It’s a (Fundraising) Walk Off
The topic of fundraising comes up in nearly every conversation we have with founders, whether they are launching a private equity fund or looking to scale a consumer brand. Yes, it is a grind, but it is possible to approach it thoughtfully and methodically. We weigh in on two approaches: targeting specific investors and reaching out to everyone between you and Kevin Bacon.
You have a great idea—awesome! If you are incredibly lucky, you have stashed away enough money to start bringing your vision to life. But unless you have unlimited resources at your disposal (if so, there are a lot of women founders who would like to speak with you!), at some point you are going to need to raise money.
Going out to the market is, let’s just say it, not everyone’s favorite thing. Most founders are not sales people by training. Many of them, including lawyers like yours truly, were raised in a professional environment that looked down upon sales as somehow less professional. But people with that attitude are only hurting themselves. The reality is that anyone who starts a business, or runs a business, is a sales person whether they like it or not.
For those founders who are moonlighting as newly-minted sales trainees, we wanted to share some information on two basic approaches to fundraising.
A friend of a friend of a friend told me to reach out…
Let’s start with the most common: everyone and their mother. I am in no way belittling this approach. It is hard and it takes time, but this is how most founders do it and it can work.
For those in this camp, here is our advice. First, get organized. Much of sales is simply about starting and staying organized. Who is on your list? When did you speak with them last? When will you contact them next and what will you contact them about? It is the extremely rare case that someone will write you a check after one conversation. People need time to settle into the idea that you will be an excellent steward of their capital.
Second, go big or go home. You can’t run through your contact list and then stop. We are not talking about cold calling here (although, frankly, I admire those who are up to this challenge). What we are talking about is asking for referrals like your life depends on it, because the life of your company does. Every conversation you have should end with the question, who else do you think I should talk to?
When I launched All Places, I was lucky enough to have many people in my network ask me how they could help. My first inclination was to turn them down. I mean, I didn’t want to burden them with helping me, right? But when I got over that (thank goodness) my ask was almost always, well, if you know any women who are launching a new fund or scaling up their business, could you introduce me? And they did! Being helpful makes us all feel good, so let your network help you. Just be really clear with them on how they can do it.
You may not know this yet, but you are my perfect investor. ;)
The other approach is less common but one that everyone should at least consider: making a list of your ideal investors and starting from there. This approach takes considerably more thought and planning upfront, but can ultimately be more fruitful.
It’s harder than it sounds to make a list of your perfect investors because you first need to figure out what your “perfect investor” even looks like. This is not a list of the richest people in the world. This is a list of people who are a perfect match for your business—they are your perfect investor because you are their perfect investment. Putting this list together requires you to think about what your company has to offer and who will benefit from it the most.
As an example, let’s say you are launching a pre-seed fund focused on companies making beach umbrellas (I am not recommending this). What do you have to offer? Hint: it’s not just the general value proposition of offering a return on investment. Who else might benefit from what you are doing and the knowledge you are acquiring? There are companies and funds that invest in adjacent products, such as beach chairs. There are investors who focus on later stage umbrella manufacturers and being in your fund will provide them information on early stage trends and companies. There are people who might connect to the impact side of what you are doing, like helping to prevent skin cancer. I think you get the point: figure out what you have to offer—all of what you have to offer—and who will benefit from it.
Once you have your list, and a compelling story about why someone might be your perfect investor, then you just have to find someone who knows someone who knows them. One added perk to finding people this way is that your pitch is not just about your company: it’s about your investor. You sought them out specifically and we all like to feel special.