As a corporate lawyer in Silicon Valley, helping connect entrepreneurs and business owners to funding sources is one of my primary roles. For middle market companies and savvy serial entrepreneurs this usually means introducing them to venture capital or private equity funds focused on their industry. For new entrepreneurs, angel investors may be a better option.
I recently ran across a down-to-earth piece on start-up fundraising on the Columbia Business School website by angel investor Alicia Syrett that contains tips for the entrepreneur who is just getting his or her feet wet. Alicia's article got me thinking about what I say to new entrepreneurs who come to me for funding advice.
The first thing I'd say to that young person starting out is that when looking for investors don't think you'll conquer Silicon Valley in the first day – start with who you know. One easy place to start is your alumni network – those college or business school or law school bonds are strong and your friends and former classmates will likely be interested in what you're doing and be willing to tap their networks on your behalf.
It's also wise to "think local." Who are the founders, entrepreneurs and business advisors and professionals (i.e. attorneys) who you already know in your region and business ecosystem where it will be easier to get your foot in the door? Once you start getting a little traction with these more approachable folks, you can ask them to help make introductions to potential business partners, consultants, employees and investors.
Remember that a rich network is not built in a day. You have to work at it. Raising capital is a long term goal. As Alicia says in her article, "think of every meeting as an opportunity to advance your company with an investor." Get out there and meet people in different contexts – if you're pioneering a new area then think of yourself as a thought leader and act like one – being an active player in your own start-up community can open up many doors.
What are the things that you shouldn't do? Here it's mostly a matter of common sense. Alicia highlights a few of the most egregious things to avoid. For example, be sensitive to your online profile – being a controversial figure on social media is not likely to endear you to the investing community. Manage your expectations . . . don't expect a check at the end of the first meeting with an investor and don't think that a busy investor is going to respond over Christmas break. Don't be discouraged if your first few meetings result in "no thanks" or a lack of interest. Remember, a no can be part of the road to yes.
In building a vibrant network, staying at the leading edge of your industry, and talking up your ideas to potential investors and partners you are positioning yourself for success. But you also need to be realistic about your ideas and business model and be clear about how you stand out from the crowd. Successful entrepreneurs didn't get there overnight.
That's it for this August end-of-summer edition. Can't believe the kids are already back in school. Have a good Labor Day holiday. Back at you next month.
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