Finance Startup

Startup Fundraising Is No Fun. Here’s How to Make the Most of It.

Whoever said there are no participation trophies in life never tried to raise money for an early-stage company. If you’ve taken a business idea far enough that its continued growth depends on an infusion of outside capital, you deserve to pat yourself on the back.

And then get back to work. Because raising money for a startup is difficult, time-consuming work with no guaranteed payoff. You’ll want to do whatever you can to increase your chances of success and avoid burnout before you’ve achieved your goals.

These startup fundraising hacks can help. Try them today.

1. Don’t Get Ahead of Yourself

Don’t start fundraising before you need to. True, not every entrepreneur has the resources or risk tolerance to bootstrap until they and their first- and second-degree contacts are completely tapped out, but that doesn’t mean you can’t take self-funding a bit farther than you’d like.

Nearly as important is your early fundraising rounds’ structure. You want to be very careful with your equity if at all possible. Debt financing, though not without its own drawbacks, preserves your leverage as a founder and creates fewer weak points for your team. 

2. Seek Out Funders Whose Professional & Life Experiences Align With Yours

Don’t bang your head against a concrete wall. Load the odds that you’ll break through by seeking out funders whose professional and life experiences roughly match your own. So, if you’re seeking capital for what you believe to be the next fintech unicorn, look to investors like Green Dot founder and former CEO Steve Streit, who grew his once-scrappy startup into one of the largest financial technology platforms in North America.

There’s no “correct” or “incorrect” way to go about this. You’ll always want to look beyond funders’ CVs, so intuition will end up playing a decisive role in some outreach decisions.

3. Be Realistic About Your Company’s Valuation and Growth Prospects

The thing about your “fintech unicorn” is it’s probably not a unicorn. That’s not to say it doesn’t have real growth potential, just that it’s unlikely to fetch a billion-dollar valuation before you exit. That’s fine, provided you’re realistic about your company’s prospects and tailor your ask accordingly.

4. Be Prepared to Show Traction Early

Even non-unicorns need to show prospective investors that they’ve gained traction in the market, and sooner than many founders realize. If your startup is still pre-revenue, you’ll need to use indirect metrics like waitlist sign-ups to show investors that your idea has legs.

5. Begin Networking Well Before You’re Ready to Make the Ask

Like seeking out funders whose experiences align with your own, serial networking increases your odds of getting to “yes” before you’re ready to throw in the towel. So, begin networking with potential investors — both virtually and via industry and investor confabs in the real world — months if not years before you expect to begin actively seeking outside capital. If all goes well, you’ll have a long list of pitch targets that you can then segment as you wish ahead of the first round.

No-Drama Fundraising?

Startup fundraising won’t ever be easy or stress-free. It certainly won’t ever be fun. But it can certainly be more painless than it is right now.

These strategies all work toward that goal. By seeking out investors who understand and appreciate what you’re doing, building a professional network well before you’re ready to make an ask, and developing a pitch that really stands out, you’ll make the fundraising process just a bit more manageable.

Maybe that’s all you can ask for. If you really do need funding to sustain your growth, it’s not like you have a choice.