Don't Be Shy, But Don't Go Naked: Your Strategic Guide to First Investment Rounds

The same way you will continue to read this post if you find these two lines interesting.

So will investors with your pitch deck, regardless of how they found it.

You have a product or an idea for a product. You need investment. The ecosystem is competitive and you hesitate to approach investors, believing it is more efficient, or better to get there through a referral. 

This is a limiting perspective. 

Investors are capital allocators. They seek returns. If you can provide them with that, investors will engage, regardless of how they got to know you.

So, the advice we give founders seeking their first investment round is simple: don’t be shy, but don’t go naked.

Don't Be Shy

Do not be afraid to engage investors directly.

Investors are actively seeking opportunities to invest their capital. While referrals are useful, you can do very well without them. If your product and pitch are strong, it does not matter if the information reaches an investor through their neighbor or through you directly. 

Just get the information in front of them.

What we recommend is:

1. Identify target investors: Research funds and individuals whose priorities aligns with your industry, stage, and capital requirements. This includes angels, VCs, family offices, and high-net-worth individuals. In Portugal, for instance, CMVM lists licensed financial intermediaries.
2. Engage at industry events: Attend – and ideally, participate - pitch competitions, networking events, industry workshops and other events that offer direct access to the people you are looking for. Prepare an elevator pitch and ensure your materials (e.g., pitch deck link) are ready to be sent.
3. Build visibility: Contribute to industry discussions. Share insights on your market or technology via i.e. LinkedIn, industry publications. Same as with participation in events: a strong public profile demonstrates expertise and can generate inbound investor interest.

Investors are capital managers. Demonstrate why your startup represents a superior return opportunity. Be visible, be persistent, and make your proposition clear.

But Don't Go Naked

Outreach without preparation is wasting time.

Investors evaluate not just the idea, but the team's capacity for execution, market understanding, and medium to long-term capacity to scale the project. This means that they want to be sure you have done your homework and that you have realistic plans.

So, before the first pitch, make sure you have these topics bullet-proof:

1. Market fit validation: Define your target customer, the problem you solve, and your value proposition. Support this with data: user feedback, early traction metrics, and market research.
2. Pitch deck & business plan: Your pitch deck must be concise, visually clear, with a compelling story. The underlying business plan should provide a more detailed market analysis, financial projections, team composition and operational strategies that validate your pitch.
3. Product roadmap: If you’re pre-seed, present a clear plan for product development. Make sure you state when the MVP will be ready, what it takes and when it will go to market. For regulated markets (think Fintech, Medtech, AI), you need to explain how you took that into consideration.
4. Investment goals: Don’t go with "We need money to build" or “We need it to pay our team”. Show why the capital is needed, how it will be used, and what specific, measurable milestones it will achieve. Investors seek to multiply their capital, so also avoid just saying “In X months we will break even”. Show them:

• Go-to-market plan: If not yet launched, detail your GTM strategy and timeline. How quickly will the investment enable market entry?
• Return multiplier: Show how the investment will generate returns. Go over technology development, marketing scale, market penetration, how much you will charge your clients, how many you need to get to your projections, etc.
• Resource allocation: Detail how funds will be allocated across technology, product development, marketing, operations, and team expansion.
• Next round strategy: Investors want to see a clear path to future funding. So, show your plans for target timelines, expected milestones and capital for each round.

      5. Anticipate Investor Questions: There will be questions, so be prepared to go over:

• Equity for Capital: Justify your valuation and proposed equity offering. Why is your company worth what you are saying it is worth? 
• Return on Investment: Discuss potential exit scenarios (acquisition, IPO) and a realistic timeline for achieving them.
• Team & Experience: Show your team's qualifications and why it is best positioned to execute the project. This can include industry know-how, but don’t forget management experience, marketing, etc.

Securing your first investment round is a tough task. But with a bit of bold, targeted outreach and strong preparation, you not only enhance your probability of funding but also build a more resilient enterprise. Ultimately, your goal should not merely be to raise capital, but to forge a strong partnership with your investors, so show them you can execute your plans and make everyone profit from it.

Q&A

Q1: What is the most critical element investors look for in a pre-seed or seed-stage startup?

Team and market opportunities are important, and so is having a clear problem-solution fit. Early validation, even if small, also helps. So, be sure to have a well-defined product roadmap and a clear understanding of time, risks and costs (i.e. compliance) of developing it.

Q2: How detailed should my financial projections be for a first investment round?

As detailed as you can get them. For pre-seed/seed, focus on an 18–24-month projection. Highlight revenue drivers, major expense categories, and how the requested funds impact milestones. But avoid overly complex models. Keep them in your data room, not in the initial pitch deck.

Q3: Is it acceptable to cold email investors?

Yes, if done strategically. A personalized, concise email that shows your value proposition and demonstrates prior research into their investment priorities can be effective. A warm introduction, or a handshake at a networking event can always help, but a well-executed cold email is superior to spam.

Q4: What if I need help preparing these documents?

We can help you in refining your pitch, business plan, and ensuring your legal structure supports your fundraising objectives. Our goal is always to make sure you are prepared to engage investors and secure capital on favorable terms. 

So, if this is something that interests you, test your cold-emailing skills with us, before reaching out to investors!