The most bashful question I get from other entrepreneurs is how to raise money. People ask privately or else whisper it. I think this is because entrepreneurs often feel as though fundraising is something they’re supposed to know how to do already.
I’ve closed 150+ investment transactions with more than 100 different investors, and I still feel like I’m figuring things out.
I think the bashfulness entrepreneurs feel is partially because of articles like the one above from EdSurge, a great publication I read that covers education technology news.
The article makes it seem as though money has been conjured out of thin air in a specific instant. Also, headlines like these are prolific, so not only is money appearing out of thin air, but it’s happening a lot, to people other than you.
Don’t worry. If you’ve never raised money before, you’re not supposed to be good at it. Also, if you’re just getting started, lower your expectations. No one “gets it right” the first time. You are going to have many false starts, and it’s going to take a long time.
I’m sorry fundraising is not as glamorous as the media makes it sound, but the good news is that fundraising isn’t a mystic tradition, it’s a concrete, controllable, and predictable craft.
Fundraising is a craft.
Let me quote MIT Lecturer Miro Kazakoff here. “Raising money utilizes a set of specific techniques and tools that can be studied, learned, and mastered over time.” It’s a craft. Just as making shoes requires a special tool for striking and shaping leather, so does raising money require specific tools for coordinating people. In other words, you can learn to do it well!
Let me give a specific example.
An example tool that I use: Google Forms
A process that I love is doing funding commitments online, and one of the tools that I use for taking commitments from Angel investors is Google Forms. I adapted this technique from how Launchpad, an Angel Investor Group, works with their membership for coordinating investments with dozens of people.
This particular tool is just one of many that I use when raising money. I picked this one to show here because I wanted to illustrate how straight-forward and pedestrian the tools can be at the end of the day. Even if you haven’t used it before, you could have a draft investor form set up on Google Forms in about 20 minutes.
Mastering the craft of fundraising takes many iterations, but lucky for everyone, funding your company doesn’t require mastery (phew). If you sit down and study the tools and techniques, and you have a good set of mentors and advisors, you can learn how to raise money. Plus, if you develop good technique, your investors will thank you for it, and invest in you next time too.
Raising money is a process. It doesn’t happen in an instant.
Like any craft, fundraising takes time to execute. Technically, funding happens in the instant cash shows up in your bank account (a truly magical moment.) But that magical moment was born on the backs of a hundred very non-magical moments that take time to orchestrate.
The trick to sticking with it, is to pick a process that works, put in the hours, and constantly remind yourself that you’re doing a good job, even when you are just writing one more set of emails. Those personalized, well-crafted messages are the hard work that generates success. The success simply comes later.
If you’re not sure enough of your technique to go heads down and work for two months with no cash movement, then get an advisor who has been there before to work with you on the process. It takes about 2-months to get everything set up, so even working full-time at full-speed, you shouldn’t expect to raise any money faster than that. In the mean time, you need to have faith, so get whatever advisors you need on board to give you that faith.
You raise money with networks, not products
One of the reasons it seems like everyone is able to raise money so quickly is because of how the media treats it. Take this article, for instance:
Doesn’t the article make it sound like Testive figured out how to make a new test-prep platform, and then that accomplishment drove the funding in the article? It makes a good story, but it isn’t true. Sure, the platform unlocked the ability to raise the money but it didn’t generate a single pixel of inbound funding interest. The funding was built on the back of hundreds of networking conversations.
Also, the article is dated December 10th. If you don’t know anything about fundraising, you might be inclined to say that the funding event took place on December 10th. It didn’t. It actually happened in June! We delayed the announcement until we wanted press for a product launch, and then we announced it.
It just goes to show that fundraising takes so long that you can delay an announcement by about 6-months and to an outsider, that timing will sound completely plausible.
A craft is something that can be learned.
One of the great features of a craft, is that it can be learned. There are processes, tools, and techniques that once mastered, make the journey faster, easier, and more enjoyable.
I’ve spent years honing my version of this craft, and I’d love to share it, but I need some inspiration, so I could really use your help. What did the above story make you wonder about fundraising? Please leave me a comment and let me know so I can build those thoughts into a future piece.
Thanks for reading 🙂 – TheRealTomRose