Raising Capital As A First-Time Entrepreneur.
Being a first time entrepreneur is hard. It can be a grind. It can also be the most rewarding experience of your life. When we were starting out, the hardest part was determining where and who we were going to secure funding from. We formed the business model and team, but in order to make the transition from concept to implementation we had to raise a SEED round. I had no idea where to begin. I was a 20-something with no start-up experience trying to penetrate an industry I knew little about. As I look back on the process, there were three defining factors that enabled us to secure funding and launch our venture.
Factor #1: I planted seeds. I was a rookie in microfinance and new to Utah in 2014. I started to network with business leaders who could help me build my program. Every few days I would buy coffee for a CEO, curiously ask questions and pitch my ideas. These leaders became my friends and colleagues. A year and a half later, when I was preparing for my entrepreneurial leap, these leaders became the people who I relied on for advice, contacts and investment.
I never had the intent of having them help me raise funds. Our relationship was driven by the fun and challenging conversations we shared. It was driven by service and support. When I sought advice, they eagerly provided it. And when they least expected it, I would do a small but meaningful act to support them: introducing them to other CEO’s, writing a Christmas card, paying for lunch. A select few of them asked me if they could get involved in the funding round. I didn’t have to mention that I needed money; they knew it was a need and wanted to find a way to help.
In our year and a half long relationship, I never strayed away from the hard conversations. I was comfortable with vulnerability. I shared my challenges with excitement. I displayed a passion for new ideas. I connected with them after I implemented their advice to show them that I took it seriously and valued action. I always went out of my way to help them. I never expected anything in return and enjoyed the giving nature of our relationship.
Being authentic, service-oriented and always sharing energy for new ideas made these leaders believe in me. Build relationships with leaders and investors far before you need investment and because you have a genuine interest in learning about who they are and how they got to where they are today.
Factor #2: I shared my idea. There are a lot of entrepreneurs who are uncomfortable with sharing their ideas with other people. They are afraid that other people will steal their idea and bring it to market. I have found quite the opposite to be true. Most of the people who I share ideas with do not have the time to pursue them.
When I was creating the concept for my social venture I shared it with everyone. I asked for feedback. I wanted to understand how my network perceived the challenges, opportunities, and solutions in the proposed business model. Looking back, it was one of the smartest decisions I have made to date. I was able to consistently compare notes, take and build on the ideas of others, and form an advisory board that was determined by assessing who provided me with the most valuable and consistent advice throughout the idea generation process.
Share your idea with friends, colleagues, mentors, advisers, linkedin contacts, online forums and groups and social media platforms. Get it out there to see if other people believe in the value proposition. Figure out who those people are and why they are interested. Those people could eventually become your early evangelists, team members or investors!
Factor #3: I committed without funding. Most entrepreneurs reach a point in the planning process where they accept the fact that there is an extreme amount of uncertainty in what they are setting out to accomplish. They understand that taking big risks is essential to get things started. Part of you has to believe in intuition. Part of you has to be willing to jump in; even when you don’t feel ready.
Months before I jumped in, I sold my car and gave away most my clothes. Those were the only items of value that I owned. I was willing to give them up if it meant stepping closer to my goal. I knew the little savings from selling these possessions would grant me a few more months of security and time for seeking investment. I decided to hand in my notice at work and buy my plane ticket to Nepal before I was ready.
I am led to believe that these early signs of deep commitment impressed my future investors. I was all in. It was intuition and optimism that kept me calm during times where I second-guessed whether I would find capital. Eventually, I found what I needed. I believe my deep desire and commitment provided assurance to investors. They were comfortable investing in someone who was willing to sacrifice current comforts to realize future dreams.
So, remember to plant your seeds, share your idea, and commit. This helped me secure funding, and I hope it can help you too!