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When it comes to fundraising, everyone in the startup world has their own two cents. But, let's face it, hearing funding do's and dont's from Silicon Valley entrepreneurs doesn't always apply here in LA. Same goes for advice from Silicon Alley folks out East. Here's six pieces of advice from LA entrepreneurs who have raised funding from local and national investors to prepare you for your next raise:
1) Don’t take it personally
“There’s a whole host of reasons people can’t invest. Maybe the timing is wrong or maybe they just did an investment, but you just can't take it personally.” - Chownow founder and CEO Chris Webb
"You have to develop a thick skin and when one investor says no, move onto the next. It’s a bit like dating in that you have to find the right match. The right partner is out there, but it may mean that you have to knock on many doors to find them."- John Faieta, VP of Finance, UberMedia
2) Cast a wide net
“You just have to cast a very wide net - and asking for introductions - five to 30 who say no for everyone for one who says yes. Jeff Bezos needed 40 investors for his seed round of $1 million” - Webb
3) Think like a VC
“When fundraising, startups and entrepreneurs need to keep the perspective and expertise of VCs in mind - they're in their current roles for a reason! These investors tend to meet with more companies in one week than most entrepreneurs could even think about creating in their entire lifetime. As a result, these investors can offer a unique perspective on the market and ways that can impact a business to be more successful.” - Robert Blatt, CEO, MomentFeed
4) You shouldn't be educating your investors
“We have found that it is best if you seek out investors that are familiar with the space you are in. If an investor is not knowledgeable about your market, it is unlikely they will invest. They may listen to your pitch but they generally won’t lead or participate materially in a round. You can generally get a sense for this in the questions they ask. If they key in directly on your pain points, there is a good chance they understand your position and could be a likely investor. If they ask superficial questions and the pitch is really educational in nature, it is likely they won’t be. The trick is to narrow your search to those investors you think you’ll have the best chance to close.” Faieta
5) A bigger name doesn’t always mean better
“It’s nice to have a big investor involved to bring more than just a check. The downside is if they lose interest in you then you don’t have much to show other investors. It is a big gamble taking investment from a big-name investor in a seed round; it’s a huge signaling risk.” - Webb
6) Be transparent
"The key is to be extremely transparent, the more you can align yourself with your investors the better. How do we find somebody that sees what we see in the market and believes in the bigger oppotunity? We continue to be very transparent if we hit bumps in the road. I send out a quarterly update. Some investors are more active and I tend to leverage them independently. I had an investor stop by recently and spend a half hour talking about how he could help." - Bitium CEO Scott Kriz
