Be Careful Who You Jump Into Bed With

Raising money from angels and VCs can be a great experience.

Can be.

You gain a wealth of knowledge that you never had and — most of the time — never even knew you needed. You get real feedback and hopefully some money & mentors at the end of it.

The problem is finding the right people to get into bed with.

This one is really close to my heart. Having taken money from the wrong people in the past & essentially screwing myself over in the long run (more on that later) I know the pitfalls. I know how it feels.

1. Do not take money from anyone you don’t know
This seems obvious but you’d be surprised. I’ve seen someone take money for an equity stake from someone they’ve never spoken to. No guesses that it didn’t end well. You need to do your DD on the investor as much as the investor needs to do the DD on you. Research their background, talk to their references, find out if there’s something they’re not telling you. It’s not happy hour at your local.

2. Do not take money from high net worth ex-corporates with no experience You might think you’re onto a winner here — you’re not. Unfortunately, I’ve had this happen first hand and I’m still seeing it happen ALL the time. Inexperience in this area is never a good thing, you can find capital in other places! The lack of experience means too much involvement, not enough involvement, or just operating with no clue. You need to have people who understand that the startup space is completely different to the corporate space. This doesn’t mean ex-corporates can’t invest, it just means they need to know what they’re talking about.

3. VC money isn’t just about the money
VCs bring a wealth of experience. Choose the right ones that fit your company. If you’re company is in Fintech — go and talk to Reinventure, if your company is in blockchain — go and talk to one of the plethora of blockchain specialised funds like Pantera Capital. You get the idea. The knowledge, the connections, the insights and the support that the right VC can bring will be worth almost (almost…) as much as the money.

Not everyone is going to agree with my take on this and that’s okay — this is my viewpoint from what I’ve experienced as a founder who has been there and done it myself. When you’ve learned a few of these lessons the hard way, you pick up on the nuances of raising that don’t make it to the top 10 lists and bro-posts.