“I’m always ready to get educated, just because I’m an engineer, and I know [what] I’m good at and [what] I’m not so great at, so today is a day to learn a bit more about things that I’m not so great at,” he said.
By the end of the series, he hopes to have a solid elevator pitch and an understanding of how to position his company.
Reducing risk
A founder’s number one job is to reduce the “complexity around what it is that you are spewing” because you’re not selling a product or technology; you’re selling a vision, Hooda explained. The biggest signal of derisking is traction.
“The more you’re able to reduce risk and uncertainty, the higher the likelihood that you’re going to be able to raise that capital that you need,” Hooda said.
On average, just 0.7 per cent of investment pitches are successful, according to Hooda. Investors are thinking: will this founder, company, and market be a fund maker in a five- to seven-year period? Very few can do that, Hooda said.
Investors are evaluating your pitch’s potential: its value, the problem’s size, the market and timing, and whether your team is best positioned to solve it. How can you make it easy for them to say yes?
Put simply:
- Why?
- Why now?
- Why you?
Hooda energized the room straight away, questioning the entrepreneurs when their contributions lacked specifics.
“A grilling is honestly more important than being nice, at least for a new entrepreneur like me. I really like the fact that he puts me on the spot and makes me think,” Kumar said.
“I was dreading this,” he said with a laugh, “I’m not going to lie, but I still love it.”
Pitbull’s advice
Session one focused on understanding how investors think, the timing and reasons to fundraise, sources of capital, and how to cultivate connections.
Hooda pointed to Pitbull’s “Feel This Moment” lyrics for a motto to live by: “Ask for money and get advice. Ask for advice, get money twice.”
Founders left the session saying they’ll be thinking differently about derisking, the importance of creating FOMO, and building relationships.
Learn more about Masterclass: Get Ready, Set, Raise.