Economic uncertainty has given investors pause, but there’s still plenty of opportunities to be had, according to a panel at the Dartmouth Entrepreneurs Forum.
Rising interest rates, mass layoffs and a general sense of unease about the health of the economy has caused many investors to tap the brakes on venture capital investing.
But that doesn’t mean that entrepreneurs should be discouraged, according to a panel at the Dartmouth Entrepreneurs Forum. In fact, the current climate could be ripe with opportunities for entrepreneurs and investors alike, panelists said.
Panelists Sarah Worden, T’20, Senior Associate at Green D Ventures; Ali Massa, PhD Innovation Fellow at Dartmouth College and Venture Fellow at Borealis Ventures; and Marguerite Dibble, Executive Director of Black River Innovation Campus discussed how founders can continue to pursue investment and get noticed even during more challenging economic times.
Here are 14 tips for fundraising in uncertain times and finding creative ways to secure the resources you need to continue to scale your company, according to the panel.
1. Perfect your pitch
Now more than ever it’s important to have a crisp, clear pitch.
“Make sure a VC walks out of that first meeting knowing why they want to invest in you,” said Worden.
Articulate the reason why you’re seeking funding at this particular moment, and why VCs should invest now.
2. Emphasize the human impact
Sometimes the goals for a new venture can be airy rather than concrete, said Dibble. But what gets investors excited is showing that your venture has a real human impact, and that you have an intricate understanding of your customers.
"It’s all about grounding an idea in people,” she said. “I don’t get that excited about an idea unless it feels like it’s impacting people meaningfully.”
3. Remember the basics of good business
For Massa, having a solid foundation can make entrepreneurs stand out.
“Having a clear vision, being lean, being nimble, and having a strong sense of purpose in product,” are all critical, she said.
4. Stay humble
Successful entrepreneurs demonstrate that they’re humble enough to know what they don’t know, Massa adds. Showing that you know your potential vulnerabilities—and that you have a path to overcome them—goes a long way.
“You’re providing solutions to your own problems,” Massa said.
5. Be patient
Deals are still happening, the panel agreed. But they’re often taking longer than they were two years ago.
“You have to be a little bit patient and scrappy to make sure you’re getting the deals done,” Worden said.
6. Give yourself enough runway
With that in mind, Borealis is recommended that entrepreneurs give themselves 18 to 24 months of runway time, Massa said.
Having enough time is critical because you never want to accept a terms sheet out of desperation, Worden added.
7. Come equipped with specific data
VCs are always interested in numbers, and now more than ever.
“Come prepared with specific cash-driven milestones for the next six months or year,” Massa said.
Demonstrate how cash is going to help you reach meaningful inflection points in the short term.
8. Turn to friends and family
Periods of uncertainty can be a great opportunity to fundraise from friends and family, panelists said. People who are wary of the current risks in the market might find themselves more willing to invest in a founder or a project that they’re passionate about, Dibble said.
“Doors might feel closed in large investment spaces, but that might mean others are more open,” she said.
9. Utilize your networks
With that in mind, utilize alumni and other networks that are available to you.
“Alumni networks are some of the most important networks you’ll ever have,” Dibble said.
10. Consider government funding
Government grants are an under-tapped source of funding, panelists said. In particular, Small Business Innovation Research (SBIR) grants can be a powerful tool for entrepreneurs who can connect a research component to their endeavor.
“There are piles of money… that they are desperate to give away,” Dibble said.
Just be careful to review the terms carefully so you understand what rights you will retain to any intellectual property developed using SBIR grants, Worden pointed out.
11. Value non-capital investment
Even when you’re not able to secure capital investment, time and mentorship can be incredibly valuable, Worden said. The Dartmouth entrepreneurial community is rich with opportunities to speak to experienced entrepreneurs and investors, she pointed out.
“Even if you can’t get capital right away, there’s a way to get support through the network at large,” Worden said.
12. Embrace profitability
In the past, there was a push to prioritize growth over profitability.
“Profitability was almost the death knell of growth,” Worden said.
Now, that mindset is shifting.
“Profitability can be a sign of really diligent financial management,” she said. “If you can find the right balance of showing growth while still having cash flow, it’s only going to bolster the way you’re perceived for future opportunities.”
13. Be the top of your class
It’s better to excel at an earlier stage of funding, rather than stretch yourself to a more advanced stage, Worden said.
“It’s best to be top of your class,” she said, even if that means sticking with seed funding rather than positioning yourself to secure series A funding sooner. VCs are sometimes hesitant to invest in later-stage companies that may need to do additional rounds of funding before executing their exit strategy.
14. Embrace the possibilities
Any time of uncertainty is ripe for growth, Dibble said. These are moments of transformation and reconstruction—the exact type of environment that many entrepreneurial thinkers thrive in.
“I’m very excited,” she said.