Editor's Note: The Grind is a weekly column that asks a revolving cast of young founders to take us through the daily rigors of running a business, as well as offer up advice on how they achieved milestones or overcame challenges. Follow The Grind on Twitter with the hashtag#ENTGrind.
You’ve decided to start your own company and completed all the challenging first steps: daring to dream, quitting your job, bootstrapping an early product and getting customers. Think the hard part is over? Think again.
As your startup begins to gain a little traction, you start to think you might want to raise some money to build the team and product that will take your business to the next level. During this time, I remember the question I kept asking myself was, “Are we ready?” and I quickly realized that was the wrong question to be asking.
No one ever feels “ready” to neglect their customers and product and take back-to-back meetings. That said, funding can help scale your company at a faster pace than bootstrapping and can open up many doors for network opportunities. The best indicators of whether you should go out and fundraise are in your pitch itself:
- Do you believe your story?
- Does it excite you?
- Do you believe you can build this regardless of whether you raise or not (money will just help you get there faster)?
If you answered no to any of these questions, do not pass go and do not collect $200 (or to be realistic $200,000). Keep working hard on your idea or adjust it until you can say an honest and emphatic “yes!” to these questions.
If you are ready to say yes at this very moment, then go for it, but please be honest with yourself and your team about your motivations. Our industry has put far too much emphasis on fundraising as an ends in and of itself. Funding “rounds” have become descriptors for companies, and the amount of money people raise is too often used as the metric by which to measure someone’s success. They’re far too often false signifiers of what’s actually happening within the business.
Smart people in the industry know better. Your users know better. And most importantly, you know better. Funding stats are not much more than Crunchbase’s version of Foursquare badges. What matters is how, why and where you spend the funding, and most importantly, the value that those dollars drive. So don’t get caught up in the fundraising vanity game, and instead set out to build the best business you can. Many first-time entrepreneurs setting out to raise money have asked me for the secrets to success. There is no one-size-fits-all, but doing these three things below can put you at an advantage.
1. Grow a thick skin. If you haven’t worked in sales (I never had), and if you are a woman (I am), then you’ve probably never experienced the amount of repeated rejection that you’ll face when you start pitching. This is normal! Even stories you hear of VCs chasing down founders begging to take their money started with those same founders getting rejected months or years earlier by people that didn't believe in their brilliant idea.
You might even get rejected by investors for completely unethical or wrong reasons, but in these cases, you’ve dodged a bullet by not having to work with awful people.
The only thing that’s worse than dealing with bad seed investors is letting them win, so don’t quit. Most investors I’ve met are really good people. Find them.
2. Play to your strengths. You can certainly learn a lot from hearing other people’s stories, but they’re only as useful as your ability to apply them authentically.
Know your strengths and play to them: Are you an introvert who isn’t great at public speaking but really good at visual communication? Then let your deck do more of the heavy lifting. Are you not good at following a structure but great at getting people excited and believing in your vision? Then go off script and let your energy carry the story.
The point is to honor who you are and where your strengths lie and play to them as best as possible so that you stand out and have the best shot at building and delivering a strong story.
3. Tell a great story. Nothing is more important than telling a great story. It’s not only essential to get people to invest in your company, but it’s critical to recruiting, retention, marketing and explaining to your family what you’re doing with your life, so hone your story like your business depends on it (it does).
- This is the framework that I used to tell our story. Note that like any good non-fiction narrative, the most important points go at the top.
- Traction: We grew xx% week-over-week
- Your narrative: Explain your story and why you care about this problem so much.
- Your unique advantage: This is especially important to prove to people as the barrier to entry for startups continues to lower.
- Your vision: What the world looks like when your product reaches scale.
- Scarcity: Fundraising is a two-way street. It’s a mutual exchange in which, if things go well, it’s a win-win for both parties. Make sure to demonstrate a sense of scarcity and selectivity. How much have you closed and with whom? Who else is interested in the deal? How much room do you have left? When do you have a hard-out and will get back to work? Does the investor have more to lose by passing on your deal than you have to lose? Make sure this answer is “yes.”
Remember this is one step in a long road to building your startup. Remind yourself that acquiring funding for your startup is a means and not an end itself. Your job is to grow the value of every dollar you take, so take them wisely. At the same time, don’t let your fear of investors or pitching be the thing that holds your business -- the next big thing -- back. Keep daring to dream, thinking big and building a team of supporters -- including your investors -- who will take the risk and dream big alongside you. Just make sure the time you spend fundraising is as consolidated and concise as possible so you can get back to business (literally).
Jamie Wong is the Founder and CEO of Vayable, a platform to request, design and book unique travel experiences. She has a master's degree from Columbia University and has traveled to more than 40 countries