A Comprehensive Guide to Raising Capital Efficiently During Market Crippling Periods of Quantitative Tightening (QT)

For Founders, Executives & GPs

www.soluriscapital.com

Capital Market Trends

Post COVID currency devaluations, war preparations, the ending of a long-term debt cycle and the resulting Quantitative Tightening (QT) or market contraction has caused massive stress on the capital markets.

In response to structural inflation, asset managers like BlackRock, Vanguard, State Street, and Blackstone have tightened their balance sheets. This tightening has trickled down to all institutional investors, affecting retail investors as well.

The state of the capital markets hasn't been this poor since 2010-2011. It has become nearly impossible for people to close funding rounds or sell debt instruments without tactical knowledge of building a marketing machine that produces term sheets or signed sub-agreements.

Consequently, most business owners, who fall into the category that don't survive past five years, fail to achieve escape velocity, change the world, or gain personal freedom.

However, even in these trying times, you don’t have to become a statistic if you understand how to achieve investor-message fit and scale your reach to investors with a current mandate in your vertical and geographical location.

By doing so, you can effectively generate interest from the few active investors not hoarding dry powder. When you reach this state, you can schedule meetings within a week, use insights from each meeting to refine your presentation, and produce term sheets or signed sub-agreements within a month.

Unfortunately, most founders, executives, and GPs lack the necessary skills to accomplish this, as the technologies involved are relatively new and require digital marketing expertise.

We are the only firm in the world dedicated to solving this specific problem.

Solving For Investor-Message Fit

In the realm of capital raising, true north isn't marked by appointments or meetings, but by tangible milestones like term sheets and signed sub-agreements. For founders, executives and general partners (GPs) across various industries, optimizing time is crucial. Yet, the imperative focus on operational excellence and deal execution is often diverted by the demanding task of fundraising.

This elusive state results from the convergence of several critical variables:

• Investor segment (type)

• Messaging (persuasive language that compels engagement)

• Channel (platform through which they are reached)

• Presentation (the meeting itself)

• Due diligence process

Achieving this state allows you to pack your calendar with mandate-specific investor meetings, have multiple groups in due diligence, and meet your funding requirements in weeks.

Solving each variable in order, with rapid iteration, leads to Investor-Message Fit. The speed at which you close the round or meet your target depends on how quickly you can solve all variables and reach the sweet spot.

This scientific approach mirrors dialing in a marketing funnel, starting with metrics like CPM, CTR, CPL, Opt-In Rate, Lead to Appointment Rate, Qualified Appointment Rate, Closing Percentage, Cash Collected, ROAS, and Net Return on Spend.

Begin by hypothesizing the investor segment using deductive reasoning, crafting compelling messaging that garners attention and converts it into meetings, identifying the optimal channel for generating attention, iterating on your presentation, and ensuring your Data Room and due diligence materials align with your presentation.

When each of these aligns, you achieve IMF (investor message fit) and term sheets begin to hit your inbox.

Step 1: Solving For Investor Segment

The first step of the equation is solving for the investor segment. We do this by first identifying which investor types align with your deal, and then segmenting those investor types down based on mandate (industry, vertical, geographical location, stage, deal type, raise amount etc).

Once you know which investor types align with your deal based on mandate, you then begin to put your target list together of actual investors who meet all criteria.

Your curated mandate-specific list of investors, is your ‘’Investor Segment’’.

We’ve created this worksheet to help you identify investor types that fit your deal parameters:

Solving For Investor Types | Matrix | Soluris Capital

Once you’ve identified the correct investor type(s), you’ll then go more granular to find the specific firms and individuals within your aligned investor type that have a mandate for deals or offerings that match yours.

There are variables you need to consider: Variable Breakdown

Whilst curating your list you’ll need to be conducting research on each of your targets, their firms, mandate and portfolio construction. This is the most time consuming part of the process.

Here are some conventional ways you can create your target list:

Conventional Method 1: Manual Search

You can spend your time conducting a manual search on Google, YouTube, ChatGPT, other engines or doing a deep dive on social to narrow down your investor list.

Here are drawbacks with Manual Search:

1. It’s time consuming, remember we’re optimizing for speed to term sheets/signed sub docs.

2. It’s going to be quite difficult to get the direct contact information for your target contacts.

Conventional Method 2: Basic Databases

One step above manual searches is using existing databases of investors. These include Crunchbase, Gust, VentureDeal, Signal.NFX, F6S, OpenVC, Angel Match and LinkedIn Sales Navigator.

Real estate specific databases: Fundrise, RealtyMogul, CrowdStreet, Cadre, RealCrowd.

There are others, but these are the ones we’d recommend.

Regardless of which investor segment you’re in, and what offering you have, you’ll be abl to find mandate-specific investors using this method.

Here are the drawbacks with Basic Databases:

1. The mandate is often not current, meaning you’ll put in your search parameters based on the variables I laid out previously, but they were true of a previous fund.

2. Contact information is accessible but often not accurate.

3. Everyone has access to this data, meaning these people are being bombarded with emails and messages making it difficult for you to get their attention.

Conventional Method 3: Introductions & Networking

Hitting the phones, putting shoe leather down to pavement and shaking hands will always be a great method to identify investor targets, and should be used in conjunction with any other methods you use.

In order to effectively fundraise through introductions and networking you’ll want to use a variety of sub methods including: networking events, tapping your own network for introductions, leveraging social for inbound etc.

Essentially any method that requires you to speak and communicate in order to identify investor targets.

Here are the drawbacks with Introductions & Networking:

1. In order for you to use this method with speed, it requires you to have an existing network to lean on in order to have the right introductions made; even if you have a network it’s still going to be challenging for you to meet people that align perfectly with your offering.

2. Very time consuming

1.1 Innovative Way To Curate Your Target List & Conduct Research Simultaneously

Enterprise Databases. Using these are by far the most effective way to quickly segment your investor list and curate targets of mandate specific investors that meet your deal criteria in less than an hour.

Here they are: Bloomberg Terminal, Thomson Reuters Eikon, PitchBook, Capital IQ, Preqin, Dow Jones Factiva, FamilyOffices.

The data you’re able to extract: First/Last name, email, phone number, firm name, location, bio, linkedin, twitter, website.

Insights:

• These are enterprise softwares, so expect to pay enterprise prices.

• Regardless of your sector, industry, vertical or deal type, you’ll be able to find current mandate specific investors using these databases; they’re the same ones that bulge bracket investment banks use to go beyond network constraints and PE/VC firms use to raise capital.

1.2 Personalization

Once the list is created, we’re going to create a personalization message for each of the contacts.

THis will show that you’ve done your homework before contacting them and significantly increase the likelihood of you generating meetings with your targets.

Personalization prompts:

• Reference a recent event.

• Personalize with specific details.

• Highlight a recent allocation (investment) - ideally one that would complement your offering.

• Highlight mutual connections.

• Express genuine admiration.

You can either do this yourself manually, or hire someone on upwork to do this for you.

1.3 Understanding Filing Requirements**

Step 2: Solving For Messaging

Conventional messaging takes place in the form of an email, phone introduction, or brief in-person meeting leading to an investor presentation.

In step 2 we’re going to dive into the modern forms of investor outreach that are high leverage and efficient.

2.1 Creating Your Foundational Teaser Document

The foundational teaser document will be the basis upon which all your messaging will derive, think of this as a redacted version of your business plan or a long form written version of your deck.

Having a singular document that can be leveraged with the help of ai will enable the quick completion of subsequent steps.

Here’s what you want to cover:

• Executive Summary

• Business Model

• Market Overview

• Comps

• Operations & Financial Status

• Funding

• Timeline & Milestones

• Management & Team

• Investment Opportunity

• Additional Information

2.2 Assemble Your Deck*

You want to use a deck (or several) that have already been successful at raising capital as a basis for yours.

You can follow this basic format that we use to help our clients:

Deck format: (Start ups)

Guide: 10-12 slides about the business.

Answer the following:

Slide 1: What You Do.

Slide 2: Product or Service.

Slide 3: Traction. Traction trumps all

Slide 4: Business Model. Tell us how you make money?

Slide 5: Investment Terms What are the terms of your financing?

Slide 6: Unit Economics. What are your key metrics?

Slide 7: Go-to-Market Strategy. Market Validation: Simple and concise.

Slide 8: Competition / Differentiation. The top two or three reasons why you are different from your competition.

Slide 9: Team. Where did the founders go to school, where have they worked and in what roles?

Everything else - market size statistics, detailed competitive analysis, product details - goes in the appendix.

Here are some additional resources you can use:

• 33 Legendary Startup Pitch Decks and What You Can Learn From Them [+10 Free Templates]

• All the Public Startups Pitch Decks in One Place

• OpenDeck

• Best Pitch Decks

• Base Templates

• VC Pitch Decks for LPs

• Top 15 Pitch Decks from Real Estate Startups

• You can do basic search for decks if you’re in Real Estate or have a fund.

Deck Builders:

• Gamma.app

• Beautiful.ai

• Open.vc pitch deck experts

2.3 Creating Your Email Template

To create your email template you’re going to feed ChatGPT your teaser document and ask it to create an email to investors using the information in the teaser.

Here is the proven format we use:

Hello {{firstname}},

{{personalization}}

1-2 sentence overview highlighting the company and unique selling proposition. (Think problem, solution, market segment, how it’s different)

Key Highlights:

• Break your highlights down into bullet points:

  • Business model

  • Financial overview

  • Competition

  • Funding

  • Timeline/milestones

  • Location

  • Team Market

1-2 sentences on Funding Requirements

Call to action

Sign off,

Keep playing with your prompt in GPT till you get something you like, then copy and paste it into a google doc to make your final touches.

You want to ensure you don’t use any hyperbolic and verbose language, keep it direct and to the point.

2.4 Creating Your DM Template

Run your finished email template through GPT to come up with a punchy 300 character message that can be used for social DMs.

Example:

Hey {{firstname}},

Would you be interested in a passive real estate investment with a target ROI of 15-17% IRR paid out in monthly distributions? Shoot me a message if you would like to learn more or schedule a very brief call. Thanks

2.5 Creating A Video Investor Presentation Example

Using a software like loom.com, record a video presentation of you going over your deck. You can make this between 5-12 minutes long, focus on your background and track record along with the investment opportunity.

2.6 Creating An Investor Video Ad

Creating a video ad to post on social for inbound leads, as well as creative paid ads is an incredibly high leverage way for you to generate investor appointments with your target list.

(More on that in Step 3)

Creating a video ad should follow this basic format, again using the information from your foundational teaser document:

Hook

Body/value

Call To Action

If you get stumped, run it through GPT using your foundational document to build your script.

In summary, instead of relying on a conventional messaging method, we break up the foundational teaser into different modalities for separate  channels.

And instead of the method being low leverage, we’re focusing on high leverage compelling messaging to attract attention from investors from all angles, yes even social.

People live on their phones, even billionaires have instagram, so do your investors, you can create videos that catch their attention.

Steps 2.3-2.6 are dependent on which channel you use to generate attention with investors.*

Step 3: Solving For Channel

The channel is the conduit by which your messaging reaches your target list of investors, and generates attention with them that converts into an investor presentation meeting.

Conventional Method 1: Manual Outreach

Manual outreach means physically typing out and sending emails or messages to your target investor list. This is time consuming and low leverage. Not what we’re going for.

Conventional Method 2: Warm Intros

Warm intros are your second conventional method, and would take place either over the phone, or in person. Of course these are targeted, and would require an introduction from someone you know, but again are low leverage in that this method is difficult to scale and requires a vast network to find a robust target list.

Innovative Method 1: Automated Outreach

Automated Email:

Leveraging email automation will enable you to generate interest with your target list by front loading all the work, and then managing the inbox (which can be delegated to someone on your team). Note: do not include links or attachments in your email automations

Ideal Investor Segments: Institutional

How to run cold email

LinkedIn Automation:

Using automation tools on LinkedIn are a great way to supplement your email efforts and provide a second touch point (you can attach your deck, and links).

Additionally, LinkedIn automation is an ideal channel for accredited retail offerings, especially thos that are early-stage or do not provide an annualized rate of return. (e.i Real Estate Fund)

Ideal Investor Segments: Institutional, angels/HNWI, accredited retail

How to run LinkedIn automation

Innovative Method 2: Paid Advertising

Using paid advertising on Meta you’re able to target your list of investors using Custom Audiences and Lookalike Audiences. This enables you to generate inbound investor leads and appointments, which completely changes the dynamic of the call.

Ideal Investor Segments:

• Paid ads are reserved for projects that are retail focused, and ideally generate a fixed rate of return. E.i you are a real estate fund and provide investors 12% annualized returns.

• Companies that are already generating significant EBITDA.

• Companies that have a really compelling or attractive solution/tech (e.i cancer treatments)

• Use your target list (investor segment) as a custom audience & LAL

• Use data vendors like skydeo

How to run lead generation ads

How to create a custom audience

How to create a lookalike audience

The innovative methods are targeted, scaled approaches that are incredibly high leverage, meaning you get a lot for what you put in, and enable you to reach your target list of mandate specific investors using tech which shifts the power dynamics in your favor.

Step 4: Solving For Presentation

Your presentation is by far the most important piece of the equation, it can make or break a deal, even if your offering aligns perfectly with the mandate of the investor, because for low-mid market offerings - investors are buying you.

How do you get investors to buy you? Hierarchical Dynamics.

Positioning, Hierarchical Dynamics, and Investor Relations

The Conventional Presentation Process:

Normally people will pitch over video call or in person to investors, and the response from your presentation and whether or not it moves forward to DD depends not only on the merit of your deal, but your salesmanship.

The Innovative Way To Develop Your Pitch:

Having a seasoned professional in Investment Banking, Venture Capital or capital markets as a whole help you develop your pitch will be the shortest path to success when it comes to presenting.

You can hire them on platforms like Upwork or TopTal.

They'll help you create a refined succinct presentation that creates a linear argument and is backed by real world experience. Your consultant will allow you to create a tighter feedback loop during the iteration process from meeting to meeting and get you to term sheets/signed sub docs faster.

The Iteration Process:

Use questions and sticking points from your meetings to incorporate into your next presentations. This approach establishes a constructive feedback loop that enhances the relevance and depth of your presentations.

The Pre-Pitch:

Leverage your Video Investor Presentation as a strategic tool to engage and educate potential investors before your direct communication. This method effectively sets the stage for the ensuing dialogue, streamlining the process from initial contact to the issuance of term sheets.

This also helps establish your Hierarchical Dynamic.

Warm Intros

During your presentation, it is crucial to strategically request introductions to additional investors who may have an interest in the opportunity. Aim to incorporate this appeal towards the conclusion of your discourse, thereby expanding your network and potential investment avenues.

Video Trainings:

The 3 Magic Ingredients of Amazing Presentations | Phil WAKNELL | TEDxSaclay

Kevin Hale - How to Pitch Your Startup

How To Perfectly Pitch Your Seed Stage Startup With Y Combinator's Michael Seibel

How to Stand Out to Sequoia with Mike Vernal (Sequoia Capital)

Best STARTUP PITCH ever. Silicon Valley.

How to pitch Sequoia & Angel Investors w/ WorkLife VC, Stride.VC, Chapter One Ventures, and Sequoia

Step 5: Solving For Investor Due Diligence

Investor Due Diligence (DD) represents a pivotal stage in the fundraising process, often consuming a significant amount of time. To optimize for speed and efficiency, it is imperative to have a comprehensive and well-organized data room established prior to the initial meeting with investors. A robust data room facilitates an expeditious review process and minimizes delays that may arise from incomplete or missing information.

Hold-ups during DD commonly occur when the data room lacks completeness or essential information is missing. Therefore, meticulous attention to detail in curating and maintaining the data room is paramount. By proactively addressing potential gaps and ensuring all pertinent documentation is readily accessible, fund managers can streamline the DD process, instill investor confidence, and expedite the progression towards securing commitments and ultimately closing the deal.

Best Practices For Managing Due Diligence Hold-Ups in Fundraising

1. Ensure Data Room Completeness:

• Maintain a comprehensive and well-organized data room with all relevant documents and information readily accessible.

• Conduct regular reviews to ensure completeness and address any gaps or missing information proactively.

2. Address Legal and Compliance Checks:

• Proactively resolve any legal issues or discrepancies in documentation to expedite the due diligence process.

• Maintain transparency and provide clear explanations for legal and compliance matters to facilitate investor understanding.

3. Provide Accurate Financial Analysis:

• Ensure accuracy and consistency in financial data and projections provided to investors.

• Address any discrepancies or inconsistencies in financial information promptly and transparently.

4. Enhance Operational Due Diligence:

• Showcase strong governance structures, management team capabilities, and operational processes.

• Be prepared to address investor inquiries regarding operational efficiency and risk management practices.

5. Optimize Investment Portfolio Review:

• Highlight the quality and performance of the company’s existing investments or assets.

• Address any concerns or questions raised by investors regarding portfolio diversification and alignment with the company’s overall strategy.

6. Stay Informed of Regulatory and Market Changes:

• Monitor regulatory requirements and market trends that may impact the investment opportunity.

• Provide updates to investors regarding any changes and their potential implications for the investment.

Closing Stage SOPs

7. Promptly Respond to Follow-up Requests:

• Address any follow-up requests from investors promptly and provide comprehensive responses.

• Ensure that all requested information is provided in a timely manner to avoid unnecessary delays.

8. Efficiently Navigate Terms Negotiation:

• Engage in transparent and collaborative negotiations regarding investment terms with investors.

• Strive to find mutually beneficial solutions and compromises to expedite the negotiation process.

9. Facilitate Investor Committee Approval:

• Provide all necessary documentation and information to facilitate investor committee approval.

• Communicate effectively with investors regarding the timeline and process for investor committee review.

I've created this checklist for VCS, RE, Debt & Funds:

Due Diligence Requirements | Soluris Capital

Additional Resources:

Startup Investment Due Diligence Checklist

VC Due Diligence Checklist

Startup Due Diligence for a Venture Capitalist

Sample VC Due Diligence Request List

Fundraising Options

Summary

As you can see, all you need to do is:

1. Solve for the investor segment

2. Solve for your messaging

3. Solve for channel

4. Solve for the investor presentation

5. Finally, ensure your investor DD is robust

These are the concise steps necessary to raising capital for founders, execs and GPs in any market condition.