Investor Funnel: From Marketing Qualified Investors (MQIs) to Committed Investors (CIs)
Raising capital for a fund or startup is much like running a sales process, with stages that lead potential investors from initial awareness to final commitment. Just as sales teams use funnels to categorize leads—Marketing Qualified Leads (MQLs) and Sales Qualified Leads (SQLs)—fundraisers, particularly in venture capital, employ a similar approach when working with investors such as family offices. By identifying these stages, VC firms and fundraisers can more effectively guide investors toward making a commitment. Let’s break down the fundraising funnel stages and see how they align with the sales process.
1. Marketing Qualified Investors (MQIs)
Definition:
Marketing Qualified Investors (MQIs) are individuals or entities that have shown initial interest in your fund but are not yet at the stage of making a commitment. They engage with marketing materials or events but haven't yet demonstrated strong intent to invest. At this stage, they are considered "leads" who require further engagement to move down the funnel.
Similar to MQLs in Sales:
Just as MQLs in sales are potential customers who have engaged with content (like downloading materials, signing up for webinars, or attending events) but have not yet committed to purchasing, MQIs are investors who have engaged with your content but have not yet indicated they are ready to invest.
Examples:
Family offices subscribing to your fund’s newsletter or blog.
Attendees of webinars, conferences, or industry events where your fund is featured.
Investors who download investment materials or request additional information, indicating some level of curiosity.
Goal for MQIs:
The goal at this stage is to nurture these leads further by providing more valuable content, answering any questions, and continuing to build a relationship. They have shown interest, but further steps are needed to move them toward deeper engagement.
2. Sales Qualified Investors (SQIs)
Definition:
Sales Qualified Investors (SQIs) are those who have demonstrated a higher level of interest and engagement. These investors are actively considering an investment, having initiated in-depth conversations about the fund’s strategy, portfolio, and terms. At this stage, they are ready to explore the fund’s offerings in more detail and are likely moving toward due diligence.
Similar to SQLs in Sales:
Just as SQLs are sales leads that have shown a strong intent to purchase and are ready to move forward with the buying process, SQIs are investors who have passed the initial engagement stage and are now engaged in more serious conversations about investing.
Examples:
Family offices or individual investors scheduling detailed calls or meetings with the fundraising team.
Investors asking specific questions about the fund’s performance, investment strategy, and terms.
Investors expressing potential commitment by asking for more detailed legal documents (e.g., term sheets) or providing rough indications of the investment amount they may commit.
Goal for SQIs:
At this stage, the goal is to solidify the relationship with these investors by addressing any final concerns, providing necessary due diligence materials, and moving them closer to making a formal commitment. The process involves answering questions, building trust, and discussing the specifics of how the investment will be structured.
3. Committed Investors (CIs)
Definition:
Committed Investors (CIs) are investors who have formally committed capital to the fund. They have gone through the due diligence process, reviewed the terms, and signed legal agreements (such as commitment agreements or term sheets). These investors are ready to transfer funds, and the investment process is essentially complete.
Stage after SQI:
The commitment stage is the final step in the fundraising funnel, just as the purchase decision is the final step in the sales funnel. The investor has agreed to invest and is now in the process of finalizing the transaction.
Examples:
Family offices signing a commitment agreement or term sheet.
Investors transferring funds or providing formal capital commitments.
Investors who have made the decision and are now preparing for the fund transfer and investment finalization.
Goal for CIs:
At this stage, the goal is to ensure a smooth finalization of the investment and provide a positive experience that strengthens the relationship for potential future investments or referrals.
Fundraising Funnel Breakdown
The fundraising funnel is structured as a series of steps that move investors from initial interest to final commitment. Here’s a breakdown of the stages:
Marketing Qualified Investors (MQIs): These investors are interested in your fund but haven't shown strong intent yet. They are engaging with your content or attending events but are not yet ready to commit.
Sales Qualified Investors (SQIs): These investors have shown a higher level of interest. They are actively considering an investment, engaging in detailed conversations, and moving closer to making a commitment.
Committed Investors (CIs): These investors have formally committed to your fund. They have signed legal agreements and are in the process of transferring capital.
Moving Investors Through the Funnel
Just like in sales, the objective of the fundraising funnel is to move potential investors from the top of the funnel (MQIs) to SQIs and ultimately CIs. Here are some tips for effectively moving investors through each stage:
For MQIs: Provide more educational content, host more targeted events, and engage through personalized follow-up. It’s important to nurture them by addressing their concerns and providing more insight into the fund’s value proposition.
For SQIs: Engage in deeper discussions, answer more complex questions, and begin sharing due diligence documents. Offer opportunities for the family office or investor to meet the team and ask questions that might influence their investment decision.
For CIs: Ensure smooth communication and clear documentation to finalize their investment. Ensure that all paperwork, terms, and capital transfer processes are clear and seamless.
Conclusion
The fundraising process, particularly when raising capital from family offices, shares many similarities with sales funnels. The key stages—Marketing Qualified Investors (MQIs), Sales Qualified Investors (SQIs), and Committed Investors (CIs)—reflect the journey from initial interest to final commitment. Understanding these stages and how to move investors through them is critical to maximizing fundraising success.
By recognizing where an investor is in the funnel, you can tailor your approach to meet their needs and provide the right information at the right time, ultimately guiding them toward making the commitment needed to fund your initiative. Just like in sales, it’s about building relationships, managing expectations, and ensuring that investors feel confident in their decision to partner with you.