Fundraising is Supposed to be Hard!
A big part of running an accelerator or a Venture Capital fund is fundraising. Whether it’s fundraising for your fund or more importantly, helping and working with your portfolio companies on their own fundraising process. I would say particularly being in Silicon Valley this is what I and other investors spend a disproportionate amount of time on. (I could argue maybe a bit too much).
So many of my founders or founders in general complain about fundraising. “Fundraising sucks!,” “I hate fundraising” or “I can’t wait to get back to working on the business.” But my response to them is, “I get it but it’s actually an important part of working on your business. It’s not supposed to be fun.”
I really do get it. The crazy amount of time it takes, the passive- aggressive blank responsives from investors, in some cases blinding arrogance, or the ghosting. So much ghosting.
And I say this as someone who has fundraised for a venture fund. If you think raising money from angel investors or venture capitalists is hard, try raising money from Limited Partners like big corporates, family offices, or Fund of Funds. Way longer sales cycles, even more arrogance and also way more flakiness. I could tell you about this A — hole High Net Worth Individual I met at LP conference in New York. I don’t recall ever having such a demeaning conversation.
BUT, this is the nature of the beast. This is the game. And I took this in stride as part of the process. I had no choice. Fundraising is an important step in your startup (or venture fund). It’s a forcing function to clarify your vision and get your story right. It helps you fine-tune your messaging and strategy. It makes you step away from the day to day and take a top down view of the business, its metrics and overall direction ie. it forces you to set milestones and plan. One additional benefit from the fundraising process is you get some valuable feedback on what you are doing right and wrong. This is both in the presentation but also on your business and your approach to the market from people who see a lot of startups.
The key pieces of a successful fundraise is about the homework you do, going after the right profile of the investor, running a tight timeline with a compact process. Exactly the same as an enterprise sales process. And understand that this is a numbers game. For a seed raise, you can expect to talk to at least 100–120 angels and VCs. Not everyone will say YES. In fact, most (90%) will not be interested. You only need a few investors to come aboard before the momentum shifts your way.
Yet, even if you do everything above right, it really starts with having the right attitude. If you need to do fundraising, at least try to enjoy it. Think of it as an opportunity to share your vision and startup with the world. Founders who are able to have this mindset are able to increase the odds of their success here. Or at minimum, it will make a painful process much less painful.
Listen to this Newsletter: https://listencat.com/the-hard-fork-by-marvin-liao-podcast/
