Building a Fundraising Foundation
How to best use your time before fundraising starts…
How to best use your time before fundraising starts…
If you’ve decided to pause your fundraising efforts for whatever reason- the state of the market, wanting to hit certain milestones first, etc. - what should you be doing now to set yourself up for a successful raise in the future?
Focus
Now comes a period of intense focus.
You’re going to be working those little hands as hard as you can to set up the best fundraise possible. To do that, it’s helpful to understand a fact that few first-time founders grasp…
The best fundraises launch off of exceptional foundations based on fundamentals developed long before any actual pitching.
Raises that seemingly took the shortest amount of time likely spent the most time in the years prior building a strong foundation. Before I raised a $2MM round led by Greylock in 6 weeks, I spent the prior decade in tech and VC growing my abilities, building my reputation, and developing a strong network. No one knows about the grind leading up to the fundraise, they just know I got it done quickly.
You don’t have years of time to casually work on your foundation, but with some focused and strategic effort you can make a ton of progress in months.
Where to start
When it comes to laying a foundation, there are 4 areas of focus that are particularly important for founders to focus on.
I like using the acronym “You CAN” to help me remember.
You
Credibility
Awareness
Network
In the time you have before launching your fundraise, focus on projects that work on these areas.
Here are my suggestions:
You
YOU run the show. You establish the vision for the company. You set the tone for your team. Everything stems from you. If you aren’t showing up with the best version of yourself, you’re wasting your time.
On top of that, a healthy connection to the business is essential. Too many founders do startups for the wrong reasons which is a recipe for disaster both in the company itself AND with fundraising.
No better time than now to make sure YOU are good and working on the right thing. Think about it - running a venture-backed startup is difficult. Is it worth the lost sleep, time away from loved ones, and enormous enormous stress, to work on something you don’t care about?
Here are two efforts that can support you in this work:
1. Finding Mentors – finding mentors can be a huge unlock for improving yourself and your company. Most of your biggest challenges and opportunities are not unique. People who have been there before to provide guidance and help are worth their weight in gold. There’s no award for working through this on your own. Ask for help.
2. Writing your Why – Write an essay on why you're working on the startup. This essay doesn’t need to be published- it’s just to uncover the core reasons for why this work is right for you. If the words don't come flowing...I'd be worried. Grab a nice cup of tea, find a quiet place to get lost in your thoughts, and put pen to paper. Once you have a draft, share it with friends, family, peers, etc to get feedback. This will tell you a lot about where you are with your company.
Credibility
Credibility = Trust. Trust = Support. Support = $$
Do investors believe you have what it takes to do what is necessary? Do they trust that you know what you're talking about?
Without significant data, credibility is all an investor can count on to answer those questions.
Some methods of establishing credibility take time, but there’s one straightforward element that establishes credibility with investors QUICKLY:
Execution.
There's no better signal around company/founder quality than execution. You don’t have a ton of time, so planning ahead of time is key. Follow these steps:
Talk to your team about what is possible over the time you have before fundraising
Commit to achievable goals over the remaining time
Create a plan for how you’ll meet those goals
Rally the team
Meet your goals
Share your progress along the way
Easier said than done?
Maybe. But you have to try.
Awareness
The last 2 years might make it seem like VCs do deals days after hearing about them for the first time.
They don't normally, and we're returning to normalcy.
Lead investors like to learn about founders well in advance of a fundraise to gain comfort around the opportunity. In 2021, I spoke to a top SaaS investor about his approach to investing and even in those heady times he estimated less than 20% of his investments were in companies he met for the first time as they were launching their fundraise.
This is why building awareness is key.
With your newfound space and time, work on things that create surface area for people to discover you.
My fav projects :
Thought piece essays – think about a topic related to your company that shows how you think and build. It could be an observation about the industry, something operational internal to your company, how you build your team…anything that provides a window into you as a founder. Important note: don’t make this essay a sales message – you’re not trying to get anyone to convert at the end of your essay so don’t be overly thirsty.Write 500+ words on it. Publish. Share. Rinse/Repeat with new topics.
Social media sharing – first, it’s important to realize your social profiles are mini webpages that VCs check to gain insight into you as a founder. If they’re empty, that’s not a negative but it’s a missed opportunity. Next, all social networks share content to 2nd and 3rd degree networks. A single “like” from a connection who has connections with VCs could help get you on the radar of investors. Tiny social shares of company progress from product launches to sales milestones to open job roles can establish valuable awareness within the investor community. Look out for next week’s post, where we’ll include a comprehensive guide to social media posts that can attract attention from potential investors.
Personal network update – I can guarantee you aren’t aware of everyone in your personal network who would be able to help with your company overall but also with fundraising in particular. Over the last 5 years, the number of people who have entered the fold as small check angel investors is staggering. One way to help uncover these helpful nodes is to write a personal update to your network. The additional positive benefit is catching up with people you haven’t spoken to in years. Go through your email and blast out a large bcc’d (or better yet…mail merge with first name) message giving a rundown of what you’ve been up to. You’ll spend time talking about personal life updates, travels, etc and work will be a natural section. Those that are interested will respond and can take it from there.
Network
Network. Network. Network.
Your network might be the most valuable thing you can build in the business world. In the fundraising game, it’s the tool you'll use to get warm intros, establish credibility, and influence decisions.
Have you ever seen posts from investors talking about how they “first met” a founder? Networks are powerful and can take time to build.
Beyond fundraising, investing in a strong network that believes in you will pay dividends beyond just your next fundraise. Never hesitate to invest in network.
2 great projects for strengthening your network:
Mine for your current supporters - most people don't know how valuable their network already is. Your girlfriend sophomore year of college? She’s a VP now at Goldman. That idiot you used to chug beers with in NYC? He’s head of sales at a hot startup. The dude who would skateboard to your class in business school? He now spends all his time helping founders fundraise with podcasts, newsletters, and workshops… (oh wait).Comb through your email and LinkedIn and create a list of all the people you’re connected to who could actually help. That list will come in handy.
Host dinners - ask Eric Siu, these build amazing relationships FAST
Think of a theme where attendees would appreciate being connected AND whose networks could benefit you. The work to organize a dinner is not difficult but it is highly appreciated. These dinners can boost your network quickly and hosting one at least once per month for the next couple months can be a great supercharger for what’s to come.
Doable, right?
So will you be able to build up that powerful fundraising foundation? Yes. You CAN. (*barf* i know)
But seriously, once you've established a stronger foundation the normal steps of fundraise prep (creating your target list, finding introductions, and executing the process) will come much more easily.
Trust.
Small asks!
If you thought this was helpful or enjoyable in anyway, I’d love for you to:
Forward this newsletter with others who would enjoy it
Follow me on Twitter where I’ve begun building in public (my course, my podcast, etc)!
Listen with a friend to Funded, my podcast that tells the rollercoaster stories of how founders raised millions (and subscribe🙏)
Ask me your fundraising questions so I can help you and cover them in a future issue
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