Raising money for my startup — some useful learnings.
Weeks 2 – 8
I write this on a cold December morning feeling very optimistic about where things are with Accomable. While I can’t say much in this post, next month we should have a very interesting announcement to make (but who knows…)!
If you need some background to what we’re doing, take a quick look at this first blog post.
I was originally hoping to write a weekly update on our fundraising experiences, but the past month has just been all-consuming. As I sit here thinking about startup experiences, especially over the past couple of months, I feel more battle-hardened and tougher than ever before. More focused and determined to turn Accomable into what I know it can one day be (and hopefully soon we’ll have the resources to achieve this!). But on a number of different levels (spanning from personal to professional), November will go down as the most mentally, physically, intellectually and emotionally challenging and intense month in living memory. Just plain brutal in every way possible.
The highs of amazing successes sat side by side with the lows of gut-wrenching defeats and failures. Rudyard Kipling’s edict in ‘If’ on the need to treat the imposters of triumph and disaster alike never felt more prescient; and I recommend any fellow entrepreneurs in the startup trenches to regularly read it.
Now that we’ve got through the toughest patch and see the light at the end of the fundraising tunnel, I thought reflecting on my experiences and sharing the following learnings would be helpful to other entrepreneurs about to go on the fundraising trail:
1. Don’t get distracted from your day to day business.
This might be obvious, but its really easy to lose sight of the daily running of the business when mentally pre-occupied with going to lots of events, speaking to many people and trying to meet and pitch to investors. Regardless of the need and importance of raising money, you won’t raise any cash unless your company is doing well and improving on a weekly basis. To address this problem, I tried to set aside specific times of the week to focus on fundraising and to keep my week and daily tasks as focused as possible on the business. It also helps to start the fundraising process as early as possible.
2. The pitchdeck must evolve and iterate as quickly as your business.
As a disciple of the ‘Lean Startup’ approach of getting a company off the ground, I think the same approach can be helpful in putting your pitchdeck together. Get a version 1 out there as quickly as possible, get feedback and then iterate and improve it quickly. Be clear to initial recipients of your pitchdeck that it is a work in progress. Based on getting lots of feedback and help early on, our pitchdeck has improved considerably.
3. It is fascinating how requirements between investors can vary so much.
Some investors I’ve met expect full-blown business plans and financial models, whereas others I’ve come across are just interested in a product and initial metrics. Its difficult to say what the right approach is and everyone will have a different opinion.
All you can really do is look to investors that you think ‘fit’ the mindset, ethos and culture of your company. So at Accomable, we’d say that we’re very much a product / user focused company. Hence, we’ve been more likely to connect with investors that also have a similar desire to focus on how well the embryonic product is performing as opposed to the quality of long-term financial projections.
4. Your reputation and social capital are more valuable than anything else.
The fundraising process is heavily reliant on getting introductions from other people. Most of the various parties interested in investing in our company were introduced to me via mutual friends and contacts that trust me. Reputation and goodwill counts for a lot and some of the best introductions have been received from people who I may have only briefly assisted many years ago for no reason other than wanting to help and be useful. If you’re ever tempted to be a bit of a jerk to someone, just remember that it may come back to haunt you one day. Your reputation is one of your most valuable assets. Look after it.
5. Your friends and family will become even more important.
When starting a company, you’ll face lots of rejection and difficulty and a never-ending stream of daily challenges. During the fundraising process, these problems get amplified. You also end up working long hours with no support structures that exist in large companies. Self-doubt can easily creep in and hence getting reassurance and support from friends and family becomes even more important and vital. When frustrations and difficulty set in, talk to people, you’ll feel much better!
6. Be persistent.
I know this is a clichéd and pithy statement, but it really is a requirement. Early stage companies are full of risk and uncertainty so be prepared to have lots of investors turn you away. If you ever need this point illustrated to an extreme, check out all these rejections that Airbnb got in the beginning! Nonetheless, they still kept going and reading Brian Chesky’s blog post is always inspiring.
I’ll be checking in again soon (hopefully with an awesome update), so see you then!
p.s. if you think there’s anyone I should speak to, get in touch with me at http://www.srin.co/contact/