When I was fundraising for my company LaunchBit, raising money frustrated me to no end. There was all the rejections. All the time spent in investor meetings. All the email follow ups that went nowhere. We ended up raising ~$1m, but it was brutal.
On the flip side, I often enjoyed selling LaunchBit as a product to customers. Selling a product had many similarities to fundraising – again, constant rejection, lots of demo calls before getting to a “yes,” and follow up emails that went nowhere. Even though the two sales processes were similar, somehow selling my product was a very different experience from selling my company for investment. One was a very fulfilling learning experience, and the other was pure misery and an angering experience.
Entrepreneurs often hate fundraising, not because of the fundraising sales process itself, but because of all the underlying crap that we have to put up with alongside the actual fundraising. Most entrepreneurs don’t complain about it publicly – I certainly didn’t. They don’t write public blog posts about their experiences because you end up sounding like a whiner and because you’re afraid that no other investor will take your meeting.
So what is this “fundraising crap”? It’s all the times that investors:
- clearly have no interest in your business but want to waste your time with multiple meetings and by “keeping in touch” with no call-to-action or closure.
- are trying to “pattern match” and have inherent biases based on past successes, but you don’t fit their demographic pattern because you are not a 20-year-old American White Man with a degree from Stanford in computer science who speaks accent-free English.
- reschedule your meetings multiple times (often on the day of or at the last minute) to take meetings with other entrepreneurs.
- are too chicken to invest in your company (even if they have conviction) because they do not want to be the only ones.
- have no money to invest but they don’t tell you that.
- don’t articulate what will give them conviction – or are even self-aware enough to know – so you can’t effectively sell them on your business.
- project their weird ideas on whether a company is truly a serious business or is “just a fun lifestyle business” when the founders happen to be
- Family
- Married or dating
- One or more of them is pregnant or has children
- have no interest in your business but will take advantage of the situation in inappropriate ways.
Truth be told, as a founder-CEO, your job isn’t to change the fundraising process or even to worry about whether it is just or fair or right. Your job is to cut through the crap as best as you can and raise money for your company.
And so, all of this fundraising crap continues because no one calls it like it is.
Having been there before and now investing in startups and running the 500 Startups Mountain View accelerator, it’s time to call it how it is and change investor-entrepreneur relations. Going forward, my blog posts will be focused on how I’m trying to make the fundraising process better and more transparent for entrepreneurs and calling things as they are. Sign up for my newsletter, and look out for my next blog posts. Let’s change how this industry works!
Special thanks to Andrea Barrica and Chandini Ammineni for reading drafts of this post.