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0/ Last night I tweeted about the top 10 things Founders do that derail fundraising. It struck a chord. 2,500+ liked the tweet.
I got a ton of DMs asking the opposite question: “What are the top things Founders do well when fundraising?”
Here's my top 10
I got a ton of DMs asking the opposite question: “What are the top things Founders do well when fundraising?”
Here's my top 10
1/ Focus on traction
Investors are in the business of giving you money. But they need help.
When you’re running a startup, there are minimal data points to triangulate. This is where traction comes in.
Assuming you have a traction, then read on. If not, stop reading.
Investors are in the business of giving you money. But they need help.
When you’re running a startup, there are minimal data points to triangulate. This is where traction comes in.
Assuming you have a traction, then read on. If not, stop reading.
2/ Get your mind right.
You’re about to hear no. A LOT. Many meetings will make you doubt your idea. Some might even make you doubt yourself.
Surround yourself with a good peer group so you can honestly communicate how things are going through the process. It's not easy.
You’re about to hear no. A LOT. Many meetings will make you doubt your idea. Some might even make you doubt yourself.
Surround yourself with a good peer group so you can honestly communicate how things are going through the process. It's not easy.
3/ Create an Investor list
Investors have different strengths.
- Industry: They now your space
- Business Model: They know how to make $
- Judgement: You trust their perspective
- Capital: You need their $
Everyone should bring something to the table (even if just capital).
Investors have different strengths.
- Industry: They now your space
- Business Model: They know how to make $
- Judgement: You trust their perspective
- Capital: You need their $
Everyone should bring something to the table (even if just capital).
4/ Prioritize your list
I like keeping it simple with 3 categories:
(a) Yes I would work with them no matter what
(b) Yes, if the stars align (terms, valuation, etc.)
(c) Yes, if my top choices don't work out (no shame in this)
Fundraise in the inverse order (c-b-a).
I like keeping it simple with 3 categories:
(a) Yes I would work with them no matter what
(b) Yes, if the stars align (terms, valuation, etc.)
(c) Yes, if my top choices don't work out (no shame in this)
Fundraise in the inverse order (c-b-a).
5/ Maintain a FAQ
You’re going to get a million questions when you fundraise. Document all the good ones and come up with compelling answers. This will help you fundraise better, but more importantly it’ll help you ultimately de-risk your business.
You’re going to get a million questions when you fundraise. Document all the good ones and come up with compelling answers. This will help you fundraise better, but more importantly it’ll help you ultimately de-risk your business.
6/ Timebox the process
Some of my best companies have dropped revenue by 20% during fundraising.
One toe in, one toe out is a double whammy - traction actually dips + fundraising gets harder (
traction = investor excitement).
Go all in so you can get back to building.
Some of my best companies have dropped revenue by 20% during fundraising.
One toe in, one toe out is a double whammy - traction actually dips + fundraising gets harder (
traction = investor excitement).Go all in so you can get back to building.
7/ Send the deck ahead
You have ~45 min. Don't spend 50% of the time trying to align. Make the meeting as worthwhile as possible.
It's also an easy test to see if they did their homework. Some will show up with thoughtful questions, some won't know your name. Speaks volumes.
You have ~45 min. Don't spend 50% of the time trying to align. Make the meeting as worthwhile as possible.
It's also an easy test to see if they did their homework. Some will show up with thoughtful questions, some won't know your name. Speaks volumes.
8/ When choosing a seed Investor, always go with fit.
Price, Firm Brand, etc. all matter but don’t over optimize for it. If there’s one thing to solve for, above all, it’s Investor fit.
I know too many Founders that solved for price and would take it back if they could.
Price, Firm Brand, etc. all matter but don’t over optimize for it. If there’s one thing to solve for, above all, it’s Investor fit.
I know too many Founders that solved for price and would take it back if they could.
9/ You just need a handful of believers.
For argument’s sake, let's say you have 5 investor slots.
Company A: 50/50 say yes!
Company B: 5/50 say yes and 45/50 say no.
You know the difference? Nothing. You’re both funded.
For argument’s sake, let's say you have 5 investor slots.
Company A: 50/50 say yes!
Company B: 5/50 say yes and 45/50 say no.
You know the difference? Nothing. You’re both funded.
10/ Fundraising is a means to an end
The market doesn’t care if you were a “hot” deal or not. Treat fundraising for what it is - a means to an end.
Congrats on raising $. It might just be the easiest thing you have to do as a Founder.
Now the real work begins.
The market doesn’t care if you were a “hot” deal or not. Treat fundraising for what it is - a means to an end.
Congrats on raising $. It might just be the easiest thing you have to do as a Founder.
Now the real work begins.
