The Role of AI and Tech stacks in Early Stage Fundraising

Introduction

Securing startup funding has become increasingly challenging over the last 12 months. Traditional methods need help to make an impact as founders find themselves competing in smaller pools.

Imagine spending months tirelessly finding and pitching to investors, only to leave empty-handed. The pressure mounts as competitors get seed funding and start scaling rapidly. The fear of falling behind is real.

If you’re drowning in spreadsheets and scattered documents, not capital, then the HubSpot for Startups State of Fundraising Report is packed with the latest insight and strategies from successful founders who are thriving right now. Find out how AI is transforming fundraising, and you can become more efficient and effective in your hunt for investors.

The Role of AI in Fundraising

It’s the AI age. Every hot startup seems to be leveraging the technology in some way. In fact, AI is attracting the most seed-round funding; 53% of the most funded startups are AI-based. 

No matter what you’re seeking funding for, you can’t ignore AI in your fundraising tool stack. If you do, you’ll be left behind. Why? The founders, using a combination of traditional methods and new technology, will beat you in finding and securing cash for their startup. 

You’ll be rearranging deck chairs on the Titanic while competitors are initiating their blast-off sequence. 

Usually, finding investors is a laborious process:

• Building lists of prospects
• Writing personal outreach
• Understanding who to focus attention on
• Following up on leads

It takes dozens of time-consuming pitches to get your first funding source. That’s months of work. Work you could be spending on building your business.

Forward-thinking founders are looking for ways to slash this workload and simultaneously raise more money at pre-seed and seed stages. 

AI is proving to be a significant tool for raising more money compared to startups ignoring the technology. 75% of startups raising between $1 and $2 million rely significantly or entirely on AI at the seed stage. 

It’s allowing founders to cut prospecting time with automated identification and prioritization of potential investors. Generative AI delivers personalized pitches to fuel engagements and conversations. Plus, automating routine tasks like CRM management allows fundraising teams to focus on high-value activities for more robust strategic thinking and investor relationships. 

Using AI in startup fundraising is delivering a ripple of advantages for founders:

• Increased efficiency
• Improved targeting
• Enhanced engagement
• Better resource allocation
• Higher funding rates

"It always surprises me when [founders] don't adopt and use AI in how they approach fundraising. You see so many investment rounds still being done on Google Sheets. Fundraising is seen as a chore. But if you can adopt a CRM (AI-enabled, or otherwise) to involve your existing shareholders and investors, that's massive."
Jason Druker, Chief Commercial Officer at SFC Capital

Role of Fundraising Platforms

A fundraising platform is a tool that helps organize, optimize, and manage fundraising campaigns. Many of them operate as investment marketplaces, connecting startups and investors. They work to simplify the process and reduce the burden of prospecting for both sides. 

Fundraising teams can create campaigns with their profiles and pitches, while investors can access a wide selection of businesses looking for funds. It not only streamlines the process but offers a broader audience, allowing companies to reach significantly more investors. 

Additionally, being associated with a well-known fundraising platform can do wonders for the reputation of a startup. You are building trust and confidence, which leads to solid fundraising results. 

This is why 65% of founders are using online fundraising platforms, and AngelList is the most popular platform used by 50% of those startups. A focus on equity-based funding from accredited investors gives direct access to more significant investment capital compared to public crowdfunding platforms. It’s a valuable tool for startups looking for equity investments and strategic partnerships with experienced investors.

Crowdfunding platforms like Crowdfundr and Kickstarter are used by 41% and 38% of startups using these platforms. While more prominent investors and VC firms might be using something other than these platforms, it opens up a new pool of contributions from the general public. Often, founders don’t even have to give up any equity; instead, they offer rewards or ‘pre-sales’ of products and services—a handy way to gauge demand during product development.

Track investor relations with a CRM

Most founders hate spreadsheets. Keeping them updated is a time-consuming drag. Especially when you need to be out there sweet-talking investors. Between Zoom calls and Slack pings, the humble spreadsheet gets neglected. 

Getting the right investor on board can feel like searching for a needle in a haystack. You might take over a hundred meetings and calls. Any investor who shows interest needs to be nurtured. If you’re trying to manage everything in manual spreadsheets, you risk missing opportunities when things get busy. 

“Let the systems run the business, and people run the systems.” It’s one of the greatest business lessons from Michael Gerber in the book The E-Myth Revisited.

Systems are the foundation of a successful business. They deliver efficiency and consistency. That includes during the fundraising process. 

When it comes to investor relationships, CRM software like HubSpot allows you to ditch the spreadsheets and set up a system that always takes advantage of every opportunity. 

Anyone who says, “Hey, I’m interested in investing” can be added to your CRM. For busy investment teams, it is an effective way to track prospects throughout the fundraising pipeline. Plus, it builds a database of all your investor data for better analysis and targeting in the future. This leads to several key benefits for your investor relations.

Here’s how:

Deal flow visibility

Your CRM is the central database for all deal information, acting as the backbone of relationship-driven investment. With precise investor details, you can easily showcase the scope of your deal pipeline, the status of the current situation, and forecast outcomes. 

This visibility and transparency allow founders and their teams to view and report real-time analytics in a digestible fashion. Making it easy to track targets and reinforce trust and confidence with existing partners. 

Increased investment

Relationships with investors can be complicated and sophisticated over long periods of time. It’s more than a transactional encounter. Engaging with prospects with accurate and real-time data ensures they feel valued, informed, and essential to the company's future. 

This ability to build stronger relationships fosters continued support and the potential to increase the investment size.

Investor satisfaction

Every interaction with potential investors is recorded—emails, meetings, phone calls, among others. Within a CRM like HubSpot, you can consolidate everything into a single view. So everyone on your team is aligned with prospects regarding communications and goals.

The result? Consistent and well-documented communications. It builds trust and continuity to enhance the quality of relationships and investor satisfaction. 

Expanded funding opportunities 

Automated features like prompted follow-ups and generative AI to compose messages keep your connections warm and in the loop. Even without major news or events, it keeps your startup at the top of investors' minds.

It’s a powerful method for maintaining interest and engagement, which leads to a stronger connection with your brand and increased funding opportunities in the future.

Streamlined deal flow

Track and manage fundraising efforts. You can quickly categorize and monitor specific funders as they move through deal stages. 

Streamlining the fundraising process delivers more successful funding rounds and efficient resource allocation. Most important of all, it ensures efforts are focused in the right places, and no opportunities are missed.

How Top Startups are Using AI to Raise Capital

Early-stage funding is tough right now. In our Startup Capital Annual Report, 74% of founders agree that it has become more challenging in the last 12 months.

The size of funding rounds is down, and the time between rounds is increasing. It is a challenging time that startups need to adapt to. But founders embracing AI and technology are the ones attracting investors. AI is directly impacting startup trajectories. 

Get the report

Find out why investors are more interested in forward-thinking founders and how the startups raising over $1 million in seed funding use AI to secure deals in the HubSpot for Startups Startup Capital Annual Report.

Click the image below to get access to the report FREE!