Note: his article is the what behind CREAM. Over the next few weeks/months, I’ll be sharing the how. Subscribe to my newsletter to get these insights straight to your inbox.

At this time last year, I was closing out the most frustrating 6 months of my life - raising our pre-seed.

Here’s a summary of that process:

• 87 meetings (yes, I counted)
• 13 investors who ghosted me (yes, I have the list)
• 400+ of warm intro requests
• 50+ hours of research
• 1 meltdown on a great summer day in Chicago

Fundraising sucks. There’s other way to put it.

When I kicked off our raise in June 2022, I spent so much time trying to figure out where to start.

I, like many people raising for the first time, jumped right in and started asking for introductions because I knew that warm intros were the best way to get in front of VCs. After 30 meetings, including a few with funds that I really wanted to invest in us, we had made 0 progress. When I say 0, I mean 0. Only one fund had even taken a second meeting with us, and none had written a check.

One meeting in particular stands out. It was August 12th, and I was in Chicago to celebrate my girlfriend’s birthday. It was a Friday afternoon and this was my last call before the weekend. I jumped on the call and only one of the three investors from the fund were on; the other two joined 5 minutes late. I started my pitch and immediately, they lost attention. One started using their phone (mind you, we’re on Zoom, so you have to be pretty rude to have your phone visible through your webcam) and the other two were doing something else on their computers other than listening to me. 7 mins later, I finished my pitch and asked if they had any questions.

Crickets.

Not a single question. Not even the questions VCs ask when they can’t think of anything better like “what about competition?” or “what’s stopping a bigger company from doing this?”

We ended the 30-minute call 15 minutes early, and I was distraught. My girlfriend and I took an Uber home and I told her that I just didn’t think I could do it anymore. Maybe fundraising wasn’t for me.

I’ve spoken to dozens of other founders and many of them have had similar experiences. It’s is a grind.

But, there’s hope! I took a break from raising after that call to reset. I thought about what wasn’t working and what I needed to change to keep investor’s attention. Then, I got back on the horse.

Things started to change. My pitch got stronger. I got more confident. Our revenue increased and we signed bigger customers. I started to get second and third and fourth meetings with real funds that had genuine interest.

Then, in November 2022, Carmen Palafox of 2045 VC emailed me saying that she wanted to invest $350k into our pre-seed. Her check, coupled with another $430k from a bunch of different places, brought us to our $780k pre-seed. We did it. We won.

I’ve reflected a lot my experience raising, and I’ve come to a conclusion:

Yes, fundraising is extremely hard, but it’s 5x as hard when you don’t have a process.

I’ve always felt a calling to help other underrepresented folks break barriers by sharing what I’ve learned, and now is no different.

Introducing: CREAM!

Not to be confused with Wu-Tang’s 1993 song, CREAM is a framework that founders can follow through every step of the VC fundraising process - from deciding if they should raise in the first place to maintaining relationships with investors that pass.

1. Consider if VC fundraising is for you
2. Ready your documents
3. Establish an investor pipeline
4. Activate your fundraising round
5. Maintain relationships

It’s everything that’s worked for myself and for other successful founders I’ve spoken to, and nothing that hasn’t. My goal is to help other early-stage Black and underrepresented founders more easily access what is, unfortunately, the most available source for us.

Let’s break it down.

Consider if VC fundraising is for you

Before you start building an investor pipeline or working on your pitch deck, you need to make sure that VC fundraising is right for you.

There are two questions you need to ask yourself when considering raising VC money:

1. Can my company get to $100M in annual revenue in 10 years?
2. Venture capitalists invest in companies that they believe can achieve unicorn status - that is, get to $100M in annual revenue within 7-10 years and reach a $1B+ valuation. If they don’t see a clear path to that outcome, they won’t invest.
3. There is nothing wrong with building a business that generates $1M or $10M or even $25M in annual revenue. In fact, if you do that, you’re a helluva entrepreneur. You’re just not building a business that VCs want to back, and that’s fine.
4. Do I want to build a VC-backed business?
5. If you believe your business can get to $100M in revenue, the next thing to consider is if you want to run a VC-backed business.
6. There are pros to taking VC money. You can pay yourself early on. You have access to whoever your investors know. You get to be featured in Forbes and TechCrunch.
7. However, there are downsides as well. Taking VC means that you have to go for the biggest outcome. It’s $100M or bust. You give up board seats, which in some cases (ex: Uber), means that you as the founder can actually be kicked out of your company. Lastly, your vision for your company becomes secondary to what the VCs want. Sure, sometimes that vision is the same, but if they aren’t, you have to convince your investors why your path is the right one.

This guide is about raising VC money, but before you can do that, you must make sure that it’s right for you. There are many different routes to get your company funded, so if you don’t answer a resounding yes to both questions above, then consider those!

Ready your documents

• Pitch deck
• Financial model
• Data room
• Communications

Now that you’ve decided that VC is right for you, let’s get your documents ready. This is where I made the biggest mistake during my own process. Before you take a single meeting, you should have all of your these docs prepared. Not having these will mean that you have to spend all night creating one from scratch, but it also might mean that the investor passes entirely.

Pitch deck

You’re probably familiar with this. Your pitch deck is the a 12-15 slide representation of your company and your vision. I’ll share more about what should go into your deck later, but the big thing to remember is that your deck should be enough for the investor to take the meeting. Don’t put too many words, make it easy to skim (the average investor spends about 3 mins reading a deck), and make sure it’s at least somewhat pretty.

Financial model & market growth calculations

The most nebulous of all of the documents, your financial model should include actual numbers from the last 6-12 months your company has been in operation, and also projections for the next 12-18 months.

Your market growth calculations are projections for the market you operate in. This spreadsheet should let the investor know how you think about your addressable market and how much of that market you believe you can capture. Calculations are optional, but they do a lot to build investor confidence in you.

Making this is tough; everything feels made up (because it is). Just remember that your financial model is more about letting investors know that you’re thorough and thoughtful about your company.

Data room

Your data room is a virtual folder that contains your company’s documentation. Here’s what should be in your data room:

1. Pitch deck
2. Financial model
3. Market growth calculations
4. Cap table
5. Employee roster and background
6. Legal docs (certificates of incorporation, stuff like that)
7. Customer lists
8. Financial statements (P&L, balance sheet, income statement)

You should have two data rooms: one that you send to investors early on, and one that is for investors in serious diligence.

Communications

Fundraising is basically all communications. Between emails, phone calls, texts, and video meetings, you want to be concise when talking to investors so you can keep their attention and get the next meeting.

This is where your email templates will come in. You will want to have the following on deck before you start raising:

1. Forwardable email
2. Warm intro request
3. Follow up after first meeting
4. Declined investment - warm intro request

The forwardable email is #1 for a reason. It is the single most important communication you need to raise VC funding, and a good one can be the difference between getting a check and an investor passing on a meeting.

Establish an investor pipeline

This is a two-part process:

1. Find eligible investors
2. Find people that can introduce you to those investors

Finding eligible investors

There are over 10,000 VC funds in the US. You can’t talk to all of them, so you want to be strategic about who you go after.

All VCs claim to be different, but if you boil it down, they can all be segmented by a three traits:

• Geography
• Industry/investment area
• Investment stage

You want to find funds that invest in your location, industry, and stage. This is relatively easy as there are plenty of databases for finding VCs and almost all of them include the above three traits. Once you find the fund, find 2-3 people from each fund and add them to a spreadsheet.

Finding people that can introduce you to those investors

Once you’ve created your list of investors, you’ll need to find people in your network that can make the introductions for you - in fundraising, this is referred to as the “warm intro.”

There are plenty of articles and thought pieces on why the warm intro needs to be banned as a venture capital practice, and you’re going to see so many funds with forms on their websites calling for people to apply for funding, but the truth is this; the warm intro is still the best way to get in front of an investor.

To get warm intros, you’ll follow this process:

1. List all your eligible VCs in a spreadsheet
2. Create a column in that sheet titled “Who can intro?”
3. For each investor, go to their LinkedIn profile and see who you are connected with that is 1st level connection with that person.
4. Write each of your 1st connections in the “Who can intro?” column.

Fair warning: this will take hours. Grab a nice drink and queue up some podcasts.

Activate your fundraising round

Okay, now we’re here! You’ve considered all options and determined that VC is the best route for your company, you’ve readied all of your communications, and you’ve established your investor pipeline. Now, it’s time to get active.

This is the meat of the fundraising process. There will be days when you’re taking 5 pitches each day. By the time you log off for the day, all you’ll want to do is go to sleep, but you’ll have follow up messages to send and prep work to do for the next day’s meeting. If you’re a founder with other responsibilities like writing code or creating content, you will want to have a backup plan for those items - whether that’s handing those items off to another teammate, pausing them while you raise, or scraping out a few hours on the weekends to get them done.

Activating your fundraising rounds includes:

1. Contacting investors
2. Meetings and due diligence
3. Following up
4. Managing your investor pipeline
5. (most importantly) GETTING THE CHECK(s)

Contacting investors

Using your investor database and list of people that can make warm intros for you, start getting in touch with the investors by asking people in your network for introductions. Text, email, call; whatever it takes.

Meetings and due diligence

This will get repetitive - that is a good thing. After some time, you’ll start to notice patterns with the questions that people ask. Analysts will ask surface level questions, and if you answer those well, they’ll jump off the call excited as they believe they’ve sourced a good deal for their partners. Partners will be more straight-faced, and if they’re experienced, they’ll ask pointed questions that are specific to your business. You will be ready because you’ll have your Q&A document handy for any and all questions.

Following up

As mentioned above, fundraising sucks. You want to finish it as quickly as possible so you can get back to building. The quicker you follow up with investors, the quicker you can determine if they’re going to invest or not. A general rule of thumb is to send 2 follow-up emails. If the investor doesn’t respond, they aren’t interested. VCs are sharks; their job is to look for good investments, so if they think you are a good investment, they’ll demonstrate it by responding quickly.

Managing your investor pipeline

You’re going to have as many as 300 investors in your pipeline. It’s critical that you stay organized. Every day, go through your investor pipeline and update it based on the day’s conversations. If a fund has ghosted you, move them out of the active stage. If they’re requesting your data room, move them into the due diligence stage. Being organized will make your process 10x easier.

GETTING THE CHECK

If you’re in VC Twitter, you’ve probably seen horror stories of VCs backing out even after signing the term sheet. This, unfortunately, is not uncommon.

The job isn’t done until the money is in your account. Do whatever you can to secure the check and get the money wired. Only then can you celebrate - and celebrate you should.

The activate stage is where fundraising becomes your job. It will be a grind, so buckle up.

Maintain relationships

Okay, so you’ve successfully closed your round. You’re done!

Well, not quite. Some people will tell you that founders should always be raising. While I don’t entirely agree with that, it is true that you will want to maintain consistent contact with your current investors and with those that passed on your first round. Especially between your pre-seed and your seed round, it’ll be much easier to raise from the people you had good conversations with than it will be to raise from a fresh batch of investors.

The key to maintaining investor relationships is sending quality, monthly investor updates. The emphasis here is on quality.

What should go into your monthly investor update

1. KPIs - updates on our revenue numbers, # of customers, and a 1 KPI per workstream (sales/product/marketing)
2. Business update - a 200-word summary on what’s happened in the last 30 days. This is the meat of the update. I typically share a recent learning we’ve had for one of our workstreams and any new customers we’ve signed. This is where you give investors a real peek behind the blinds.
3. Highlights - good news from the past 30 days. New team members, new customers, press coverage; all of that should be listed here in bullet format.
4. Challenges - this is optional, but it’s important if you have anything for #6 below. I include things that we’re struggling with and/or areas we could use help in.
5. Focuses for the next month - a bulleted list of focuses for the next 30 days for each workstream. One sentence per workstream. If you have a team member who owns a workstream, ask them to fill this out so they can get involved and start thinking in milestones the same way you are.
6. Asks - this is where I tap into our community to ask for help with anything. Last month, I asked for connections to UI/UX researchers because I want to be better about customer interviews, and I got 3 intros!
7. Thanks - give flowers! I use this section to shoutout anyone in our network that’s made intros for us, referred us to a potential customer, or helped us in another way.

You can snag my investor update template here!

Summary

Fundraising sucks. I know I’ve said that before, but I had to remind you. The only way to make it easier is to have a process. Use CREAM to set yourself up for success so you can get the money you need and build your company into what you know it can ultimately be.