Mo Money Mo Problems
Since our funding news broke today (so much for embargoes…) I thought I’d share a few best practices I learned about fundraising along the way.
1) Leverage your network. It is easy to get face time with VCs but hard to get mind share. The best intros typically come from execs of their portfolio companies and other VCs. Initially ask for advice not money.
2) Start local. The west coast is the best coast for raising capital, but you should start by seeding the local market. If you’re from Austin and you march down Sand Hill Road before getting interest from the local funds, you’ll be embarrassed when they ask you, “What does [AV] think?” It helped a lot being able to say, “Ask them.”
3) Appear bigger than you are. I’m hesitant to say “fake it till you make it” but you need to plausibly believe you’re the next Google. Highlight the metrics that put you in the best light. For us that was traffic, page views and downloads, not revenue.
4) Sell your stock, not your product. Having worked on a few public offerings, I learned that you draft the prospectus with a focus on selling stock, not product. Investors need to understand whatever you are selling and how you’ll make money, but it is more important to convince them that the opportunity is to invest in your company.
5) Get to the right partner at the right time. An associate who loves you can be your best champion but make sure you move the conversation up to the partnership before you need the money. When a decision needs to be made in a compressed timeframe, it is often a “no”.
