This is the last post of our 10-week “Funding Fit” blog series, and it’s hard to believe that ten weeks have gone by so quickly. Hopefully our weekly tips have given you a better sense of what to expect in the fundraising process.
Here’s a recap on the full series:
Tip 1: Can you pitch in a tweet? Tip 2: An idea is not a product Tip 3: Fundraising is like another full-time job Tip 4: Build a product the market wants Tip 5: How much do you want to raise? Tip 6: Get investor referrals through your network Tip 7: The challenges with bank lending Tip 8: Optimize your online presence Tip 9: Be professional
In reality, fundraising never stops for entrepreneurs, and we can probably go on to write another 10 funding tips easily. But at the end of the day, we believe what gets entrepreneurs through this very long and hard process is their passion.
Remember what it’s all about? Why did you start your business?
Maybe it was financial freedom. Maybe it was to be your own boss. Maybe it was the flexible schedule. But most likely it’s because you were passionate about the problem you’re solving.
It was your passion that gave you the motivation and courage to be a startup founder, which led to building a team, creating a product, and delighting your customers.
Rekindle your passion because it can help you tremendously when you are fundraising.
Investors want to see passion and dedication
This seems obvious but think about how you can convey your level of enthusiasm throughout your interactions with potential investors. Regardless of the financing structure, the quality of the founding team is a very important consideration for investors.
Before you seek financing, take a moment to think about why you started the business and how you feel about it now that you’re a bit further down the road. While investors may not ask directly about your level of enthusiasm, if you’ve thought through all the reasons why you are still in the game, you’ll be much more convincing when you talk about the future success of your company.
“I love what I do”
Many entrepreneurs have built a successful business after an experience that made them think, “This is what I want to do for the rest of my life.”
If you don’t love what you’re doing, why would you not go back to a steady day job with fewer risks? When your company hits a major obstacle, will you care enough to persevere?
“I know this industry”
A lot of the entrepreneurs we talk to have deep expertise and connection within a specific industry. Often, they suffer the same pain point over and over (inefficiency, lack of data transparency, unsophisticated technology just to name a few) and finally decide to develop a product solution to address it.
Equity investors look for industry fit. Other than investing in a company that has a potential big market, venture capitalists also want to make sure they can add value to the founding team. And often times, the fit comes from sharing the same passion and knowledge of an industry space.
“What I do is important”
A common theme among successful entrepreneurs is that they have a sense of purpose. They are not just in it for the financial gain; they feel that what they do is important.
Purpose-driven entrepreneurs are often very dedicated to their cause and dedication is a key indicator for future success. On the other hand, if investors sense the founders are losing their sense of purpose, they may worry that critical team members will bail before they see the return on their investment.
“I believe in this business”
Every entrepreneur encounters obstacles and most have times that they question whether their company will make it. Successful entrepreneurs also harbor these doubts, but their belief in their potential for success is bigger than their doubts. If you don’t believe in your business, why would your potential investors?