Creating FOMO to increase your chances of fundraising success

FOMO – the fear of missing out – might sound like teen text talk, but it’s actually a highly important part of the fundraising process for start-ups. Funders get approached by endless entrepreneurs looking to secure their cash, so creating some excitement around your opportunity helps to elevate it above the crowd.

As with any area of fundraising, however, there’s an art to getting FOMO right. It’s about more than name dropping in front of investors or getting thousands of followers on Instagram. 

You need to think strategically about using FOMO as part of your campaign, otherwise funders will see right through it and look elsewhere.

Start with the right investors

Your first investor is crucial as they pave the way for others to follow. If you start with a credible lead investor, it sends a signal to others that you are worth investing in. 

They are also more likely to have carried out in-depth due diligence, sending out a message of confidence. Get that qualification early on and it will help to create a powerful knock-on effect.

As more investors come on board, make sure you continue to approach the right category of investors as you go. Funders will take more notice of your idea if they believe in what you do. This means that your bid will be a far more compelling prospect if they can see you have a credible group of like-minded investors on board already.

Raise ahead of your first milestone

This point goes hand-in-hand with finding a suitable lead investor. Getting in early with one quality investor who has willingly parted with their cash gives you a huge head start. It also puts you in a much stronger position to cast the net wider.

Consider the power of statement when you have secured funding:

“We're excited to announce that we’ve just secured £75k from this brilliant [person/company/fund] as our lead investor. This means we're opening our pre-seed round of £200k with over a quarter already funded. The round is open for four weeks but we’re already in talks with other funders, so let us know as soon as possible if you'd like to see our deck or have a chat about the opportunity." 

Compared to this statement where there’s no funding secured:

“Exciting news! We’ve just opened up our funding round, looking for £200k of investment in the next four weeks. We’re keen to talk to like-minded investors, so get in touch asap to find out more.”

The first statement creates a much stronger sense of FOMO than the second, which is easy to bypass without worrying about missing out.

Create a buzz

Everybody wants to feel like they’ve got in early on a good investment. You can help funders get that feeling of excitement by creating a buzz around your opportunity.

It’s important to make enough noise to be noticed, but it needs to be the right kind of noise at the right time. Remember that you have control over the story you tell, so curate it carefully. As you open up to the wider world, drip-feed exciting updates to create a buzz around your funding opportunity.

Use these tips to get started:

1. Build a social media presence

Post regular updates, tagging the names of investors and companies that have come on board.

2. Build traction

Investors want to know how far you’ve already got to show a proof of concept. Perhaps you’ve had three meetings with high street retailers about your products, or pre-sold 500 downloads for your new app? Flesh these examples out to show them how they could grow with further investment.

3. Use scarcity to pull investors in

For example, “our crowdfunding campaign will be open for the next 20 days” or “we’re looking for two further investors before the close of this round”.

4. Show that people care about your idea

Build up advocates to shout about why they love your business on social media, create case studies and conduct customer research that validates your idea. 

Sell your USP

Funders see pitch decks for new businesses all the time and it’s likely that they will have seen other ideas that are very similar to yours. It’s your job to make them sit up and take notice. To do this, you need to be able to show them what makes your business different to the others.

Make sure your pitch deck articulates the following points:

1. What part of your business sets you apart from your competition? 

Work out how you can prove that no one else is tackling the problem in the same way as you and present your evidence clearly.

2. How does it solve a specific problem? 

Provide customer research and user anecdotes to show that there is a specific need you are addressing.

3. What makes it purposeful? 

Show how you are changing society for the better. Approach funders who have a vested interest in this purpose and will therefore be more tempted to invest. 

Do your research to find like-minded investors. Perhaps they have invested in other businesses with a similar purpose or provide pro-bono time to charities in this area? Be clear about why you have a similar outlook and explain where the common ground lies.

4. Why is your idea important at this exact moment in time? 

Target investors with a timely idea that is hyper-relevant at this moment, and they’ll find it harder to resist. 

It could be a new regulation being introduced or a rise in consumer demand that is related to your product. Use this as a hook to pull in investment before the moment is gone.

Make it easy for investors

What are the benefits to investors? Package these up neatly so investors find it impossible to ignore them.

Ultimately, funders want to see a good return on their investment and they’re looking for early-stage start-ups that still have low valuations but are highly scalable. Demonstrate how your idea will scale and show you understand the market size and your potential growth within the market.

Show funders how they can receive tax breaks through government schemes like the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS). Be ready to educate them on these benefits if they’re not already aware, and show that you’re up to speed on the requirements. 

Set a deadline

Create a cut-off point for investors or they will drift. A deadline helps to pin them down and encourage them to make a decision.

Be realistic here – you don’t want to miss out on opportunities because investors haven’t had enough time to fully consider your ask. Set a sensible time limit and get in early with the funders that you are most keen to get on board.

FOMO is hard work… but it pays off

Done well, FOMO can be the thing that gets the wheels in motion for your fundraising campaign. 

Be prepared to work hard at building the right interest in the early days and then generate a buzz based on this. Approach the task methodically and consciously, and you should reap the rewards.