The Art of Startup Fundraising

When you go out to raise capital there are many things that you need to know in order to have your company at a stage in which it is thriving in order to be attractive to investors. Reading my book The Art of Startup Fundraising (shameless plug) will help. However, there will be many questions before the fundraising and after that you will be asking yourself.

I am an entrepreneur myself. I‘ve learned many things the hard way by failing and making stupid mistakes. I wish I had someone or something guiding me throughout the journey. For this reason I wanted to put together the 100 lessons learned that I wish I knew before launching my company. Especially before fundraising.

1. You are never going to be the first to market. There is someone doing exactly what you have come up with directly or indirectly.
2. Every single networking event in your space is something you want to be part of at the beginning to build your network. If possible as a speaker to elevate your thought leader status. I talk about this already on my post The 4 Best Conferences To Find Startup Investors.
3. You want to find a key metric that has a major impact on your business. This could be user growth or revenue growth. Be totally obsessed about it and monitor this metric week over week. I would recommend you reading my piece 30 Techniques To Gain Massive Traction as it may help in pushing the metrics up.
4. The failing fast philosophy is bullshit.
5. Most Venture Capital firms add 0 value for the most part even if they think differently.
6. Surround yourself by really talented individuals even if it would cost you a little bit more money. Remember that cheap labor will end up costing you more money down the line.
7. Never cut corners with lawyers. You need good legal counsel. Period. If you are thinking about how to structure financing perhaps you should read my piece How To Structure Startup Financing.
8. Do not outsource key components of your business.
9. Ideas are worthless without a masterful execution.
10. PR firms and Recruiting shops are a huge waste of money and time. Do it yourself.
11. The most talented people will join your company for the problem and not the paycheck
12. You will be disappointed several times by people that you trusted. Don‘t let this change the beautiful person you are.
13. During the early days 95% of your days will suck and your main job will be to put out fires
14. Reading 2 books per month is not enough to face the steep learning curve. Here is a list of the 30 best books for entrepreneurs that can get you started. On your way to work or school you can also listen to some podcast. If you are looking for some of the best feel free to read the piece The 8 Podcasts Every Entrepreneur Should Listen To Before Fundraising
15. Success is 20% about the product or content and 80% about marketing and distribution
16. Overnight success stories don‘t exist and what you read on TechCrunch is just a tiny percentage of all the companies out there.
17. Focusing on growth instead of revenues is a huge mistake as currently every dollar counts. Especially for investors. Hyper growth vs Profitability.
18. Never say that you are fundraising unless you have a lead investor. If you wonder why, I would suggest you read my piece Top 5 Fundraising Mistakes. To get things going, feel free to use the email templates that are provided on the piece 3 Email Templates You Should Use When Fundraising.
19. I really wish my book The Art of Startup Fundraising was available and written by someone else
20. If the investor does not buy you lunch on your first date run the other direction. They are most likely a poser. You want to go after people that have the capital to pull the trigger. I did put together a few pieces that might help you in finding these folks faster. These pieces are Top 50 Investors on Twitter and How To Engage Them and also the piece 178 Investors That Startups Should Be Pitching Right Now
21. Raise capital to speed up the machine and not to build it. Before you get out there to raise funding read the articles 15 Reasons Why Your Startup Will Never Get Funded and also 10 Reality Checks Before Fundraising. This way you will have a clear idea of what is missing on your business to be successful at fundraising.
22. Founders should have the same percentage of equity to avoid conflicts.
23. Raise capital at least 6 months before running out of money. You can find here what you need to include on every slide of your pitch deck and here to see what are the best resources to find investors. Some of the best pitches that I have seen live could be viewed on the piece The 10 Best Startup Pitches of All Time
24. Disconnect at least one day in the week to rest your mind.
25. Go to the gym at least twice per week to burn the toxins.
26. Believe in yourself. If you don‘t who else will?
27. In the USA you can lift up the phone and call directly anyone you‘d like. You will never know until you ask. Remember that you have nothing to loose.
28. You should be raising capital even in your sleep. See how some of the most well known companies like Facebook, Square, etc… used as slides for their pitch decks in early rounds of financing here.
29. It is critical to be grounded with the numbers of your business.
30. Avoid as much overhead as possible.
31. Be transparent with your employees
32. Hire slowly and fire fast
33. Master the art of listening with your customers, employees, partners, and investors.
34. Don‘t be afraid to pivot. Not a single business has been able to launch with a bulletproof business plan.
35. It is harder to divorce from an investor than divorcing your own spouse
36. While business plans are not required any more by investors, they are still a nice roadmap for you to understand what your 18 month plan of execution looks like. I wrote this piece regarding the 18 month plan with a template for you to download.
37. Do every job yourself first to understand it before you delegate such efforts to someone else. Some of the tools that may help you in being more effective are outlined on my piece The 150 Best Free Tools For Entrepreneurs.
38. Don‘t go international too early. Develop one market first and take it from there.
39. You will hear the word no over and over again and it should energize you to keep pushing towards your goals.
40. Only hire people you see yourself having a beer with
41. The first 10 hires set the tone for the whole company
42. Content is king in marketing. It is the best way to capture new potential customers via education.
43. Most accelerator programs for startups are full of shit. Only a few are really worth the mentoring and the demo day where you get a big push on the financing. Get a good advisory board in place instead for less equity.
44. Never be attach to the outcome of things
45. Location matters a lot. The piece that I wrote some time ago called The Best Regions For Fundraising may give you some insight in this regard.
46. You need to start recruiting for a position 3 months before you actually need that person onboard.
47. Everyone in the team should push towards reinventing customer experience within the company
48. Stay humble always and make sure everyone leaves the ego at home. Press and awards don‘t mean anything.
49. There are too many things you could do. Focus as much as you can in doing one single thing right.
50. Avoid building a mall. Start with a store.
51. Being an entrepreneur involves being part of a rollercoaster of emotions. Try to minimize the impact on your employees.
52. Do a lot of price testing to get it right
53. Time is your biggest resource as an entrepreneur.
54. Build things based on data and not on assumptions.
55. Don‘t try to have a perfect product. Build a minimum viable product (MVP) and get it to market as fast as possible to start generating data. Build the product from there.
56. NEVER GIVE UP! Founders never shut their company because they run out of money. They do so because they run out of energy.
57. Treat investor money as if it was your own.
58. Your number 1 priority with investors is to make them money. Not to answer their calls every day to give them an update on progress. Set up expectations on communications and updates (monthly, quarterly, etc).
59. Investor conversations are all about listening and addressing concerns. Pitch your story for 2 minutes and then engage them. A few weeks ago I published the piece 45 Questions You Need To Nail To Raise Capital which could be a good way for you to start getting ready.
60. Talk about your idea with everyone. At least 100 other people have thought about that same idea. It is all about the execution.
61. It is a marathon and not a sprint
62. It is ok to make mistakes. That means that you are moving fast. As long as you learn from such mistakes it is fine.
63. Don‘t spend money on nice to have things. Only spend the capital that you have on the necessary things that your business needs to be successful.
64. Criticism is great. Embrace it and learn from it.
65. The vision and the mission should be contagious and you should live it and breathe it
66. Your team is everything
67. Learn how to say no
68. Don‘t raise funds at a seed stage from VC funds if you are not sure about your business model. If these VCs don‘t invest on your Series A you are toast as it would send negative signals to the market. If you need to price the round yourself you should check my piece 8 Ways To Value Your Company
69. Reverse engineer the metrics you will need for your next round of funding
70. Realize the power of simplicity
71. Invest in your own health and wellness first
72. Write as much articles as possible to set yourself as a thought leader in the space. If you can become a contributor at a major media outlet that would be fantastic.
73. Learn how to speak in public
74. Become a great storyteller to get investors, employees, and partners onboard
75. Treat people the way you would like to be treated
76. Do what you say you will do when you say you will do it. You are your word. Have integrity.
77. Don‘t raise more than the money you actually need. Avoid dilution at the beginning.
78. Rewarding your employees with stock options will give them a sense of ownership and purpose
79. Don‘t focus too much on your competitors. Focus on your own execution.
80. Have a mentor or a coach that you can tell your problems to.
81. Have contracts in place for everyone and everything. It is important to have things recorded and documented.
82. Never dilute yourself more than 25% per round of financing that you raise.
83. Don‘t drink your own kool aid
84. Learn how to manage your time and schedule yourself accordingly
85. Always be authentic and don‘t be fake trying to give out an image. People are not stupid.
86. Find a support system and people that truly understand you
87. Always ask for references of employees that you are looking to bring to the company.
88. Be very active on social media. Like Richard Branson states, the best marketing that you can do is the marketing of yourself
89. It will take longer than you plan for
90. Everyone needs early evangelists
91. You are not smarter than others
92. Have a charter for your company in which you keep reminding yourself and your team how to generate the future of the company and where you are all heading.
93. Give stock options with a vesting schedule to everyone in your company. Even the most junior person. This will give people a sense of ownership in the business and will have them motivated.
94. Weekly management meetings and monthly or by weekly team meetings are a must to keep the communication going.
95. Reach out to press reporters yourself directly. When you are small they don‘t want to hear from someone else.
96. No assistants. It reflects very poorly on you. Use tools to help you in this regard. If you are fundraising and need an extra hand you should check my piece 10 Must Have Tools For Fundraising.
97. Always be on time for meetings. You are not better than anyone.
98. Press will not make your business succeed.
99. Interns at the beginning are great but they take too much time to train and they leave eventually to go back to university.
100. Ask your employees about their personal life and how things are going. Have offsite events. This will show your team that you care about them.