Anyone who has raised money for their startup knows that it’s one of the most challenging things a founder has to do.
In my personal experience as an entrepreneur, I raised venture capital for CN Creative and Nerudia, which my business partner and I founded and then sold for a combined value of £158m.
Now with Fearless Adventures, my latest venture with fellow entrepreneurs Dominic McGregor and Charlie Yates, I’m providing the capital, along with best-in-class marketing and talent sourcing support.
I know only too well that a capital raise is a full-time job, but running a company is also all-consuming. To be successful, you just have to do both.
So how can you raise the money you need whilst keeping the wheels on your business moving? Here are my tips.
Fundraising is a full-time job, but don’t break from running your business
Raising capital is so all-consuming that many people ask if it’s a binary choice: do you focus on either fundraising or running the business?
Or they worry that, by concentrating on a raise, they forget to build a strong business. But as a founder, grab a strong coffee as you have to be good at both.
In fact, you have to be good at more than ‘just’ that. You’ll wear many hats as you grow. From fundraising to growing the business, developing a product, building teams, creating strategies, and more, doing it all is simply what it’s going to take.
The CEO has to run the fundraise, not deputise it
I’ve heard people suggest that you split running the business and running the raise with someone else but the CEO has to do both.
As the head of the company you need to be present and driving it forward. Also, investors want to meet the business leader, the person they are backing with their cash, and that’s the CEO.
As soon as you bring more people in, your pitch messaging can become inconsistent.
Such discrepancies can quickly sow the seeds of doubt with investors and can lead to them backing out. So to reduce these opportunities for investors to cry off, ensure the CEO owns as much of the process as possible.
You need an abundance of energy and resilience
Fundraising is super distracting. It’s all-encompassing and tiring. You’re fighting to get people’s attention, and then when you do, you’re trying to connect with them on an emotional and mental level. But this is draining. In fact, it’s the proverbial emotional rollercoaster, so you need enormous energy.
On this wild ride, you get many no’s, which can be even more taxing. And even when you get to a place where you get a term sheet, that’s just really the beginning because then you have a legal process, which again absorbs so much energy.
So raising money is distracting and tiring in itself, but you still have to pony up and drive your business forward at the same time, wearing all the other hats you need to be successful. But that’s what makes good entrepreneurs special. And when you clinch a deal, it’s re-energising and helps to drive your business forward.
Finding an investor fan is more important than finding a great investor
One of the toughest things about fundraising is that you’re trying to get someone you don’t know, in another part of the world, to clearly understand and buy into your vision.
But often, as an entrepreneur, you’re trying to break new ground, be disruptive, and take an industry to another place.
Look at how Tesla has almost single-handedly transformed the car industry, but (along with another Elon Musk company, SpaceX), nearly went bust in 2002. Its founder was almost broke and sleeping on his friends’ floors. Today the company is valued at over $1 trillion.
So even for visionaries like Musk (or perhaps, especially for people looking so far into the future), the likelihood of finding somebody who also thinks precisely the same way you do about your vision is actually very low.
They might be great investors, but unless they really get what you’re trying to do and fully understand your business idea, they’re not going to invest.
Finding an investor who gets your vision and is a fan of it is a bit like finding a bit of a needle in a haystack but when you do find that person, they’ll really understand your business and want to help support you through the inevitable bumps on the road to success. And that can make for a brilliant, successful partnership.