Sitting Down with Patrick Lor to Pick His Brain About Raising Capital

Patrick Lor (PL) recently wrote this amazing post on LinkedIn about raising capital, and running it as a process. As Patrick says, “99.9% of the entrepreneurs who are successful at fundraising run a process. It's not complex, but it takes a lot of hard work and discipline.” We totally agreed and wanted to sit down with Patrick to get more of his thoughts on successfully raising capital. 

TNT: Thanks so much for sitting down with us, Patrick! Jumping right in - What do you think are some of the biggest mistakes that a founder can make when raising capital? 

PL: Raising capital is just like everything else in life - you only get good when you learn from those who went before you, and you practice lots. Some founders think that they can read a few news articles and just shoot from the hip. Others get coaching and advice, but not enough practice. When founders go into pitch meetings unprepared, investors know almost immediately. 

My advice for founders is to go into pitches well prepared. Know your numbers, and deliver your answers concisely. This means you should go through multiple iterations of your deck and stage multiple pitch practice sessions before you start raising from top investors.

TNT: Ooof, it is always telling when someone hasn’t done their homework or prep. Like you said, you can tell right away. Other than not being prepared, what do you think are some big mistakes people make in their pitches? 

PL: Lack of clarity, vision, and focus. Whenever it takes more than 30 seconds for a founder to explain the reason why their company exists, it typically means they're struggling to define who they are to themselves, their employees, and their customers. Consider simplifying your company's value proposition into one sentence, like this: "We make ( _______ ) that does (_____) that solves ( ______ ) for (__user group__)"

I think most VCs want to find the answers to three main questions:

- "What is it?" or "What problem does it solve?" - is there product-market fit?

- "How big can it be?" - in other words, is this a niche market, or a multi-trillion dollar industry?

- "Why you?" - in other words, is there a founder-market fit? Are the founders exceptional?

TNT: And if founders are finding themselves fumbling? Any advice on how to quickly and succinctly explain the benefits of the product/idea in a pitch meeting? 

PL: Make sure you're saying the most important things first. Imagine if your business was an article. What's the headline? It needs to be short, punchy, and attention-grabbing. Then, what's the byline? This is the follow-on sentence that gives a bit more detail and pulls your audience in further. Then, write the most important paragraph you can write - this needs to be interesting enough for your readers to scroll down and read more. 

If you're having difficulty with this style of writing, consider hiring a journalist or an advertising writer to help you with this. I find that most entrepreneurs have difficulty expressing themselves in this manner because they want to write 5 or 10 different headlines for their companies. 

TNT: Great idea to outsource to a copywriter when that isn’t your strength as a founder. 

Ok, so going back to your LinkedIn post. In the post, you put 200 prospects and 50 intros... is that the magic number to success? 

PL: This is the ratio that I mentally prepare myself for when I start a fundraising process, so it means that I need to cast my net out far and wide. Some emails/calls will be ignored. Some prospects will make more intros for you - bonus! Your ratios will likely be different, so the point is, keep on prospecting!

TNT: 100% - don’t let your foot off the gas, make sure you’re filling that funnel with prospects! And in speaking of this process, sometimes founders panic as they're raising capital and try to rush the process or they abandon the process. What are your words of advice to them? 

PL: I have a lot of empathy for founders that are raising capital because I've been through it myself and it's a brutal process at the best of times. I don't have any magic process or solution that solves this problem, unfortunately. 

Be mentally prepared to be rejected many, many times. And build a network of people who you can commiserate with... and get up every day with a fresh, new, and positive attitude and do it all over again. Remind yourself that sometimes, your success ratio could be 1 in 100, and there might not be anything you can do about it - other than to improve your pitch and call more people. 

And keep in mind that the goal of the process is to build trust and relationships. The outcome is receiving money, advice, and network. Build enough time in your fundraising process to have initial meetings to build trust and exchange information, and be intriguing enough to capture the next meeting. 

TNT: Alright, let’s talk about networks now and how to approach asking your network for an intro. Any tips?  

PL: As long as your ask is well-formulated and respectful, you should be able to ask anyone in your network (including friends and family) for introductions. 

If you're a founder asking for intros, keep in mind that you are asking your contacts to use their social capital to vouch for you. Ask yourself: will my friend be thanked or admonished for introducing me to her network? Imagine your friend hearing "I loved that conversation, they were so knowledgeable and helpful" from their network about you - you'll get more intros. Imagine the opposite - you get the idea. 

And do all the work. Write the intro scripts, prepare a forwardable pitch deck, and develop a list of contacts you'd like to be introduced to. When you do this, it sends the signal that you respect people's time and that you're willing to do all the heavy lifting because they're doing you a favour. Remember, the people with the best networks get more intro requests that they can handle - so this is a way you can rise above the crowd. 

Learn all the etiquette for double opt-in email intros, and make sure you're on top of your email/calendar scheduling game when you get the intro. 

P.S. This is also something that takes a lot of practice to get good at. So don't get discouraged if the first few don't work out. 

 TNT: And last question! Any other suggestions on how a founder can make it onto the radar of an investor? 

PL: When you consider what investors do (especially VCs), it's not that hard to get ahold of them. The question is, what is the best way to get their attention? Most are reachable through their websites and cold emails, which I find get very low response rates for most people. However, this works if you can put together a killer email - short intro pitch, impressive traction metrics, a "brag" (award-winning achievement, recent founder exit, etc), and a pitch deck. 

For those that don't have all of this, start with meetings in your network, or attend events where you will meet investors, and be impressive enough for others to talk about you when you're not in the room. If you show the spark and the knowledge they're looking for, you'll get the next meeting and you'll get intros to other investors in their network. The key is to always be prepared to deliver your unique knowledge delivered in an elevator-pitch format.

TNT: Amazing. Thank you so much for your time today, Patrick! A ton of wisdom and lots to think about for the next fundraising round. Appreciate it!  

*Patrick Lor is Managing Partner at Panache Ventures, a $58m fund that has invested in over 95 seed-stage startups. Previously, he was co-founder at iStockphoto, which was acquired by Getty Images. As a mentor, he was recognized by UBC’s Creative Destruction Lab with their Associate of the Year award in 2019.