DIY: Raising Money
Raising money is a function of delivering the right pitch to the right person. That's true for impact seeking investments from foundations and return seeing investments from private equity investors.
A strong pitch quickly demonstrates six elements:
- clarity: focused impact and clear goals
- context: you get what's happening and identify a window of opportunity
- capability: a team that 'gets it' and can get it done
- ambition: appropriately bold but short of unbelievable
- scalability: pathway to impact at scale
- sustainable: a viable business model
Analogies can be helpful (e.g., it's like Facebook for the classroom) and are particularly useful for translational innovations (i.e., it worked in one sector and should work in another).
It's critical to get in front of the right investors. It takes a combination of focus and persistence.
Finding a grant. Philanthropy has become more strategic over the last ten years and, as I've pointed out, less responsive to 'over the transom' requests. That means if you want a grant, you need to do your homework. You'll need to investigate foundation strategies and find one that might be interested in the work you are proposing.
Raising private equity. Funding a for-profit usually starts with a 'friends & family' round--people you know who help support development of the pitch, team, and prototype.
Beyond friends, a growing number of 'angel investors' and venture capital funds provide seed funding to education startups. As the EdTech Hanbook says, it's critical to find investors that "get education" and buy into your vision of the future.
The approach. A summary email, preferably with a warm intro, can be a good way to start. Try to get an in person meeting. If that's not practical, get a phone call. You should also develop a strong pitch with great visuals. Sites like PitchEnvy.com can help. Here's some advice from Fred Wilson,
"I do think a short phone call introducing the opportunity at a very high level and making the case for an in person pitch is an important thing to do. You can accomplish that in A few minutes or less. It's basically an elevator pitch. But don't agree to do the whole pitch on the phone. Ask the investor make time for you in person to do that. That will determine if they have sufficient interest for you to invest your time with them."
How much to raise? Fred Wilson suggests "raising 12-18 months of cash each time you raise money." When you're starting out take what you can get, but as you begin thinking about tranches:
"Less than a year is too little. You'll be raising money again before you know it. Longer than 18 months means you may well be sitting on cash that you raised when your company was worth a lot less."
Create some buzz. Unless there's a good reason to be stealth, creating some buzz before and during your raise can't hurt.
- Blog at least weekly and avoid purely promotional pieces
- Build an active Facebook and Twitter presence
- Pitch your idea at the ASU Innovation Summit and work the lobby at New Schools
Stick with it. Raising money involves a lot of rejection. It's a numbers game--learn from a rejection and remember that no means you just haven't found the right investor yet.
For more see:
· The EdTech Handbook, Edtech is Booming: Five Things You Need to Know to Raise Money Today