Five lessons for founders
Fundraising is something all of us as entrepreneurs worry about constantly and discuss pretty much whenever we meet.
A lot of people think you should meet for the first time with a VC or a potential investor with your pitch in hand, ready to start the process. I disagree.
Raise Long Before You Raise
Scrap around and find a way to get warm intros early. It’s like picking a partner for anything important – tapping into your network and doing your homework on who is interested in your space, who’s actually insightful in the space and good to work with, means you’ll have a lay of the land before you desperately need money.
Why would they want to meet with you? Well, figure out what you know about the industry that’s interesting to them, what’s intrinsic to their portfolio companies, and make that the hook. Once they understand your capabilities, you’ve started the process.
Like any relationship, it takes some care and nurturing, but it’s worth it, because the relationship sets the foundation for them to take that leap of faith when you’re bringing them an idea to fund. Even if they’re interested in the space and the product is intriguing, the leap of faith is team x product x market.
It’s not additive, it’s multiplicative and if any of them are zero, it takes the entire equation down to zero. So, especially in this anemic macro-economic environment, it’s a lot less risky for them if they feel like they already have a sense of the team.
If you know them before you take money from them, it’s good after the money hits the bank too. You start with higher credibility and a better understanding of one another’s working styles before the first board meeting. You have a more acute understanding of their beliefs around the space and there’s a foundation of trust and benefit of the doubt in the face of any conflicts.
In short, if they know you and trust you, they’ll be a lot more open to your ideas after the funding hits and a lot more likely to make that leap and write you the check in the first place. It’s not rocket science, but it does take a good amount of elbow grease up front and a substantial amount of prep and time.
I have yet to hear a CEO or founder say they regret firing someone too quickly. Seriously. We have a rough rule of thumb – if there’s a team member I’ve had a conversation five or more times in about the span of a month (and that includes other people coming and giving feedback, me having discussions on what to do for them with co-founders, etc), we know we have a serious problem.
The worst thing we can do is let that problem fester. We know we either have to resolve it fast, or let the person go.
There are a hundred reasons we wait too long. It’s the part of my job that I hate the most. I hate it so much it triggers a physical reaction for me. I know and care about every single member of our team. I know about their sick parent, their spouse that’s having trouble finding a job, all of it, and I take all of it home with me.
The decision to let someone go is never made lightly and it always costs something emotionally. The key indicator for me is if thoughts of the situation or person come flooding in right before bed or right when I get up, I already know what needs to be done, I just don’t want to do it. But that’s exactly when the team needs me to suck it up and get it done for them.
Walk and Talk
I get 6-8 miles a day by walking during my one-to-ones and pacing during calls. Headsets are a great thing. This is most of my exercise for the week, and my doctor says I’ve never been in better cardiovascular shape. Seriously, my resting heart rate is in the low 60’s now!
But, the biggest benefit is that people feel more free to talk about the hard things if you’re not sitting across the table, staring at them. If I really want to hear what someone thinks, I’ll ask them to walk with me.
Now the whole team does this with one another and it’s become part of our culture. I also think people have better ideas when they’re walking and the blood is flowing. I find that walking side-by-side, facing the same direction, it has the effect of making it feel more like we’re solving a problem together, or that the solution or idea is ours as opposed to mine or theirs.
The Hidden Benefits of Your Advisory Board
Most people think of an advisory board as just advising on functional areas along with some strategy. Of course, we’ve included domain experts to help us in areas where we need it – and there are plenty of those – but there are less obvious benefits to an advisory board, too.
The first is recruiting. The referral aspect of this is obvious, as advisors all have their own extensive networks. The bigger bonus is having them help you close on a candidate you really want. From the candidate’s point of view, they’re more objective than an employee or an investor in the company. They’re also a great conduit for ongoing correspondence with the candidate after you’ve made the offer.
You can have contact with a potential hire every 24-48 hours without making them feel like someone from the company is bugging them or pressuring them to make a decision.
The second benefit is on the fundraising side. Every investor has people that influence their opinions and if some of your advisors happen to be those people… That they’re willing to go to bat for you and support you is a massive reputational benefit, which is something that can’t be overstated when you’re asking a person to make that leap of faith. The third benefit is that they’re usually more than happy to spread the word when you go to press, a time when it’s important that all the talking doesn’t come from you. You need as many different types of advocates as you can get. The right group of advisors is chomping at the bit and raring to go at press time.
Don’t Discount the Kitchen Cabinet
There’s only one CEO but there are a lot of team members. There are days where you give and give and end up feeling a little emotionally tapped out.
That’s where my ladies come in, my Kitchen Cabinet. It’s a group of women that acts as an unofficial group of advisors. It’s really a safe place where we understand each other and have permission to be be vulnerable.
Problems become a lot less scary when you can talk them through. We’re available to each other by phone pretty much anytime and we get together for slumber parties once a quarter. We spend a whole day and night just kicking back. We eat, drink, talk, and decompress. We support each other.
These get-togethers aren’t just a couple of hours of light conversation – having a large chunk of time to relax into means you can really get into things and help each other.
I’d urge you to pick a handful of savvy, awesome, and trustworthy women you feel would gel together, kick your significant other and/or kids out of the house for a night, and slumber party it. Spending a day and night away is big investment but it has a massive payoff from an energy and happiness perspective.