5 Things Not to Do When Raising
Fundraising is on my mind. I am raising a $500,000 seed round for our tech platform for women entrepreneurs (85% in the bank, heading into the last mile), my coaching clients are asking for help with their fundraising, and I am preparing to be on Jason Kirby’s podcast later this week talking about why so few women raise Venture Capital.
The media is full of VCs and angels pledging to invest dollars in the companies of underrepresented and diverse founders (LGBTQ, women, people of color, and founders over 40). And yet when I talk to said founders, we all have the same story. A lot of conversations. Not a lot of checks.
Seemed like a fitting time to share some tips. And encouragement!
I raised $6 million for my edtech company, Little Pim, which I sold to our largest partner. Now I help other women raise angel, venture and alternative capital (think crowd-funding, grants, loans, lines of credits).
Here are my top 5 things NOT TO DO when raising angel or VC.
1. DO NOT prepare for a sprint
A sprint is short and painful. Fundraising is long and painful. Ask any founder and they will tell you fundraising takes about twice as long as you think it will. And in this challenging fundraising environment this is especially true. Raising Seed Capital or an Angel Round is like doing a half marathon. You will need to spend months preparing to raise before pitching one person. Just as you wouldn’t decide to run a marathon and then sign up, lace up and start running, you should not pitch without training for it. See 2 to 5 for some of my best advice about how to prepare.
2. DO NOT be stoic
The support of friends, team and family is critical. If you are the stoic type, I suggest you get over that now. You will set yourself up for a mental melt-down otherwise. The support doesn’t have to include financial support, though that is great to have if you have investors you can go to in your close network. One reason it can be so much harder for underrepresented founders is we are less likely to have that wealthy family member who will back us, generational wealth to draw on, or friends and colleagues who can write $25k-$100k checks, so it tends to take us even longer to raise.
Be sure to enlist the support of a partner, friend, or your older kids to be there for you — when a pitch is not well received, or a potential investor you thought was perfect and spent hours researching turns out to only invest in later stage companies. Your team will need be there for you too, as moral support and more or less run the company without you while you focus on reaching out to dozens of investors, all of whom need to be researched, and cultivated through multiple emails and meetings. You’ll need to find time to work with lawyers. And change your financial model and deck dozens of times. It’s best to proactively ask someone to support you (don’t just assume they will), almost like you really are training for a marathon and looking for someone to cheer you on. Don’t wait until you are on a steep hill to ask someone to hold the “Go Emily!” sign on the sidelines.
3. DO NOT count on introductions
You can ask for introductions to investors from your network, but don’t be surprised if you have to circle back a few times. When asking for intros, keep in mind that Angels are different than VCs — know your audience and only ask for the right introductions.
Do not count on introductions being easy or plentiful. People may offer to introduce you and not do it. Others may need three reminders. Introductions are critical to getting a meeting with a potential investor, many of whom only acknowledge founders who can get on their radar through a mutual connection. Sometimes someone you adore leaves three emails unanswered or says they will think of people for you but never actually suggests one person. Or writes you back but ignores just the part of your email that was asking for the introduction. It’s ok. Breathe. Your investors are out there if you have something scalable that people truly want and will pay for.
I hired a more experienced fundraiser to help me with the process (a woman I admired who has raised millions) and she helped me craft the perfect emails to forward to people in my network so they could easily make introductions. She coached me on subject lines, content and how many times and when to email. It worked. Don’t count on intros falling in your lap and don’t be shy about asking people to connect you with someone who might be a fit for your round. Try to think of this as “friendraising” not “fundraising,” since you can make many new friends along the way, and realistically, only a few people will say yes.
4. DO NOT be in love with your product
What is this a big problem you are solving and why are you the one to solve it? Is this the right time in the market to do this? What are the numbers that back up your claims and how quickly can you get to a place where you’ll meet a set of criteria that makes you ready for the next fundraising round? The rule of thumb is put half as many slides on your product, and instead, show more about the market, how you will go after it, and your traction in qualitative and quantitative terms. Also get help from a finance person on building the story around the numbers in your projections, even the ones 4 and 5 years out that are in the zone of “who knows what will be happening by then?” You still have to be able to explain it.
5. DO NOT forget to work on your mindset
Your pitch will only be as good as you are, and 90 percent of that will be determined by your confidence and mindset. Make sure to check your self-talk going into every meeting. Do you have a “go big” mindset or are you battling with major confidence issues? It’s about showing up with the “we are going to do this no matter what” attitude and “you would be lucky to come along for the ride.” Feel free to borrow my mantra: “Fortune Favors the Brave.”
When I decided to build a tech platform for women entrepreneurs, I felt the same fears every founder has when getting ready to raise. But then some incredibly “fortunate” things started happening that I took as signs I should keep going, like attracting the right talent for my team even when everyone is struggling to find good people to hire, a long-time advisor sending us the perfect COO right when we needed her most, meeting a handful of angel investors who right away “got” the need for our company, and a former coaching client helping us to revamp our web site.
If you are raising or have raised, what did I miss here. What else should people NOT DO when raising? Please add any other tips or share your experiences raising seed, angel or venture. I am rooting for you. Good luck fundraising — and friendraising.
