Two simple things you need to know about fundraising for your startup

This article is short. Like stupidly short and probably you know this. There are many things I could write about startup fundraising, yet these are the 2 things you can’t screw up:

1. Only take money from people you like to work with.

2. Then always take money if you can.

That’s basically it.

If you like, let’s see if I can elaborate a little bit with some examples below and if you wanna further discuss with me, I’m happy to do so via lb[at]j12ventures.com.

1. Only take money from people you like to work with because your plans will change. I don’t mean only take money from people that will be nice to you, no, of course an investor will put pressure on you, challenge you, etc. but that is helpful for your company. Take money from somebody you can reason with. Somebody you can have a discussion with, and sometimes disagree. Somebody that has the same ambition as you and can share your vision. If you screw that up, I think the chances are high that you will regret it.
2. If you manage to achieve 1., then always take money as you will always need more money than what you originally thought. Perhaps things didn’t work out as planned and then you’ll be happy to have reserves and investors already committed. And if things do work out and everything is going smooth then you’ll want to speed up and grow faster. If you have money on the table then take it, unless that valuation is completely off. But if you achieve 1., you will likely find an agreement, a good investor won’t agree to dilute you too much anyways. Second, and arguably more important, you might think that with every further achievement fundraising becomes easier, however you might be VERY WRONG. Why? Initially, you don’t have any metrics, but you can sell a vision and future growth. In reality, things don’t play out as smoothly as you thought. Your metrics might not look like a parabola from a textbook yet. It is likely there will be bumps. So now what? You have metrics, but they are not as shiny as you thought. Good, things are progressing and you are finding your product-market fit. But is it easier to fundraise now that you have metrics which are not yet fantastic? Now that you need money because things are taking just a few months longer? Often the answer is no.

Every case is different in the end. I hope you choose wisely.