Since many first-time entrepreneurs might not have fundraising experience but have plenty of dating stories, we felt compelled to share the similarities between raising $2.25M in a week and dating
After raising a $2.25 million seed round in a week, we noticed a number of similarities between our fundraising efforts and proven dating advice. Since many first-time entrepreneurs might not have fundraising experience but have plenty of dating stories, we felt compelled to share our takeaways with you.
Dating rule #1: Put yourself out there
Once you’ve decided to raise money, the most important thing is to let the world know. Having sat behind excel spreadsheets for the preceding decade, putting ourselves out there was far from easy. For entrepreneurs graduating from competitive schools or leaving high paying jobs, it can feel unnatural to suddenly be the person asking for money. But unless you’ve received a large inheritance or left a career in sales, you – the entrepreneur – will be the one doing the chasing. And like in dating, that can be tough.
Being methodical helped. First, my co-founder Mor and I agreed on a division of labor, whereby one of us would focus primarily on fundraising while the other focused on running the business – one of the big advantages of having a co-founder. This was essential since fundraising is truly a full-time job. If you try to do it while running a company full-time, both endeavors are likely to suffer.
Furthermore, preparing all the necessary materials in advance made life easier. Having well-written pitch emails and an investor deck, for example, took a lot of the stress out of initiating communications (avoiding much of the thought required before each email is sent). And having key documents like a budget, cap table and a competitive analysis, which investors will always ask for, ready in advance helped maintain momentum with potential investors.
Dating rule #2: Don’t waste your time on people who are not ready for a commitment
Remember that girl or guy who flirted with everyone but committed to no one? Unfortunately for the entrepreneur, most investors get paid to behave this way. Most investors avoid leading rounds, and those who do often lead investments only in industries in which they have expertise.
The most efficient way to fundraise is to segment your list of investors into two groups: the leaders and the co-investors. Start by approaching only the people that really lead investments and reaching out to the rest only after you’ve secured a lead and the terms are set.
Mor and I put together a list of all the quality investors we’d met over the years. We focused on investors we had good chemistry with, people that we knew we could learn from and that we would enjoy working with. Just like you join clubs that pertain to your interests to meet potential dates, attend investor networking functions on a regular basis, and connect with as many investors as your bandwidth allows throughout your career. Even a coffee chat or quick lunch will help you build your list when you ultimately want to fundraise.
You should feel very comfortable asking investors outright whether they know the space you’re in and if they would consider kicking off your round, preferably before you schedule a meeting. If you get the sense from the initial conversation that the answer is no, you should thank them for their time and politely suggest to talk again once the round gains traction.
Dating rule #3: Be confident
The key to attraction in dating is confidence. True confidence emerges from knowing you create value for others, and when it comes to fundraising successfully, you must not only know you create value, but also passionately express your value propositions to potential investors. Quantifying the value you expect your company to create based on justifiable assumptions will also enhance your confidence and motivate investors to take you seriously.
Based on our analysis, we were reasonably confident that we would be able to raise at least $1 million so we set the round at that amount, conveyed this in our communications by telling people that the round would only be open for the next couple of weeks, which created a sense of urgency for investors interested in exploring the investment. In retrospect, this was a good decision. The round quickly became oversubscribed and we had the flexibility to increase the round size as we received more demand from investors, generating time sensitive momentum.
Although persuading investors to put their hard-earned money in your startup requires a major leap of faith on their part, confidence in yourself and your company will tip the scales in your favor.
Dating rule #4: Dating is a means to an end
While fundraising is all consuming, filled with apprehension, exhaustion, and excitement, a successful round is only the beginning of a number of long relationships – relationships likely to experience ups and downs. People look to you to create wealth for them, which is a much harder and longer journey than the fundraising itself.
Our advice? Be a good partner, be honest, talk to your investors frequently and update them regularly, not just when you need to fundraise. Like any other relationship, this one too requires attention, nurturing and a lot of hard work to make it successful.
Like in dating, the process is sometimes painful, but if you have a good product and team, if you are persistent and you stick with your plan, the odds are you’ll find the right one(s) for you.
The views expressed are of the author.
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