Raising money is necessary evil for all startups going down the venture rabbit hole. One a few lucky ones (Mailchimp, Shopify, Shutterstock) make it to $B valuation without raising money, but realistically if you’re going after a big opportunity, the company that has the most money usually wins.
Here is the basic playbook, but of course there are exceptions and the magic is in the details…
There are 2 strategies when raising money, the long slow play and the fast and furious.
For first time founders the long slow play generally is better… Before you have a product with traction (paying users ideally) you should start building your network of potential investors as soon as possible. Take everyone you know (almost literally) and add them to a BCC email list, and send them an email every 2 weeks saying:
1. What you’ve done over last 2 weeks
2. What you will do over next 2 weeks
3. How they can help you
Sometimes an early investor will come through a completely unexpected source, like a friend of an uncle, and that’s what gets the fundraising fly wheel going.
The second strategy is to hit fundraising fast and furious, specifically line up a list of investors you’d like to have on board, then identify the connection person between you and get approval for introductions. When you have a minimum of 10 introductions ready, then send the emails and try to stack meetings in a short a time period as possible. The advantage to this approach is scarcity, VC’s are competing against each other, and with more excitement you close deals faster and at better terms. The downside is that you need a real volume of investors to make this happen, which is tough for a first time founder.
Whatever strategy you choose, make it deliberate and intentional. Write down your strategy, and talk to a fellow founder, co-founder, or coach to help you stick to your plan. Raising money is hard but you can do it.
