Raising money for a startup is something I really want to help demystify for first time entrepreneurs who have no idea where to get started.
I shared a few of the ingredients to the secret sauce of raising money throughout several blog post covering the topic over the last 3 months.
One ingredient I noticed that was missing was timming.
Timing is the one ingredient that you must nail if you want to succeed.
To help bring clarity to this critical fundraising topic, we need to look no further than a blog post written by the founder and CEO of Buffer, Joel Gascoigne.
What I’ve learned from talking with some very experienced and highly respected successful serial entrepreneurs is that there are only really two good times to raise funding. The first is when you have just an idea, and you’ve not even started to build. The second is when you have a product with good traction you can show to investors.
Gascoigne goes on to point out that first time entrepreneurs have a 0% chance at success at the idea stage because investors are looking for serial entrepreneurs with multiple successful exits as the deciding factor for investing in an idea.
So for first time entrepreneurs, the only option you have is to raise money when your product has good revenue or user traction depending on your business model and market.
How much? Read this post for specific numbers you must hit before you have a good chance to raise VC money.
Probably the one most important thing for an entrepreneur to do is to stay positive. Sometimes this can be difficult when facing 100 nos in a row. However, if you understand the law of averages in the scenario you are facing, 100 nos may mean you are 90% of the way to the one yes you need to succeed. If you knew this up front, it would be easy to stay persistent and positive after each no.
This is more or less the insight I gleaned from reading a blog post written by the founder & CEO of Buffer, Joel Gascoigne. Joel calls this concept Ratio Thinking. He states:
As soon as I accepted that the whole world works in ratios, that’s when it became easier. Knowing that success happens in ratios allowed me to go ahead and send that email, without worrying about not getting a response, about ‘failing’.