Securing your first 10 investors is a crucial milestone for any startup founder. Not only does it validate your business idea and provide the necessary capital to grow, but the right investors can also lend expertise, connections, and mentorship. Securing that initial investor backing takes persistence and preparation – follow this step-by-step guide to attract and close your first 10 investors.
Table of Contents
Define Your Fundraising Goals
Before approaching anyone about funding, including your first 10 investors, be clear on exactly what you’re fundraising for. Outline financial and strategic business goals so you can articulate specific investment needs. Key points to define:
- How much are you seeking to raise in total and from each investor? $50-100k from each of 10 investors is a reasonable first funding target.
- What concrete milestones will this investment allow you to achieve? Target launching a minimally viable product or fulfilling initial orders.
- What equity or stake are you willing to trade for capital? 10-20% for this early stage is typical, according to Lexology. Be prepared to discuss valuation methodologies based on market size and growth benchmarks.
Aligning these upfront will focus on your funding search and investor discussions. It will also help determine if your asks match realistically with what early investors might expect to provide.
Set Funding Goalposts
To reach a $500k-1M initial round target, build an investor grid that breaks down contribution levels. For instance:
- 5 x $100k investors = $500k
- 10 x $75k investors = $750k
Having incremental cumulative goals will help you gauge progress toward hitting your overall capital needs.
Create a Startup Investment Pitch Deck
Your slide deck is the key tool for discussions with your first 10 investors. Make sure it covers:
- The problem you’re solving
- What is the market size of this problem? Appeal to investors with a large, growing market.
- Who has this problem and feels the pain acutely? Define your target customer persona.
- Your solution and what makes it unique
- Detail what needs you address that others miss or don’t adequately cover.
- Provide evidence of desirable benefits only your product delivers.
Traction and metrics that show evidence of success
- Share hard data on revenue, user growth, or partnerships rather than just promises.
- The team’s expertise and background
- Emphasize years of direct industry experience, past exits or successful ventures, and additional initiatives like looking for a employee wellness program that demonstrates your commitment to team well-being and productivity.
- Financial projections and details on how you’ll use funds
- Model out multi-year income statements and balance sheet cash flow forecasts.
- Link use of proceeds to fuel specific milestone achievements.
- Valuation and investment terms you are offering
- Support your valuation with market comps, risk-adjusted metrics, and future exit multiple assumptions over 5-10 years.
Refine your deck based on investor feedback so you can clearly showcase the viability and growth potential of your startup. Memorize key data points so you can fluidly walk investors through each slide.
Your First 10 Investors: Identify the Right Targets
Not all investors are created equal. Seek ones that align with your industry, business model, and stage of growth. Ideal first-round targets include:
- Friends, family, and professional contacts who believe in you and your vision
- Tap networks like college alumni groups, business associations, and entrepreneur forums
- Appeal to their desire to support someone they know personally
- Angel investors focused on early-stage startups
- Validate that your business idea resonates with those who regularly fund concepts like yours
- Get referrals to angels with passion for what you’re building
- Small venture funds specializing in your vertical
- Identify 5-10 funds that have invested in adjacent spaces
- Leverage LinkedIn to reach out to relevant managing directors
- Strategic investors that could also partner with your business
- Approach large companies your startup could enable or enhance
- Offer equity stake in exchange for distribution, licensing, or R&D support
Leverage your network and startup communities to connect to qualified leads. Reach out individually to build relationships before ever asking for money.
Explore Our Fundraising Guide →
Craft a Recruitment Strategy
To secure multiple commitments to get your first 10 investors, you need a structured outreach plan. Key steps include:
- Building an investor prospect list based on ideal targets
- Leveraging warm introductions through your network to set meetings
- Personalizing cold emails while balancing efficiency
- Following up diligently to provide additional information
- Moving prospects to the next steps, like meeting co-founders or demoing the product.
Track outreach progress in a CRM so you know how discussions are trending with each target. Log notes and milestones achieved to keep your recruiting efforts organized across the sales funnel.
Guide Investor Discussions
Develop a consistent narrative and slides to walk prospects through in exploratory meetings. But also prepare to answer key questions on areas like:
- How you will fend off early competition
- Biggest risks in your model, and how do you mitigate them
- Proof that customers need what you’ll provide
- Plan to acquire users at scale
Addressing investor concerns directly and confidently will convince them you can manage the inherent uncertainty in early business stages.
Develop a Strong Data Room
Investor due diligence doesn’t end with your pitch. To support the evaluation process, create a well-organized data room including:
- Financial statements and tax returns
- Product specifications, prototypes, and imagery
- Customer pipeline and projections
- Bios and references on the founding team
Anticipating and answering likely questions upfront will move you quicker to closed commitments. Provide forward-looking management projections versus just historical performance so your first 10 investors can underwrite future potential.
Know the Terms You Want
Preparing a terms sheet ahead of time allows you to anchor negotiations to work for your startup’s interests. Be clear on:
- Valuation threshold you want to meet
- Class of shares being issued
- Investor voting rights
- Vesting schedules for founder shares
- Future financing requirements
While some terms will be negotiable, others are worth fighting for in early rounds to maintain maximal control as a founder before needing to take more dilution.
Define Red Lines
Determine 3-5 year terms required to get a deal done. These could include:
- Maintaining voting control
- Assigning liquidation preference rights
- Defining exclusive negotiation periods for future fundraising
Communicate truths and trade-offs required to power your startup vision while still attracting investor capital.
Close Commitments through Relationship Building
Even after an initial “yes,” first-time investments can fall through without careful follow-up. Make your first 10 investors feel vested by:
- Introducing them personally to your whole team
- Providing regular progress reports between close and funding
- Expressing genuine interest in their expertise and willingness to serve as a mentor
Closing 10 investors often takes over 100+ introductory calls. Stay persistent yet personal throughout.
Seal Agreements with Term Sheets
Request initial capital commitments be formally captured in term sheets. While non-binding, they provide a document that grounds deal progress and key agreed-upon terms. Keep momentum going by having an attorney translate these quickly into final stock purchase agreements.
Move Quickly Through Investment Agreements
After verbal commitment, don’t lose momentum during legal processes. Have investment paperwork ready to finalize agreements including:
- Stock purchase agreements
- Investor questionnaires
- Subscription agreements
- Shareholder certificates
Set an expectation of prompt signature turnaround so that you can quickly bank initial funding checks. Immediately executing your stated funding milestones is key to building investor confidence.
Onboard First 10 Investors as Trusted Advisors
Your pre-funding advocates can evolve into lifelong advisors. Early on, connect with new investors by:
- Outlining areas where board involvement would be most impactful
- Scheduling monthly check-ins to review business growth plans
- Soliciting introductions to new partners or customer prospects
- Tracking metrics investors care most about showing progress
Leveraging first investor expertise will compound the startup value built from their original capital infusion. Offer meaningful ways for your new expansion partners to contribute based on the assets they bring to the table.
Build an Advisory Board to Broaden the Experience
While your first 10 investors will provide hands-on guidance, forming an advisory board expands your expertise “bench” for nominal equity. Identify 5-7 professionals from backgrounds like:
- Former entrepreneurs who’ve built companies in related spaces
- Domain experts like PhDs doing groundbreaking research
- Executives from strategic partner firms or large vendors
- Finance experts with IPO and M&A experience
Advisors can lend specialized insight during a pivotal growth period over 12-24 months. Define their scope around strategic priorities like:
- Evaluating expansion opportunities
- Hiring key executive team members
- Providing technical review on product roadmap
- Supporting future fundraising needs
Create a lightweight advisory agreement capturing involvement expectations, equity grants (0.1-0.5%), and assignment duration. Schedule intermittent working sessions rather than monthly meetings so you can leverage this brain trust efficiently.
An experienced advisor cohort beyond your early-stage investors magnifies strategic perspective as you scale. As constructively critical sounding boards, they improve decision-making and lend credibility that supports continued capital raises. With each member contributing 3-5 hours monthly, you tap into over 50+ hours per month of highly qualified guidance.
Seed Future Rounds Through Investor Updates
Closing your first funding round is just the start of continuous investor management. To lay the groundwork for future capital raises beyond your first 10 investors:
- Continue providing quarterly updates to keep existing investors engaged, even if you don’t need immediate financing.
- Share updated metrics on customer acquisition and revenue growth trends. Highlight key milestone progress.
- Outline how additional funding would accelerate market capture based on what you have learned.
- If relevant, summarize strategic partnership developments that validate your scaling business model.
It allows investors time to increase their position or tap partners for your next round, avoiding cold-start outreach each cycle.
Also, use monthly or quarterly updates to reconfirm:
- Capital needs over the next 1-2 years.
- Projections of future valuation step-ups. It builds expectations with investors ahead of upcoming discussions.
- Interest amongst the existing base in participating in a new round or leading it. Secure these verbal commitments well in advance to follow your current financing.
Keeping your first 10 investors updated on interim developments starts an efficient fundraising feedback loop. Rather than going dark, proactively seed ongoing investor enthusiasm through regular connectedness. Maintaining these open communication channels saves significant relationship rebuilding whenever you pursue adding key expansion capital.
Conclusion
Securing your early-stage first 10 investors requires systematic outreach and follow-up. But with a commitment to the process, founding teams at any stage can validate and fund their venture while building mission-critical expertise into their cap table. Use the playbook above to secure the essential startup financing needed to drive transformative growth.
