Fund raising is not something most entrepreneurs look forward to doing and that may be the understatement of the year. Some fear the rejection, some are concerned about the time suck and the impact it will have on their business, and others are simply nervous because they have never done it before. Many women in particular have been scared away by reading one too many articles about how hard it is to raise VC money as a female. No matter your gender or your stage, if you need venture capital to build your build your business, you need to learn to embrace the fundraising process.
Just like anything you do in life, if you let yourself hate the process, you won’t be your best. Your deep negativity towards the process will show even if you think you are masking it with charm and a happy face, and you will not strike investors as someone they with whom they are excited to work. Even if you do not come across as negative, you will also not likely come across as someone who is passionate, full of positive energy and open-minded — all traits that VCs look for in an entrepreneur.
I recently saw this in action while spending time with a company in which I was interested in investing. As I was brainstorming with the entrepreneur and assessing how he solved problems and whether we could work well together, I was sensing defensiveness. Not a great dynamic for a partnership. While I liked him and his business, I thought this may be our deal-breaker. I discussed my concern with an angel investor of his who said, “I have not found him at all defensive, but he does hate fundraising.” I gave the entrepreneur the benefit of the doubt and discussed my concerns directly with him. He acknowledged that he finds the fundraising process annoying and just wants it to be over so that he can have the capital he needs and get back to work. The ironic thing is that hating the process makes the fundraising process harder and therefore becomes a self-fulfilling prophecy. In the end, I did invest in the business and he and I have worked beautifully together. But his dislike of the process almost kept that from happening.
What’s to Like?
You may have your own opinions about VCs but I believe most are smart and have seen a lot of what makes businesses fail or succeed. VCs are masters of pattern recognition and spend their lives studying businesses, meeting market leaders and entrepreneurs and thinking about where the world is headed. Getting time with people like this to discuss your business and give you feedback is an opportunity to learn. So don’t just think of fundraising as fundraising, think of it as a free hour with a talented business consultant. Tell them about your business and enjoy the challenges they present. Even if you do not get money from an investor, if you are meeting with good VCs and have an open attitude, you should gain knowledge or perspective from every meeting you have. Listening and learning does not mean you have to agree — it just means you have to be open-minded enough to understand and evaluate someone else’s point of view.
Take my experience, for example. When my partner and I were fundraising in 1998 for our first company, WeddingChannel.com, a bunch of smart men on Sand Hill Road challenged us heartily about our desire to work with the retailers. We were building an aggregated gift registry and they thought we were “swimming upstream” by working with retailers vs. selling Wedgewood china from a warehouse. We heard them, thought about it and came out with a strong conviction that our way was the winning way, as brides wanted their goods from their favorite retailers versus from some random dotcom. Because we truly considered their challenge and were thoughtful about why we believed in our approach, we were able to turn them into believers (and investors). If our attitude had been “these guys just don’t get it — I hate this!” I question how successful we would have been on getting them to back us.
Preparing for VCs meetings also makes you smarter and more thoughtful about your business. Having to present the market, the opportunity, your solution, your go-to market plan and compare your business to all the competition in the space may feel tedious but when done, should make you tighter and better prepared to build your business. I would argue that when the seed market got frothy and capital was being given to entrepreneurs a little too easily, it hurt the entrepreneurs who got the easy money. Many got the capital and worked their hearts out for a year or two, only to discover that they had not confronted the hard questions early on; they then discovered that the path they were on was not fruitful. Think of VC meetings as boot-camp for building your business. You want to have all the hard questions answered up front, whether you need capital or not, as your time is a very valuable resource.
In summary, learn to love fund-raising! If it is a fact of life for you, you might as well enjoy the journey as best you can and increase the odds of a successful outcome.