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Every year, as we move into the quiet few weeks where (so goes the stereotype) investors head to the beach and startups stop seeking attention, we bring you slightly different content to usual.

The regular startup profiles will return in September. But today, let’s look at something few founders consider when they raise their first funding round: how to announce it.

As we’ll find out, there’s an art to it, and plenty of pitfalls to avoid…

– Martin

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The secret art of announcing a funding round

There is no shortage of articles online offering advice about how to raise a funding round. There are also plenty about how to pitch a journalist, but there’s more to announcing a funding round than that.

In my 15 years in tech media I’ve reported on countless funding rounds, and I’ve even worked on the other side, getting PR coverage for rounds from the tech press and beyond.

But rather than just tell you my own experiences, I thought I’d speak to a former colleague who is one of European tech PR’s best-known names.

Cathy White is the founder and CEO of CEW Communications, a communications agency that shares the stories of emerging tech companies, VCs, and others in the industry.

I jumped on a call with her to find out what goes into a successful funding round announcement… and what you absolutely must avoid.

__________________

MB = Martin SFP Bryant, CW = Cathy White

1. Figure out your goals

MB: Before announcing a funding round, I always find it’s important to figure out what a startup wants to get out out of it. As with any project, setting your desired outcomes is important. Would you agree?

CW: Yes, it's one of the questions we always ask a company. If a company gets in touch with us and says ‘we're looking to announce our round and we just want to get TechCrunch’, it's a bit of an immediate red flag.

It's fine to want to get TechCrunch, but there's got to be a ‘why’ behind it. What's the objective? So we always get them to take a step back and explain what are they are trying to get out of making the announcement.

The typical things that come up are things like:

• Employer branding, if they’re going to be hiring lots of people and they need to be in the media so that we stand out.

• If they're already going to market then they might want to build trust and credibility with early adopters and other customers.

• If they know a competitor has been working on something similar, and is also due to come out of stealth, they might want to use the funding round as the announcement of what they've been doing

• Raising the flag ahead of time for potential future investors to start watching them

2. How long does it take to make a funding announcement?

MB: How far in advance should founders be thinking about planning an announcement?

CW: We work on a flexible schedule, because it depends on how good you want the outcome to be.

The fastest we've ever done a funding announcement was five days of drafting, finalising, approvals, pitching, and getting it out. But with the five-day lead time of doing all of that, we're also just going for the quickest coverage we will get, not necessarily the smartest.

If you want smart coverage, where it's a little bit more objective, then you take more time, and dependent on the size of the round and the stage of the company, you will probably need more time.

If you're a smaller business that is completely unknown and has raised a small round, and that could be anything from a few hundred thousand, which won't get much interest anyway, up to maybe £3 million, you're limited in where you can get that story placed.

And one of the one of the things you can use to your advantage, dependent on the nature of your company and the story, is an exclusive. An exclusive means you have to be way more flexible on timing, because no-one knows who you are, and the journalist is taking a punt.

The other thing on timing is it's not just about how long you give yourself to get a really good announcement out there. It's also the when.

Avoid holidays, nobody announces anything in August because Europe is dead, avoid key political moments and big company announcements. Major events just mean that you're not going to be seen, or no-one's going to write about you.

Looking at a calendar, you can figure out when it makes the most sense in the wider world, and then try to align that with when it makes the most sense for you.

3. What materials do journalists need?

MB: A lot of founders seem to think it's just ‘write a press release, send it out, and you're done’, and it's not really like that. So what is the work that goes into preparing an announcement around a funding round?

CW: The press release has to include something newsworthy. A few things to note:

• If you have raised money, tell people how much money you raised. Don't be the company that says ‘we raised a seed round’ and doesn't put any numbers against it, because that means nothing. No-one's going to write about you.

• Make sure that the press release is very much about where you're going, and the problem that you're solving. Explain everything to do with the company and the impact your business is going to have.

• Try to connect that back to things that are happening in the world today. So bring it back to key themes that are popping up in the media, or cropping up in the specific press that you should be talking to

• Please, for the love of God, don't let your investors make it their ego show. No-one cares that the investors are “delighted” or “excited” or “thrilled” that they that they have invested in you. Of course they are. They decided to back you, and they're hoping that you make them lots of returns.

• Get your investors to lend smart quotes: insights into what you might achieve or what the market opportunity looks like. Get them to add more colour to the press release, rather than a quote that means nothing. Be smart about what you're getting other people to say.

• Don't include too many voices in the press release either. We work on a ‘rule of three’: no more than three quotes. One obviously comes from a co-founder or a CEO. One should definitely come from a lead investor unless for some reason they don't want to talk, and then the other one can come from another investor. That could be either someone who is well known, or you have a very strong relationship with. In some cases, it could come from a customer or a partner - someone who can give a different lens on the company.

• You have to get other people to sign off on the press release: any investors involved, partners, or customer names; you have to have it in writing that they are okay with being mentioned, and particularly for your investors or your board, but they've signed off on that press release. Your PR team will be really annoyed when they have to go and fix it for you, so don't do that, and if you're doing your own PR, it's going be a pain.

Photography is also important with the press release. So you need to have images, ideally, a nice team photo, or shots of the founders, product images, just various things that you are very comfortable with, that look good alongside that press release.

They should be professionally shot: don’t take them yourself on your iPhone: invest in photography.

4. How to pitch

CW: In terms of actually pitching the story, you've got to figure out what strategy you want to take. If you are dead set on trying to get a TechCrunch or a Sifted, depending on the size of your round, they are more amenable to taking an exclusive. So if you go down the exclusive route, which means one publication gets the story first before anyone else, build that into your time,

The other option is, rather than going down the exclusive route, you set an embargo, which means no-one before a specific date and time can publish the news, and they have to agree to it, and you pitch to a range of media.

A pitch, more often than not these days, is done via email. You need to come up with a snappy subject line that gets their attention. Don't put your name in the subject line, just summarise what your business does and what the news is.

Use something like ‘Exclusive… [summary of news]’, and then send them a top-line summary. Don't send them a press release until they have agreed to an embargo or agreed to an exclusive. And that first email really should just be bullet points with the key things that they need to know.

The other thing that you need to know is, who are you actually talking to? This is where you do some research, or you work with an agency or a freelancer to help you through the whole process.

And who you are talking to is really important, because there are a bunch of publications out there that do not care about funding. You can approach them with a funding story, but do not expect them to cover it.

It’s really easy to figure out who to contact. You can look at competitors who have raised funding. Type their name into Google, hit ‘News’ and look for the timeframe when they announced it, Then you can go through and pull out the publication and journalist names.

Then check: are the journalists are still at that publication? Where is the publication based? Is it geographically relevant to your company? Do they cover your size of round? Different publications have different brackets of what they’ll cover.

Put politely, most PRs are just really good stalkers, and you have to take a leaf out of their book and do a bit of X stalking, LinkedIn stalking, website stalking to figure out contact details and how to get in front of journalists. Most journalists are happy to receive emails.

5. How soon after you raise should you announce?

MB: What fascinates me is that you sometimes have founders who want to announce a round as soon as possible, particularly in certain countries like Germany where there’s a public log of funding rounds and they don't want the news to get out by other means.

But then other times you have funding rounds that get announced a year after they close, because that's when the startup wants to attract attention.

Aside from ‘that’s why you should take quarterly VC funding trend reports with a pinch of salt’, what should founders bear in mind here?

CW: The problem with the announcing something that happened really far back is the risk that it is already out there. Maybe the investors have been updating their own CrunchBase profiles or something like that, and therefore it's listed that they invested in you. It might even say the amount.

We worked with a company a couple of years ago, and it was a real pain because we didn't realise until too late in the game, and the company never told us, but their CrunchBase profile was entirely up to date. And that was a mistake on us, because we should have checked it, but it made pitching the story almost impossible.

We got some coverage, but it didn't take much for one or two journalists to go and check them out and go ‘hey, they closed this like year and a half ago’. So be very aware of where else publicly online information is shared.

And with German businesses, the speed at which it does go on public record means you have to move fast. When we've worked with German startups in the past, the moment that the investment is signed, a version of the press release goes to investors for comments, quick additions, quotes, etc, and then it's very swiftly cleaned up.

And even with that, we're able sometimes to secure an exclusive (dependent on who the company is, how much they've raised, etc) but you are up against the clock, because you don't know when a couple of publications are going to scoop it.

So you do everything ahead of time, and actually, with some UK companies, we've done this - not because it's going to be publicly available, they just want to make it as loud as possible, as soon as possible, so sometimes you can get ahead of all of this stuff before the investment is even closed.

6. More pitfalls to look out for

MB: Are there any other annoyances or pitfalls that occur when announcing funding rounds that spring to mind?

CW: We've had a few different things over the years:

We worked with a company previously that halfway through our pitching to media, decreased the funding round figure. One of the figures they'd included in the press release was a grant. We were very clear about where this money had come, and this is also quite common.

Sometimes you'll see a funding announcement where the grant figure is combined. So it will just be ‘x company has raised £5 million in funding’. And then the details will be, ‘this includes a £3.5 million seed round and a £1.5 million grant’. And then within the press release, we can provide extra detail of what that actually means, but we're being very clear about what part of it is actually equity.

And in the case of this company, we were already pitching TechCrunch and a few others, and then the company said ‘Oh, we've decided we don't want to include the grant’. And then I'm like, ‘cool, so you want me to go back and lower the figure of investment, which also really does lower the chance that they will even look at it or cover it now?’

So yeah, be very clear from the beginning on what figures you're using, also what data and facts.

The other big one is to back up any claim that you make. So a press release really should be factual. Through quotes, you can provide colour and opinion, but the release itself is a factual document. So if you're talking about market opportunity, where is that data from? And normally it needs to come from someone else, other than someone in your finance team who was very creative and found a way to create a picture of what the market looks like.

Also, make sure that you give the PR team the correct information, such as the right spelling for the investors that you have. We had that once where the company signed off on it, even the investor had signed off on it, and then I got an email when the news was going out, saying ‘Cathy, that's the wrong name’. And I'm like, ‘what do you mean it’s the wrong name? You gave me this name!’ So just be sure all of the detail, be very detail orientated.

MB: And signoff can take a long time as well, can't it? Especially the more stakeholders that are involved.

You only need one person to be on holiday and not respond to emails, and you need them to sign off before you can put the release out, but they're taking ages to actually look at the release.

They might have no comment on it at all when they see it, but planning in that time to make sure everyone's signed off is important.

CW: From the beginning, you need to project-manage the announcement, so put together a timeline: ‘This is when we're drafting, this is when you'll receive it, please have it back with us by x…’

Then if one of your VCs has a head of comms or head of marketing and they're off, they can throw it back at a partner, and a partner can deal with it.

Another thing that we've seen is people announcing the news on social media faster than the press release has gone out. So with the with an embargo or an exclusive, if you promise it to a publication, that counts for all outlets online, social media included.

So wait until it's been published to do your own announcement.

Make sure anyone who would share this news, stakeholder-wise, knows not to share it on social until a particular time. We always actually advise that you let the first publication go or, or the embargo lift, and then you wait a few hours and then post it on social a bit later in the day. This is just so that as journalists are receiving the press release, it still feels a bit fresh.

MB: Yes, and you can then say and ‘hey, we've been covered here, here and here - read about it in Tech.eu, EU Startups, or Tech Funding News’, or wherever, when you do your own announcement, which adds a bit of extra kind of excitement and gravitas around your announcement.

CW: I've got two more I think are worth mentioning. There are things to avoid doing when it's live.

One thing that I don't think enough people understand is that while you've done a pitch, while you've done the press release, while you've maybe done an interview, you do not write the article, you do not get to approve or review the article, and when the article is live, you can only ask for factual changes.

So you might not like the article, but there's only so much that you can control, and that’s what you provide them. If you've given them incorrect information, or something else exists online that maybe you didn't catch and you were worried about it, it's always worth particularly for a slightly later-stage company, maybe seed stage or later: anything that you've got online that you do not want people to see, try and bring it down or change it.

Journalists do research. It's not just what you provide them, it's what's on the internet.

And if a journalist says ‘no’ to covering you, the rule of thumb is, don't be a dick.

You're not the editor, and journalists are really, really busy and really stressed most of the time. So a bit of human compassion plays in your favour longer term. I don't think enough people realise that.

Back on next week

With the summer slowdown, we’re going to be back a week from now. We’ll see you in your inbox again on Thursday 1 August.