Three lessons learned from the frontlines of startup fundraising

Fundraising is tough. It can get exhausting, overwhelming, but it’s also the single most important job of a startup CEO. I’ve raised six rounds of funding over the course of my career — twice at my first company before it was acquired by eBay in 2001, and now, after raising $92 million in Series D funding last week, four times at Turo, the world’s leading peer-to-peer car sharing marketplace.

With fundraising fresh on my mind, I thought I’d share some insights I’ve gleaned to help other startup CEOs as they chart their courses to profitability.

Always be raising.

You’re never not raising. Echoing Alec Baldwin’s character’s advice to “always be closing” in Glengarry Glen Ross, all CEOs of cash flow negative companies should always be raising.

A wise person once told me that CEO actually stands for “Cash Extraction Officer” when your company is not yet profitable. Tongue-in-cheek as that may be, cash-burning startups are existentially reliant on venture capital to execute on their mission, vision, and growth plan, so you always need to be thinking about your next milestone, and how to get there.

There are many flavors of investors to research before you pitch — early stage, later stage, investors who specialize in certain verticals, industries, regions, or technologies — each of whom evaluates potential portfolio companies based on unique criteria. For instance, while small fund investors who specialize in early stage startups are more interested in your business plan than your numbers, later stage investors are looking to prove measurable growth — product-market fit, strong unit economics, ROI-positive marketing spend, etc. (I’ve gone deeper into the product-market fit equation here.)

Each investor has its own sweet spot, so build your network thoughtfully and strategically — know your audience, do your research, and always be raising, even when you’re not.

Fundraising is like dating — it takes time.

Investing in a company isn’t a transaction, it’s the start of a relationship. Think of it like dating — you need to mingle, court each other, be available but not too available. If you say you want to get married on a first date, chances are that date won’t end so well. Same goes for investors. They’re going to own a part of your company, so nurturing a healthy relationship is critical.

And sometimes, it can be a slow burn — Kleiner Perkins Caufield Byers passed on Turo’s Series A and B rounds before leading our Series C round. They wanted to observe our numbers go up and to the right, and witness for themselves a consistent vision, mission, and dedication to delivering on promises. Similarly, we had been talking to Daimler, co-lead of our Series D, for upwards of a year before they invested.

Your investors are going to be intimately involved with your company’s decisions — make sure you share compatible visions for the future. Never think of it as a one-and-done transaction, but as an ongoing collaboration for years to come.

Each time is different, but also the same.

Each round I’ve raised has been different, varying by the stage of the company, type of investor, and strategic milestones guiding the road map. But there are two truisms that stay constant, regardless of the unique variables.

1. Investors are always looking for a return on their investment. They’re evaluating your business on its potential, and you need to demonstrate not only that they’ll get their money back and then some, but that you’re worth betting on.
2. You’re looking for someone with whom you’d enjoy working and who will add value to your board. Investing marks the start of a mutually beneficial partnership; your ideal investor brings more than just cash to the table, whether it’s their values, behaviors, or expertise.

All told, fundraising is a wild ride. You’re going to clock a lot of miles, kiss a lot of princes and a few frogs. It can be daunting when you start, and exhausting because it never ends, but be patient yet assertive, transparent yet persuasive, self aware yet confident, and hopefully, you’ll emerge victorious with the capital you need to drive your business forward.