Hacking your way through funding
Funding is possibly one of the hardest things that a startup founder has to do at some point along the journey. Here are some of the lessons that I have learnt along the way.
1. Build a list of potential investors
This is one of the very first steps that you should take while sourcing for funding. Create a spreadsheet or a Trello board and start listing down all the potential investors that you would like to talk to. Here’s a brief example -
The most important part to take note is the last column. You should never get an investor for the sake of money. Find someone who can genuinely help you. Partner with someone who compliments your skills and guide you along.
2. Find people who can help
Cold emails do work! There is no doubt about that. However, warm introductions are still the best way to get acquainted with an investor (or) a VC of your choice. Think of it as this way. How awkward would it be for someone to talk/trust a complete stranger.
I, personally, love LinkedIn and AngelList for this. These tools are made for this. You can easily explore multiple degrees of how a certain investor is connected to you. If you have found a friend, who is connected to an investor of your choice, be considerate. There is a chance that your friend might not want to do the introductions for multiple reasons. One of the obvious reasons is because your friend might not like your idea. So, he/she might not be comfortable with introducing you to that investor. Would you want to recommend uncool products to friends? It’s the same idea.
On the bright side, if you do get introduced, kudos! You have already passed your first stage of validation.
3. Don’t over-protect your idea (Be vocal)
Share your idea with as many people as possible. This helps you refine the idea. What matters most is execution, anyway. Sure, you do not have to share every bits and pieces of your idea. But, share just enough to get feedback as early as possible.
How could someone recommend you without knowing how your business works? How would you know whether you are tackling the right problem if you do not share your ideas with others?
In addition, being vocal could potentially help you to land introductions to a fair bit of investors.
4. Due diligence
Please, please, please do your due diligence before sending that pitch deck to investors. Make sure you have a proper business model in place with some ideas on how you are going to market your product. Double check all the numbers that you have put in from valuation to financial projections. Figure out how your capitalisation structure should ideally look like.
It is always a good idea to predict possible questions and answers for them before meeting a potential investor. Internet is your best resource.
5. Read Venture Hacks
Venture Hacks is the most relevant blog for you to read through before you plan to take an investment. If finding an investor is hard, having the right investment strategy is 10x harder. Venture Hacks has a lot of examples, tips and tricks on almost everything that you need to know before you strategise for your funding round.
And last but not least, yes, investment must be strategised. And that is one of the most important responsibility that a founder has to take.