Read Full Story Here – By Rafe Furst
- Hacking the Startup Fundraising Matrix
- How to Leverage Social Currency
- The Eightfold Path to Investment
- The Five Hindrances to Getting Funded
There are many things that entrepreneurs can do to help be proactive during their fundraising process. As an investor myself, these are some obstacles I see many early stage companies face during their investment process.
Ignoring the Heart— We are sold with our hearts and unsold with our brains. In fact if you don’t grab me emotionally in the first few seconds and completely enthrall me, then I won’t ever engage my brain to determine whether it makes financial sense to invest. Ultimately you need to convince me both rationally and emotionally. Help me fall in love with you, and help me have faith in you, and I might give you a pass on the numbers and projections that don’t make sense.
Lack of Transparency & Authenticity — For founders like me who are Generation X or older, this may be the hardest part of your journey. Because we were ingrained with the notion that failure is bad and weaknesses are to be hidden. Even those of us who understand the need for transparency sometimes have a hard time executing on it. But here’s why you have no choice as an entrepreneur. Humans are hardwired to sense the inauthentic, and they instinctively know when you are hiding something. Sophisticated investors will ask endless questions until their instincts are satisfied. Unsophisticated investors will simply lose interest (or get spooked) and become unresponsive, and you won’t know why. Is any of this sounding familiar?
Pitching The Wrong Thing — Even if investors don’t recognize or admit it, their actions reflect the following reality. Nobody knows whether you will be able to make the company successful. This is not predictable at the time of investment. We are placing a bet on you as the CEO that you will make it so, and we hope you won’t stop until you do (even if you run out of money). There will be numerous threats to your company’s existence, and many times when you will be tempted to quit. Don’t pitch me your idea, or your team, or even your massively scaling revenues or user growth. I’m investing in your ability and willingness to run through brick walls, dodge bullets, and at the end of the day make the company 1000 times more valuable than it is today, no matter who else is left standing with you. Pitch me that.
Abdicating Responsibility for Results — It’s understandable that you would want someone to take over the responsibility of running your campaign. After all, being a CEO and running the company is more than a full-time job. In this context, fundraising can be seen as a distraction. But the buck stops (and starts) with you, so how can you possibly put that responsibility in anyone else’s hands? Consider for a moment that Kickstarter campaigns are 80% funded by people not on Kickstarter but who heard about the campaign from the founder’s efforts.
Attachment to Results — While fundraising results are your responsibility entirely, the paradox is that if you are attached to results, you won’t get the money. Founders who “do the work” and limit the mental editorial, get the dough. Founders who obsess about results — or get defensive about what lack of results “means” — struggle greatly and turn off investors. Every investor is closable and every company is fundable… at some point in time. It’s your job as CEO to make sure the company is alive and thriving so that timing is not a factor. Don’t overthink it. Trust in the process. And when you fail, just get back up and do it again. And again. And again. Is it possible for you to actually enjoy the process, and the struggles and failures along the way? That is what non-attachment means.
Ready to Jump?
“Unfortunately, no one can be told what The Matrix is. You have to see it for yourself.” – Morpheus