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Study Hall: Mastering the Art of Fundraising · Earn Your Leisure

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  Speaker 1: Earners.
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  Speaker 2: This episode is brought to you by P and C Bank,
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  Speaker 3: When I started raising money, I was doing everything wrong.
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  Speaker 3: And one of the first rules that I say in
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  Speaker 3: my book Fundraising is, uh, don't say you're fundraising. As
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  Speaker 3: the second you say that you're fundraising and you're on
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  Speaker 3: the clock, meaning people are gonna be like, all right,
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  Speaker 3: well his round should blow up and be over soon.
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  Speaker 3: Because if this is a hot company, I'm gonna have
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  Speaker 3: a limited window. So if in two weeks your round
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  Speaker 3: isn't done, people are gonna be like, why aren't others investing?
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  Speaker 3: And so they're gonna you know, they're gonna walk away.
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  Speaker 3: And if you build up a bunch of no's around
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  Speaker 3: your company people are not investing, then that's you know,
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  Speaker 3: the network becomes aware that all these people didn't invest,
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  Speaker 3: and you're kind of screwed. So, you know, one of
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  Speaker 3: the first lessons that I learned from a great mentor
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  Speaker 3: of mine, his name is Michael Cartery, as this company
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  Speaker 3: play Co, very successful gaming company. He was giving some
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  Speaker 3: talks on fundraising, and he taught me this, just don't
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  Speaker 3: say you're fundraising. Just go build relationships first. Go and
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  Speaker 3: meet investors and get them excited about who you are
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  Speaker 3: as a person, and casually get them excited about your
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  Speaker 3: idea instead of going and saying I'm pitching you, which
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  Speaker 3: automatically puts them on a pedestal versus you.
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  Speaker 1: Right, you're not peers anymore.
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  Speaker 3: Now they're on a pedestal, and so it sets the
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  Speaker 3: dynamics incorrectly from the beginning. You're not building a relationship
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  Speaker 3: and you can get this domino effect of nose which
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  Speaker 3: could really screw you before you even begin.
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  Speaker 1: So I did that in the beginning. I learned from
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  Speaker 1: those mistakes.
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  Speaker 3: I had some great mentors who helped me reshape my
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  Speaker 3: fundraising strategy.
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  Speaker 4: So you said something, or you say when you said,
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  Speaker 4: if you want money, ask for advice. If you want advice,
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  Speaker 4: to ask for money. Yep, that's how I said it correctly. Yeah,
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  Speaker 4: so can you elaborate on that.
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  Speaker 3: Yeah, it's a pretty common adage in Silicon Valley and
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  Speaker 3: so I certainly didn't invent that. But uh, if you
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  Speaker 3: go to someone and you say, hey, I want, you know,
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  Speaker 3: to pitch you for funding, They're most likely going to
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  Speaker 3: give you advice. It's going to say, hey, you know,
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  Speaker 3: I'm not able to fund you right now, but how
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  Speaker 3: about I give you some advice. Whereas if you go
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  Speaker 3: to them and you show a genuine interest in their advice,
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  Speaker 3: but also, potentially even more importantly, you really impress the
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  Speaker 3: shit out of them with who you are, and that
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  Speaker 3: person has money or is an investor, they're going to
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  Speaker 3: organically want to invest in you.
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  Speaker 4: So let's say I have a company and I'm trying
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  Speaker 4: to raise money. I know a very wealthy guy. Instead
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  Speaker 4: of saying, hey, do you want to you know, hand
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  Speaker 4: my pitch to give me money to put my startup,
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  Speaker 4: and we say, you know, I have this idea, da
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  Speaker 4: da da, And I really respect, your your opinion. Would
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  Speaker 4: you want to just hear about it just to kind
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  Speaker 4: of give me some feedback on it? And then you
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  Speaker 4: just do a really great job presenting it, and then
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  Speaker 4: they're like, damn, I gotta be involved in this situation,
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  Speaker 4: but you're not. You don't look like you're so eager
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  Speaker 4: to just only get their money. You really genuinely want
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  Speaker 4: their advice. But then by you not wanting to take
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  Speaker 4: their money, they want to give you money even more.
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  Speaker 3: Exactly, this approaches a win win makes it more comfortable
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  Speaker 3: for them, right because they don't like saying no to you.
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  Speaker 3: It makes it more comfortable for you because if if
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  Speaker 3: you're doing a good job, they're gonna want invest. If
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  Speaker 3: you're talking to an investor whose job it is to invest,
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  Speaker 3: who invests, they need you just as much as you
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  Speaker 3: need them. So if you're sitting in front of them
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  Speaker 3: and they're like, oh shit, this dude is gonna fucking
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  Speaker 3: kill it, they will pro actively say how can I
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  Speaker 3: get involved? And they're going to be just as likely,
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  Speaker 3: if not more likely, than if you came to them
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  Speaker 3: explicitly trying to pitch.
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  Speaker 2: How intentional are you about it? Before you even go
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  Speaker 2: to get the advice. Are you strategically targeting the people
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  Speaker 2: that you want to get the advice from? Like, is
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  Speaker 2: there a list? And it's like if I could meet
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  Speaker 2: or get in front of this ten or twenty people
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  Speaker 2: this month, that's my target. Like how did you go
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  Speaker 2: about it?
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  Speaker 3: Well, in the beginning, you know, beggars can't be choosers, right,
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  Speaker 3: so you kind of will try to get meetings with
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  Speaker 3: anyone who has money, right.
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  Speaker 1: I mean, now you.
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  Speaker 3: Can be as you go later, Sage, you could be
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  Speaker 3: a little more picky, and you should be picking. I mean,
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  Speaker 3: you should try to avoid putting sharks on your cap
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  Speaker 3: table who are at odds with you or who are
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  Speaker 3: very short termistic and they're going to create issues for you.
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  Speaker 1: You should avoid.
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  Speaker 3: Those to the maximum extent possible. But you know what
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  Speaker 3: I would do is I would try to build my
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  Speaker 3: network in a very strategic way, so I would host
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  Speaker 3: like happy hours or dinners. I'd do this on a
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  Speaker 3: college budget. I mean I didn't spend I spent minimal
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  Speaker 3: money on it. It's like a couple hundred bucks that
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  Speaker 3: i'd throw together after a few this VC would sponsor them,
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  Speaker 3: so they'd throw down three four hundred bucks on these
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  Speaker 3: dinners right and be at my place or you know,
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  Speaker 3: I didn't spend a lot of money and so I
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  Speaker 3: was building network. So first step is build network if
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  Speaker 3: people have interconnectivity to investors and play the long game.
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  Speaker 3: Build a relationship with these folks casually, make sure all
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  Speaker 3: these people in your network are impressed by you, right casually,
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  Speaker 3: and then at some point you can make the asks
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  Speaker 3: or you can say, hey, I know this person invests
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  Speaker 3: in your company. I think they have this relevant experience
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  Speaker 3: what I'm doing. Do you mind making the intro? And
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  Speaker 3: so you do that with you know, all founder friends.
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  Speaker 3: People will raise money before you're trying to build this
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  Speaker 3: network to cultivate and then eventually make the ask for
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  Speaker 3: the introductions and uh, you know you're just doing this
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  Speaker 3: on repeat as much as possible.
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  Speaker 4: So you said something also where it's like you always
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  Speaker 4: want to avoid try and get it know.
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  Speaker 1: Yes, you don't. You never want to get to know.
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  Speaker 3: This is a little bit of the opposite advice that
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  Speaker 3: some would give you.
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  Speaker 1: Oh you want to get to know quickly. Yeah, that's
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  Speaker 1: that's what I've heard.
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  Speaker 4: I need not know because I come from sales, So
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  Speaker 4: that's what I heard all the time. Was like a
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  Speaker 4: no is always one step quicker to a yes, or
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  Speaker 4: get to the know early or stuff like. But so
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  Speaker 4: that's an interesting.
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  Speaker 1: It even it feels contradictory.
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  Speaker 2: It's like because you're going this is trial, right, Like
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  Speaker 2: you're saying this because you've got nos.
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  Speaker 3: Yeah exactly nos uh spread. So you know, investor community
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  Speaker 3: or the community you're raising within is small, and so
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  Speaker 3: you don't want somebody to go to someone you just
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  Speaker 3: pitched and that person say be like I passed, right you. Now,
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  Speaker 3: if you follow this strategy, you may have had a
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  Speaker 3: meeting with that person, it may not have went well,
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  Speaker 3: so they may not have invested, but you were never
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  Speaker 3: pitching them, so they don't have the ability to say
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  Speaker 3: I passed because you never went to them officially asking
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  Speaker 3: them for money.
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  Speaker 4: No, it's actually makes a lot of sense psychologically, because,
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  Speaker 4: like you said, it becomes a virus once one person
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  Speaker 4: says no and then another person acts. This person even
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  Speaker 4: if they want to say yes, it's like, well why'd
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  Speaker 4: you say no?
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  Speaker 1: Right?
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  Speaker 4: And then it's like I don't want to be the
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  Speaker 4: person that says yes and be an idiot when my
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  Speaker 4: friend who I'm I have a high level of respect
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  Speaker 4: for said no, so more likely to lean towards the
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  Speaker 4: know because that's just where the crowd is going exactly.
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  Speaker 3: And so what you're trying to create is a crowd
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  Speaker 3: momentum behind you. The hardest one to get the fall
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  Speaker 3: is the first one. And you have to get this
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  Speaker 3: person to fall just through your character and your pitch
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  Speaker 3: and this strategy that I'm outlining, and then that one
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  Speaker 3: will hopefully turn to two or three once you have
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  Speaker 3: like three people is the magic number where three people
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  Speaker 3: have now casually without you saying you're fundraising, have told
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  Speaker 3: you they want to get behind you. Now you can
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  Speaker 3: start a fundraising round with the wind at you're back.
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  Speaker 3: Because you could say, the way I like to sequence
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  Speaker 3: it generally is even when these people say I want
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  Speaker 3: to back you, I won't say, okay, how much, here's
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  Speaker 3: the docs you want to then take a step back
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  Speaker 3: once again and say, okay, I'm honored. I'd love to
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  Speaker 3: work with you. Let's do another meeting. I'd love to
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  Speaker 3: get your advice on these other things. I'd love to
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  Speaker 3: learn how you work with founders. I like to, you know,
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  Speaker 3: have this discussion on what working together will look like.
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  Speaker 3: I asked for references say hey, can I speak to
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  Speaker 3: a couple other founders you've worked with? So, uh, you know,
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  Speaker 3: when someone expresses interest, you don't.
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  Speaker 4: Just automatically jump and say hey, yeah, I'm ready.
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  Speaker 1: Yeah exactly.
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  Speaker 2: Yeah. I think that probably feels like the biggest mistake
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  Speaker 2: that most people make because you're in so much desperate
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  Speaker 2: not desperate need, but you're in need of the funds.
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  Speaker 2: And so once you feel it inklink of somebody who's interested,
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  Speaker 2: it's like, I gotta jump, you got it.
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  Speaker 3: Desperate, you can't. You can't show the desperation, even if
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  Speaker 3: you are. I've been desperate many times in my career,
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  Speaker 3: even beyond us our seed round, But you can never
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  Speaker 3: show it because this is what investors are. Just their
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  Speaker 3: job is to sniff desperation, right. They're experts at this,
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  Speaker 3: so they can get the best deal possible, So.
• 12:06
  Speaker 1: They can get the best deal possible. Exactly.
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  Speaker 3: So, no matter what desperate situation you're in, I mean,
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  Speaker 3: you've got to come in with confidence. It's as simple
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  Speaker 3: as that. I mean, most people won't give this advice,
• 12:18
  Speaker 3: but I mean it's just the truth.
• 12:20
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