Part Two: How to Pitch to Investors as an Early Stage Startup

As a continuation to Part One, this post covers a unique perspective of raising capital from the standpoint of someone that has done it already. Leif Elgethun founded Retroflex in 2012, spending the next few years navigating his way through the trials and tribulations tied to raising funding. 

During this workshop, Leif shared with us the main lessons learned during the time-consuming process. He approximated that he spent 8,000 hours and $100,000 of personal funds before raising capital from investors. 2016 was the year of the breakthrough, raising $1.5 million.

Here are our key takeaways based on the lessons he shared.

Who is part of your team? Team is the most important aspect of building a company. What’s more important than your internal team, is your external team. Finding advisors and directors who have been through this process before is imperative.

What kind of company is it? What type of company are you building? Are you going after a slow growth large market, slow growth small market, fast growth large market, or fast growth, small market?

What type of capital should you seek? First, try to grow your company on revenue. Then you should look at founders, friends, family, fools and former friends. After that, consider “free” capital (crowdfunding, etc.) Then, debt - personal savings, loans, etc. The last thing you should be looking at is equity. Below, we go into the pros and cons of each type of capital.


  • Pros - earned money, minimal strings attaches, proves product market fit, doesn’t give up ownership.
  • Cons - requires finished product/service, requires proven team. 

Founders/friends/family/fools/former friends

  • Pros - lowest outside money barrier, minimal strings attached, quickest .
  • Cons - unmet expectations, loss of friendships, no value add.

Free - grants, crowdfunding, competitions

  • Pros - Doesn’t give up ownership, minimal strings, can be quick.
  • Cons - Can take away from core business, takes time.


  • Speaks for itself


  • Pros - no founder collateral, appropriate for sales growth and value-add to investors.
  • Cons - gives up control of company, mismatched goals and expectations, extremely time intensive, distracts from core business.

Raising Equity Capital in Boise & Idaho
Minimum company requirements

  • Need a clear value proposition. You have to know what the problem is and what the solution is. Has to be clearly understood. Sometimes you have to dumb down your idea and really condense your value proposition.
  • Need to have problem solution fit - need to show your product is something that your market will buy somehow.
  • Need to have a 10x business model.
  • Initial traction - defined by throughput of your business model. Show you can get your customer through the beginning of the process, and turn into a paying customer.
  • Realistic go to market strategy - you have to understand your investors well enough to explain potential, and how much it costs to get a customer. This has a huge impact on your ability to scale.
  • Passionate founder with unique market insight - the founder believes so much in the solution, they believe that no one will get in their way.
    • You need to know something about the market that allows you to create a solution. Either it comes from industry experience, a unique life experience, etc.
  • Team, team, team - most investors, if not all, will say that the team is the #1 thing they invest in. Your first round of funding is usually them investing in one or two. Once you go to the next round, they look at your entire team. They are counting on your team on taking their money and doing something that will grow it. You’re asking people to risk their livelihood for your dream. How will you get your team excited for what you’re solving and building? They need to believe in your passion. If your team doesn’t get excited, that is a recipe for disaster. They’ll jump to something else. Don’t underestimate the team. The reason we are where we are is because of the team.

Fundraising Tools

  • Pitch Deck - Guy Kawasaki
  • Executive summary (1 pager) - most investors, for seed plans, take the executive summary instead of the full business plan. Once you write a biz plan, and it’s printed, you can guarantee that it’s obsolete when you print.
  • Investor tracking mechanism (spreadsheet) - what you don’t want to do is go to an investor and never talk to him or her again. You need to follow up with them. You’re going to talk to them more than once before they write you a check. (Sales 101) - for us to raise 1.5M dollars, we had to talk to 120 people. It was a 10% success rate. 1000 hours meeting people. Doesn’t include getting advice, writing pitch deck, etc.
  • Product or demo - need something more than your slick conversation skills. Need to have something to show.
  • Supporting documents for due diligence - your articles of incorporation, list of competitors & SWOT, other documents that investors will ask for. Have them on hand so that you’re ready when they ask. The #1 thing an investor looks for in you, is CONFIDENCE. Investors can smell it. A way you can make yourself feel confident is to have the answers before they ask them.
  • Capital needs and valuation - You need $20M? What are you going to spend it on, specifically? How are you going to spend it? When you’re a startup trying  to raise a seed round, you need to know your valuation. Took my capital need, willing to give up 25% of that, giving you your valuation.

Fundraising Process

  • Get help - nobody is an expert at fundraising out of the gate
  • Practice your pitch as much as possible - you have to be super confident when presenting
  • Identify potential investors - start networking, tell people you’re raising money, ask for referrals and introductions
  • Refine, refine, refine - make changes to your pitch based on feedback after pitches
  • Hire a lawyer - do NOT negotiate this on your own! This will be the best money you’ve ever spent. This isn’t because your investors are trying to ‘run one by you’ - but you need to know what you’re signing yourself up for and make sure the deal is fair to you.
  • Keep asking until the round is closed - it might feel like you’re begging, but you can’t give up. Get them off the fence. Force them by asking “yes” or “no”.

Strategy vs Reality

  • Our idea is great, people will invest - reality, they invest in companies, not ideas.
  • Once we have a lead, the rest of the round will close itself. Reality - It is time consuming and requires tenacity.
  • I want to raise all of my money here, locally. Reality - we hit the whole NW. Referrals were key.
  • Having our due diligence packet ready will help. Reality - having due diligence packet ready was VERY helpful.

Lessons Learned

  • You will have skin in the game before an investor will.
  • Raise 2x the money you think you need
  • Expect things will take 3x longer than you think it will
  • Don’t raise capital until you have to
  • Prepare to raise capital before you need it
  • Always forecast with two plans - bootstrapped and capital
  • Fundraising is longer than you think. 6-12 months in Boise.
  • Once you start fundraising, you never stop
  • Find great mentors and advisors
  • Don’t underestimate how hard raising capital is.

Thank you Leif, for sharing your story and giving startups real advice without any fluff. We appreciate the honesty. 

Roumena Kratchunovastartups