Greetings from Moscow…enjoyed my presentation…great audience. Thank you
Fundraising is hard….and frustrating.
Convincing people to invest in your company is irrational and illogical.
There are two major drivers in raising money successfully:
Your team and your idea.
Nobody wants to commit to help a company that's boring or has bad founders unless you have an incredible growth rate.
Here are a number of lessons learned through the process:
1. It’s more important to find investors that share your vision than those who provide the most money.
2. Be Persistent
I have had days where I have received 6 no's, and then repeated that day after day for a month. Some potential investors said the idea sucked, others just didn’t get it, some think we should get a CEO that had done a project like this before.
3. Ensure your investor is "founder friendly".
Uncapped convertible notes are the norm. The fundraising landscape is male dominated, and biased as a result.
4. Get to the right person via a connection or referral
If pitching a firm, getting in front of the person who can cut the check is very connection based.
People do business with people they know like and trust.
The Paypal Mafia
- Reid Hoffman - linked in
- Peter Thiel - fund manager and Bitcoin and facebooks founding investor
- Elon Musk - SpaceX and Tesla
- Max Levchin - Yelp
- Jeremy Stoppelman - CEO of Yelp
5. Beware of the string along
Funders still struggle to reject a company directly, instead feigning interest and stringing entrepreneurs along
6. When you pitch, your deck should not tell your company's story — you should do that.
The deck is just the support material. It's more important to show people how much you know, how committed you are, and how excited you are. A deck alone will never accomplish that.
7. Don’t make graphs look exponential with just six months of data.
Stop using hyperbole, and don't make amazing projected growth targets for five years from now. You're pitching to smart people who can sniff the BS from a mile away.
8. only one founder should focus on fundraising
Everyone else should focus on working on the company. Fundraising sucks. It's more fun to work on progressing the company than to be turned down each day.
9. raise what you need, but not more.
Don't lock yourself into a valuation you can't realistically exceed. If you raise $50 million, that means your company has to sell for $50 million for you to make a cent. Your investors will likely get that first $50 million, and then you split everything after that. If you raise too much, it could hurt you in the long-run and you may make $0. Just because an investor thinks you're worth $100 million doesn't mean the rest of the world does.
10. raise money from smart, strategic people.
You probably know this already, but internalize it to your core. Take smart money: money from people who add more value than just cash, like past founders or CEOs. Find people who can empathize with you. It can be the difference between life and death; between a local success or a global one in terms of impact.
11. Don't have a fundraising celebration, wait and have a cash flow positive party instead.
12. You just need 1 yes
remember that through all the rejections sometimes you only need one "yes" to continue the journey. Nobody knows your market like you do, so don't get discouraged. Remember, if you are not living on the edge, you are taking up too much space. It is easier, and more rewarding, to do the impossible than it is to do the ordinary. If you are always trying to be normal, you will always be boring, you will never know how amazing you can be.
How do you tell the difference between the homeless and a startup entrepreneur? The homeless usually get a government check every month…and maybe food stamps. The entrepreneur eats pizza, crisps and drinks Coke
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