How to Raise Funding: A Founder’s Story

As a founder, I’ve been through the challenging, and at times painful, process of raising money for a startup. I know how passionate I am about my own startup, so I know how dedicated everyone else must be. This makes me want to help them do it better. Raising money is a hard process, but it’s not impossible, and there are some basic approaches that can give anyone a better chance of getting through it with your sanity and integrity intact, and with the funding, to rock! Let me tell you a few things I’ve learned.

The Iron Law of the Runway

We’ve all heard the stories of the one special entrepreneur who managed to raise a $1M seed round from a one-time chance meeting with a VC at a networking event. But this is essentially a fairy story. Even if it happens, it’s not real enough to plan on. We’re not out there selling magic beans! You gotta start planning your raise at least 6 months before you need your cash.

Don’t try to game the timeline. You need to make the connections, set up the meetings, prepare and then edit your pitch materials. Have a meeting, then a follow-up and then another follow-up. Plus, investors can smell the desperation on you! If you really need the money next month, they’ll either turn away or exploit it. Planning is the essence of professionalism, and they can see that, too. Knowing how to plan your raise is not only smart for the raise itself, it also helps you learn how to plan long-term for your business’ other needs later in the game.

It’s Whom you Know

Sometimes, the greatest ideas just die in obscurity. Why? Because the creators didn’t know the right people to make it happen. I know how important my own connections, and those of my co-founders and partners were, in making WeGroup happen.

Don’t underestimate — EVER — the importance and value of knowing the right people, and the return on investment that comes from going to the kinds of events where you might meet them. That same business angel investor that won’t return your email or call if you approach cold might very easily meet you and your founders for drinks if you can approach him through his friend, or better yet if his friend introduces you directly as a promising startup. The right connection makes all the difference.

Don’t be a Bridge-Burner

In any tech hub, the investor community is small, and everybody talks to each other. You might have a bad meeting, a failed pitch, or just a crappy day but don’t let it get to you. Even more important: don’t let it interfere with your business. Just get back to the drawing table and live to fight another day!

Someone who might not be the right investor or partner at one time might be the perfect person to help your business grow at some later point. Besides, these people usually are entrepreneurs themselves, and understand the ups and downs that come with trying to put a new business together. Keeping your cool, maintaining your professionalism and showing that you can deal with the rejection and difficulty that comes with it can increase your standing in their eyes. A connection or a meeting that doesn’t yield something today might be the most important thing you ever had in a year or two. Keep your connections close, and don’t burn your bridges.

Your Business is your Business

When you’re in money-raising mode, it can seem like the most important thing you’ve ever done or ever will do. And you can forget that the fundraising isn’t the end in itself. You gotta remember that you’re out to run your business, not just raise money. Keep your head in the game, and focus. This will also help you raise your confidence and comfort about your business model itself, which investors will always ask you about.

And coming across as knowing your company, inside-and-out, will be more impressive and professional than any elevator pitch or slide deck can do. An entrepreneur who clearly knows his work, his revenues, his targets and his team is the kind of person that any self-respecting investor is going to want to be in business with! You gotta keep running your business first, and everything that comes with fund-raising second. In any case, don’t let the funding campaign run you!

Fundraising for a startup is a tricky business, but it’s a skill that can be learned. I know from my own experience what works and what doesn’t. And while every founder needs to chart his or her own course, there are some pointers that will always help guide in the right direction. As someone who’s been in the trenches (and still is), I want to do what I can to share the results of my own passion with other founders. If you want to hear more about our story and what we’re doing with the funding we’ve raised, stay tuned!