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Fundraising for first-time founders. This is a first principles thread on fundraising that should help any new founder understand how to raise money and what steps to take.
I've personally raised about $70M from 1500 investors & this synthesize a lot of my advice.
**Read On**
I've personally raised about $70M from 1500 investors & this synthesize a lot of my advice.
**Read On**
Step #1: Understand Venture Capital
So many founders message me asking for advice on raising capital, yet they haven’t bothered to actually understand how VC’s work. If you don’t understand why investors invest and what they look for, how will you convince them?
So many founders message me asking for advice on raising capital, yet they haven’t bothered to actually understand how VC’s work. If you don’t understand why investors invest and what they look for, how will you convince them?
VC is a hits-driven business that relies on the top 1% of companies to succeed. Show them that if you do succeed, you’ll be huge by sharing:
1. You have product/market fit, or a path to getting there.
2. If you’re right about #1, you could eventually be a $1B+ company.
1. You have product/market fit, or a path to getting there.
2. If you’re right about #1, you could eventually be a $1B+ company.
Make sure you have a VC fundable business before you start asking for capital:
1. Do I have a product that customers love? Are they paying for it?
2. Can this idea generate them 100x returns within 10 years?
If not, save yourself the time and bootstrap your business!
1. Do I have a product that customers love? Are they paying for it?
2. Can this idea generate them 100x returns within 10 years?
If not, save yourself the time and bootstrap your business!
More on Step 1 is available in this thread which covers many of the major mistakes we made while raising:
- Trying to book meetings without traction.
- Pitched only the short-term vision.
- Why Silicon Valley Hype didn’t matter. https://twitter.com/gaganbiyani/status/1313955118610608129
- Trying to book meetings without traction.
- Pitched only the short-term vision.
- Why Silicon Valley Hype didn’t matter. https://twitter.com/gaganbiyani/status/1313955118610608129
Step #2: Share your vision of the future
The best companies change the world in some way.
- Uber got everyone to start ordering cars from their phones.
- Slack got everyone to message their co-workers instead of email.
- Udemy got millions of people to take online courses.
The best companies change the world in some way.
- Uber got everyone to start ordering cars from their phones.
- Slack got everyone to message their co-workers instead of email.
- Udemy got millions of people to take online courses.
How will your product change the behavior of millions? Share:
- Your assumptions about the future.
- Why those trends will start this change.
Remember: if you can't answer these questions, just don't fundraise! Find another solution to your business challenges.
- Your assumptions about the future.
- Why those trends will start this change.
Remember: if you can't answer these questions, just don't fundraise! Find another solution to your business challenges.
Step #3 Find the Right Investors
Investors want to build their own brands, and they have become more open about sharing their beliefs through Twitter, interviews and blog posts.
Look for the investors who are focused on your space and pick off the up-and-coming ones first.
Investors want to build their own brands, and they have become more open about sharing their beliefs through Twitter, interviews and blog posts.
Look for the investors who are focused on your space and pick off the up-and-coming ones first.
You should know who the 50 investors are that invest in your domain.
Who are the investors to be most bullish on the underlying assumptions that your product would need to succeed?
e.g. If you have a VR Gaming company, find investors investing in VR, gaming or both.
Who are the investors to be most bullish on the underlying assumptions that your product would need to succeed?
e.g. If you have a VR Gaming company, find investors investing in VR, gaming or both.
Do your homework before reaching out. Be concise and share your traction.
Do at least 10 outreaches at a time. Don't get emotional about any individual investor. After you get some feedback (even no response is feedback), then regroup and try again.
Do at least 10 outreaches at a time. Don't get emotional about any individual investor. After you get some feedback (even no response is feedback), then regroup and try again.
Step #4 Get the Right Intro
Spend time before launch finding founders or executives that serve as “angel whisperers” in your space.
Talk with the podcast hosts/newsletter writers specializing in your field. How someone hears about you can make or break the pitch. Plan ahead.
Spend time before launch finding founders or executives that serve as “angel whisperers” in your space.
Talk with the podcast hosts/newsletter writers specializing in your field. How someone hears about you can make or break the pitch. Plan ahead.
If you are a first-time entrepreneur, build connections early and often.
This will allow people to see you execute over time, and a notice the trend in your journey. Speak to them before you have a product, after your launch and after you signed a customer.
This will allow people to see you execute over time, and a notice the trend in your journey. Speak to them before you have a product, after your launch and after you signed a customer.
Step #5 Use an Incubator
If this is your first time starting a company, most likely you are going to want guidance and experience by your side.
This may involve 3-10% of the company but you’ll get much-needed attention and advice from people who have helped hundreds succeed.
If this is your first time starting a company, most likely you are going to want guidance and experience by your side.
This may involve 3-10% of the company but you’ll get much-needed attention and advice from people who have helped hundreds succeed.
If you have trouble getting into YC (I applied 3 different times and never got in). Try other industry specific incubators or others such as:
https://www.techstars.com/startups
https://500.co/accelerators https://www.pear.vc/accelerator
https://www.techstars.com/startups
https://500.co/accelerators https://www.pear.vc/accelerator
Step #6 If it isn’t working...
Do not get mad at the investors. Look inward. There is probably something going on that you can fix. Even if they are biased against you because of who you are, you can’t do anything about that.
Fix what you can in your own control.
Do not get mad at the investors. Look inward. There is probably something going on that you can fix. Even if they are biased against you because of who you are, you can’t do anything about that.
Fix what you can in your own control.
Thanks for reading!
A full series on fundraising can be found here:
https://www.gaganbiyani.com/blog/fundraising-101-part-1
https://www.gaganbiyani.com/blog/fundraising-101-part-2
For more honest stories about entrepreneurship, education and tech, subscribe to my newsletter (high signal, low noise): https://www.gaganbiyani.com/newsletter
A full series on fundraising can be found here:
https://www.gaganbiyani.com/blog/fundraising-101-part-1
https://www.gaganbiyani.com/blog/fundraising-101-part-2
For more honest stories about entrepreneurship, education and tech, subscribe to my newsletter (high signal, low noise): https://www.gaganbiyani.com/newsletter
