Permissionless fundraising - finding investors for the first time
By Rob Cossins on the 28th March 2023Investing
Founders and Funds face similar problems. The first time they both raise money is probably the hardest. It used to be the case that only those with a contact book could raise money for their new fund or start-up. Today, that's a relic of the past.
Say hello to permissionless fundraising
What is permissionless fundraising? Put simply, with today's technology, prospective risk-takers can build a network faster than ever. There's never been a period in history where your background matters less, at least when it comes to raising money.
Let's take start-ups. If you're raising money for your new company, you'll reach out to either funds or angel investors. With the right information, cold outbound can work wonders. If you send ~100 targeted emails, you may get as many as 25 responses. Even a handful of meetings is likely to turn into potential introductions, or at the very least you'll get good feedback on your company from a seasoned investor. From a cold-start, these network effects snowball, particularly if you know how to ask for an introduction.
Raising a first fund
It's the same principle for first-time fund managers. Perhaps you've left an established fund, or you've exited a company and are looking to support early-stage companies. This process is tough at the best of times, even harder if you've never raised a fund.
However, by having the right data on LPs, you can sharpen your focus from day one. Stage, commitment size, sectors, are all important data points. If you can refine a target LP list, you can build a pipeline and get going. With more funds out there than LPs, being strategic will save first time managers significant time.
Fundraising is still hard work, but the barriers to entry are slowly being removed as we have more data than ever at our fingertips.. Fundraising is becoming permissionless.
Scribe is a data platform for company information, powered by research-based AI. We help Banks and Private Equity to uncover deep insights about private companies and end data entry from PDFs. Welcome to the future of company knowledge.
Header Image by Un-perfekt