After being in the trenches, entrepreneur Dave Kerpen shares his key learnings about fundraising.
Writing my first book was the hardest thing I've ever done in my professional career. That is, until I raised money earlier this year for my latest company, Likeable Local. It was more difficult than anything I'd imagined. I assumed because I had built a successful, two-time Inc. 500 company already that investors would throw money at me.
That couldn't have been further from the truth. Investor after investor turned me down, via email, text, phone and in person. Some were nice about it, and some were quite nasty. I persevered and eventually, after four grueling months, raised $910,000 and was off to the races. Here are three secrets to successful fundraising that I learned along the way:
1. It's all about who you know.
The single most important factor in securing a meeting with an investor is a warm introduction from a mutual connection. A cold call or communication has little to no chance of securing a meeting and, even if you get a meeting, even less of a chance of leading to an investment. Instead of cold communications, work your network. Check all of your connections on LinkedIn, and then more important, all of your connections' connections. Use your college and high-school alumni networks to find investors. Use AngelList to find your friends who are interested in investing--you may be surprised at who you see there. Finally, make it super easy for your friends, family and acquaintances to make introductions by writing it for them.
2. Tell, don't sell.
An advisor told me one way to build a pitch deck, and then another advisor told me a different way to build the same pitch deck. This process happened about 12 times until finally I settled on a pitch deck I liked. But once I started actually pitching, I realized that the pitch deck isn't even all that important. Like many things, it's your ability to tell a compelling story that matters most. Sure, you need financial projections and product/market fit and your team bios, but ultimately, your success depends on your ability to tell an amazing story of why you're doing what you're doing and where you're going with your vision.
3. Persistence is key.
If at first you don't succeed, try, try again. And try, try again I did, after rejection upon rejection. I was feeling very down, until one of my advisors told me that even Twitter founder Jack Dorsey, even after Twitter's massive success, struggled at first to find investors for Square. Of course, he persevered to raise money for a company now worth billions of dollars--and I persevered to eventually raise $910,000 for Likeable Local--and you too can persevere, as long as you're persistent.
There are many intricacies to fundraising, but these are the three things I wish I had known when I began to fundraise. If you've fundraised before, what did you find was most important in your success? And if you're fundraising now, what are your biggest challenges? Let me know in the Comments section below.