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Courting the right funders

By Posted on June 11, 2015

DannyIn my admittedly limited experience on this earth, I’ve observed that the most productive and fulfilling relationships are those that have been cultivated over time and built upon a foundation of honesty, clear communication, and reciprocity. This applies to professional, investment, and even romantic relationships alike. While I will stick to professional and financial relationships in this Funding Findings blog, I’m pretty sure there could be a blog solely dedicated to explaining the uncanny similarities between securing investment and romantic relationships. But I’ll save that for another day.

Similarities aside, energy/transportation technology companies interested in securing funding must think strategically about how to position themselves for success. In most cases, this positioning requires deliberate thought about how to grow relationships with potential funders and funding influencers. Here are 6 tips for how to court the funder that’s right for you and build a connection – hopefully to the point of consummation into a financial relationship:

  1. Know your goals

Before you begin actively developing relationships with potential investors or other funders, your company needs to know its goals as they relate to securing funding. Ask the key questions: What types of funding are you pursuing? To what activities within your company will the funding be allocated? When do you need funding? You should think critically about your company’s development goals over the next one, three, five, and ten years. If you neglect these goals, you will have much less direction, and thus much less success in building relationships with potential funders. Once you understand what your funding goals are, you can then reverse engineer and build a timeline with milestones. Your strategic goals should provide the overlying context for any potential funding opportunities.

  1. Identify the right people

Once you understand your goals, the next step is to understand with whom you will be developing a relationship. If a key part of your funding strategy is to pursue federal R&D programs, identify which federal agencies and technology sub-offices are particularly relevant to your technology, based on their strategic plans and past grant programs. Then, identify the individual program managers that influence decision-making for your technology area. This information can be easily accessed on the agency websites. If your capital requirements point to pursuing seed or venture capital funding, do some research on which angel or venture capital groups are making investments in your space similar to the investment you are seeking. There are a handful of VC firms that specialize in energy technologies. If it turns out that you identified a target contact that may not be an influencer or may not be relevant to the funding you’re seeking, ask them to refer you to any of their contacts who may be relevant and pursue those.

  1. Start the conversation early

Let me repeat what, at this point, is becoming the unofficial mantra of the Funding Findings blog: START EARLY. Being proactive is particularly relevant to building relationships with potential funders, because building a fruitful funder-fundee relationship takes time. Once you know your key goals and the timeline along which they are placed, start cultivating relationships as soon as possible. Allow the relationship enough time to mature for when you actually might be pitching or applying for funding. Starting early also enables you to learn (read: fail) early and often. You may learn unanticipated major barriers or challenges your company must overcome to secure funding earlier, rather than later when it may be too late.

  1. Be humble and ask questions

You’ve made it this far by knowing your strategic goals, zeroing in on the appropriate contacts, and reaching out early to set up the initial phone call. Think of the initial conversation as informational or research-oriented, rather than pitch- or sales-oriented. Starting off by selling or pitching your technology immediately often changes the conversation’s tone, prompting the investor or federal program manager to listen with a more skeptical and perhaps defensive mindset. Begin the conversation by introducing why you’re there: to learn more about their goals, needs, and priorities, to humbly socialize your technology, and to ask for honest advice about how your company should be approaching technology and business development. Ask a lot of follow up questions that begin with “why.” Ask what technology or business milestones they think your company needs to achieve in order to be successful. If executed in a supplicating, yet confident manner, the conversation can introduce your company to challenges and opportunities that you may not have realized. I think many would be surprised at how honest and helpful potential funders can be if approached the right way. Investors are humans too!

  1. Reciprocate support and feedback

Reciprocity is a basic human instinct that, often subconsciously, guides our interactions with other people. Thus, relationships with funders ought to be a two-way street. Ask your contact if there is any way you can support their efforts or lend some information you have. Mutual support is particularly relevant for relationships with federal grant program managers. When a grant program releases a Request for Information (RFI) or is open for public comment, the managers appreciate input from the experts in the field, especially experts from companies that may be submitting proposals to the program in the future. For both federal grant program managers and private investment professionals, you can provide valuable information about the environment in which your technology lies – the state of the art, key challenges and opportunities, and other organizations that are innovating. This information is important for the funders to stay on top of the markets in which they invest or sponsor research.

  1. Keep in touch

As your company and technology progress over the course of your work leading up to your pursuit of additional funding, periodically keep in touch with the funder contacts with whom you’ve developed relationships over time. One of the most productive ways of maintaining contact is to provide updates on how you’ve tangibly and continuously hit key milestones on a regular basis. The milestones could be on the business side, such as securing channel partners or purchase orders, or on the technology side, such as developing a bench scale prototype or hitting certain performance targets. These may be the same milestones that the venture capital partner or federal program manager suggested were prerequisites for their group to consider funding your company. If you can demonstrate that your company routinely sets ambitious, yet achievable goals and routinely achieves those goals, your relationships will further strengthen and be more likely translate into financial relationships. It’s also important to keep in touch to understand the potential funder’s needs, challenges, and opportunities and how those evolve over time.

Hopefully, if you heed the aforementioned advice and create a productive working relationships with potential funders, you’ll be able to make the “ask” when the time comes. Not only do these tips serve to make it easier to secure funding when you need it, but they also serve to inform how to most effectively build your company and innovate on your technology.

Go out there and respectfully court potential suitors! Potential funders, that is.


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