I am a big fan of return on effort and being as efficient as possible with your time. One area where this has come up recently in conversations with entrepreneurs is fundraising. As I have written before, raising money may not be the best path for the entrepreneur. But if you decide to raise money, here are some thoughts on maximizing return on effort. 

Wide vs. Narrow

Some folks subscribe to the theory that you have to reach out to hundreds of investors to get enough initial meetings to ultimately get to someone who will write a check. While that may be true, I am not a fan of that strategy given the amount of time it takes as a founder to do this right. If you do cold outreach to numerous investors, it is time consuming to personalize all of those requests. If you just use generic/bot messages, your outreach does not stand out. You also then may be stuck taking lots of meetings with firms you would never want to work with - again, that takes time away from your business.  

Being focused and prepared 

Instead, I prefer having a narrow list of the 5-10 key firms you want to work with (that you know are thesis, stage, and culture fit, and have been referred by other entrepreneurs). Now you are focusing your time on firms you would be happy to work with in the end. This takes some preparation, but if you are already planning ahead to fundraise (meeting investors before you need money, asking for feedback, sharing updates, etc) then this process can be much quicker. This also means being prepared with a clear story, plan, data room, etc. to streamline the process.

Have options

Lastly, you may want to raise $2M. But market conditions, investor feedback, etc. may make that difficult. I like having a fundraising goal and plan, but be aware of how easy/difficult that is. If you are getting signs the market is not ready, you don’t have enough traction, the story is off, etc then be prepared to get back to building the business (customer funding and consulting services are always great ways to self fund for a period of time). There also could be a smaller amount that is easy to raise and start there. In the example above, maybe you can quickly get to $500K, but $2M would take a lot of additional effort. In that case I would say just raise the $500K and create a plan to make that work so you can get back to building the business.

Remember, time spent selling and supporting customers not only helps your business, but also makes it easier to fundraise in the future as you will have more traction and learnings. Be careful being drawn into fundraising cycles that take a ton of time and appear to go nowhere.