You’ve read the glitzy headlines, “Virtually Unknown Startup Secures $5M in Series A Funding.”
These captivating stories often leave many entrepreneurs with one simple thought, “That’s great, but how did they do it?”
If you’ve bootstrapped your company but lack the experience, connections and expertise to raise venture capital for your small business, take some lessons from young and funded entrepreneurs who have “been there, done that.”
Here are 13 startup funding tips from entrepreneurs who have successfully been funded.
1. Get results first.
Try to get as far as you possibly can without raising money. The more customers, revenue and general progress you have made, the higher valuation and terms you will command from investors. Also, you should only raise money if you know what you are going to do with it. When we raised money for SpareFoot, we knew that we had to hire people (especially developers) and that’s what we used the money for.
2. Get a “funding” state of mind.
You should always be thinking about funding, not just when you need the money. It’s not ideal to simply approach potential investors when you are looking for funding, you should be building relationships all the time. It’s part of your job to be “known” and well-respected by potential investors.
Use networking events, office hours, and social media to build these relationships well in advance of when you need funding. You can do this months or ideally years in advance of when you need to ask for funding, so that before you even give a pitch the investor has a favorably impression of you.
3. Be yourself.
They’re investing in you. Make sure they’re seeing the passionate entrepreneur you are and not a presentation robot.
4. Tell the world you’re looking.
The best way to receive funding for an idea or business is to tell as many people as you can about it; to take all of the meetings that you are offered; and to keep an open mind. On paper, some investors may not seem like the best fit for an entrepreneur’s business. However, entrepreneurs need to be as open-minded as possible in the fundraising process because a great contact may come along when they least expect it.
If you have just one funding option on the table and you are not sure that the investor is right for you, Suki believes that you should always “go with your gut.” Not all money is money worth taking if it means that the entrepreneur will have to give up the integrity of the business or make other concessions.
If no other investors are interested, perhaps it is time to go back to the drawing board and pinpoint what, exactly, are the barriers to funding so that the entrepreneur can address them before moving forward with a more appropriate investor.
5. Admit what you don’t know.
Be comfortable with who you are. Angels and venture capitalists (especially at the early-stage) invest in the Founder(s) and their belief in them as people maybe even so more than the idea. Be ready to admit areas where you don’t have the answers but then go back, research the right answers and get back to them.
Through that process you show that you are trustworthy and comfortable enough in yourself that you can admit that it’s impossible to have all the answers – especially at the early stage.”