Latest / Earn Your Leisure / Mastering the Art of Fundraising

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Mastering the Art of Fundraising · Earn Your Leisure

• 0:00
  Speaker 1: When I started raising money, I was doing everything wrong
• 0:07
  Speaker 1: and uh, like, one of the first rules that I
• 0:09
  Speaker 1: say in my book Fundraising is, uh, don't say you're fundraising.
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  Speaker 1: As the second you say that you're fundraising and you're
• 0:19
  Speaker 1: on the clock, meaning people are gonna be like, all right,
• 0:22
  Speaker 1: well his round should blow up and be over soon.
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  Speaker 1: Because if this is a hot company, I'm gonna have
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  Speaker 1: a limited window. So if in two weeks your round
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  Speaker 1: isn't done, people are gonna be like, why aren't others investing?
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  Speaker 1: And so they're gonna, you know, they're gonna walk away.
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  Speaker 1: And if you build up a bunch of no's around
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  Speaker 1: your company people are not investing, then that's you know,
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  Speaker 1: the network becomes aware that all these people didn't invest,
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  Speaker 1: and you're kind of screwed. So, you know, one of
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  Speaker 1: the first lessons that I learned from a great mentor
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  Speaker 1: of mine, his name is Michael Cartery, as this company
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  Speaker 1: play Co, very successful gaming company. He was giving some
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  Speaker 1: talks on fundraising again he taught me this concept, just
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  Speaker 1: don't say you're fundraising. Just go build relationships first, go
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  Speaker 1: and meet investors and get them excited about who you
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  Speaker 1: are as a person and casually get them excited about
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  Speaker 1: your idea instead of going and saying I'm pitching you,
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  Speaker 1: which automatically puts them on a pedestal versus you. Right,
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  Speaker 1: you're not peers anymore. Now they're on a pedestal, and
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  Speaker 1: so it sets the dynamics incorrectly from the beginning. You're
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  Speaker 1: not building a relationship and you can get this domino
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  Speaker 1: effect of nose which could really screw you before you
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  Speaker 1: even begin. So I did that in the beginning. I
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  Speaker 1: learned from those mistakes. I had some great mentors who
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  Speaker 1: helped me reshape my fundraising strategy.
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  Speaker 2: So you said something or say, when you said, if
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  Speaker 2: you want money, ask for advice. If you want advice,
• 2:02
  Speaker 2: ask for money. Yep, that's that's how I said it correctly. Yeah,
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  Speaker 2: so can you elaborate on that.
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  Speaker 1: Yeah, it's a pretty common adage in Silicon Valley and
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  Speaker 1: so I certainly didn't invent that. But uh, if you
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  Speaker 1: go to someone and you say, hey, I want, you know,
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  Speaker 1: to pitch you for funding, They're most likely going to
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  Speaker 1: give you advice. It's gonna say, hey, you know, I'm
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  Speaker 1: not able to fund you right now, but how about
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  Speaker 1: I give you some advice Whereas if you go to
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  Speaker 1: them and you show a genuine interest in their advice, uh,
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  Speaker 1: but also potentially even more importantly, you really impress the
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  Speaker 1: shit out of them with who you are. And that
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  Speaker 1: person has money or is an investor, they are going
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  Speaker 1: to organically want to invest in you.
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  Speaker 2: So let's say I have a company and I'm trying
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  Speaker 2: to raise money. I know a very wealthy guy. Instead
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  Speaker 2: of saying, hey, do you want to you know, hand
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  Speaker 2: my pitch to give me money to put my startup,
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  Speaker 2: it will say, you know, I have this idea, da
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  Speaker 2: da dad, and I really respect your your opinion. Would
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  Speaker 2: you want to just hear about it just to kind
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  Speaker 2: of give me some feedback on it. Then you just
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  Speaker 2: do a really great job presenting it. And then they're like, damn,
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  Speaker 2: I got to be involved in this situation, but you're not.
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  Speaker 2: You don't look like you're so eager to just only
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  Speaker 2: get their money. You really genuinely want their advice. But
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  Speaker 2: then by you not wanting to take their money, they
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  Speaker 2: want to give you money even more.
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  Speaker 1: Exactly, this approaches a win win makes it more comfortable
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  Speaker 1: for them, right because they don't like saying no to you.
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  Speaker 1: It makes it more comfortable for you, because if if
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  Speaker 1: you're doing a good job, they're gonna want invest. If
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  Speaker 1: you're talking to an investor whose job it is to invest,
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  Speaker 1: who invests, they need you just as much as you
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  Speaker 1: need them. So if you're sitting in front of them
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  Speaker 1: and they're like, oh shit, this dude is gonna fucking
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  Speaker 1: kill it, they will proactively say how can I get involved?
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  Speaker 1: And they're gonna be just as likely, if not more likely,
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  Speaker 1: than if you came to them explicitly trying to pitch.
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  Speaker 3: How intentional are you about it? Before you even go
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  Speaker 3: to get the advice? Are you strategically targeting the people
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  Speaker 3: that you want to get the advice from? Like, is
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  Speaker 3: there a list? And it's like if I could meet
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  Speaker 3: or get in front of this ten or twenty people
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  Speaker 3: this month, that's my target. Like how did you go
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  Speaker 3: about it?
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  Speaker 1: Well, in the beginning, you know, beggars can't be choosers, right,
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  Speaker 1: so you kind of will try to get meetings with
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  Speaker 1: anyone who has money, right. I mean, now you can
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  Speaker 1: be as you go later, Sage, you could be a
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  Speaker 1: little more picky, and you should be picking. I mean,
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  Speaker 1: you should try to avoid putting sharks on your cap
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  Speaker 1: table who are at odds with you or who are
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  Speaker 1: very short termistic and they're gonna create issues for you.
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  Speaker 1: You should avoid those to the maximum extent possible. But
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  Speaker 1: you know what I would do is I would try
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  Speaker 1: to build my network in a very strategic way. So
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  Speaker 1: I would host like happy hours or dinners. I'd do
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  Speaker 1: this on a college budget. I mean I didn't spend
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  Speaker 1: I spent minimal money on it. It's like a couple
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  Speaker 1: hundred bucks that i'd throw together after a few this
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  Speaker 1: VC would sponsor them, so they'd throw down three four
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  Speaker 1: hundred bucks on these dinners right and be at my place.
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  Speaker 1: Or you know, I didn't spend a lot of money,
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  Speaker 1: and so I was building network. So first step is
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  Speaker 1: build network. If people have interconnectivity to investors and play
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  Speaker 1: the long game, build a relationship with these folks casually.
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  Speaker 1: Make sure all these people in your network are impressed
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  Speaker 1: by you, right casually, and then at some point you
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  Speaker 1: can make the asks or you can say, hey, I
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  Speaker 1: know this person invests in your company. I think they
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  Speaker 1: have this relevant experience of what I'm doing. Do you
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  Speaker 1: mind making the intro? And so you do that with
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  Speaker 1: you know all founder friends. People will raise money before.
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  Speaker 1: You're trying to build this network to cultivate and then
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  Speaker 1: eventually make the ask for the introductions. And you know
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  Speaker 1: you're just doing this on repeat as much as possible.
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  Speaker 2: So you said something also where it's like you always
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  Speaker 2: want to avoid trying 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 1: This is a little bit of the opposite advice that
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  Speaker 1: some would give you. Oh you want to get to
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  Speaker 1: know quickly.
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  Speaker 2: Yeah, that's that's what I've heard. I need not know
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  Speaker 2: because I come from sales. So that's what I heard
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  Speaker 2: all the time, was like a no is always one
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  Speaker 2: step quicker to a yes, or get to the know
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  Speaker 2: early or stuff like. But so that's an interesting.
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  Speaker 3: It even it feels contradictory. It's like it's because you're
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  Speaker 3: going this is trial right, like you're saying it's because
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  Speaker 3: you've got nos.
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  Speaker 1: Yeah, exactly, nose uh spread. So you know, investor community
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  Speaker 1: or the community you're raising within is small, and so
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  Speaker 1: you don't want somebody to go to someone you just
• 7:23
  Speaker 1: pitched and that person say be like I passed right you. Now,
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  Speaker 1: if you follow this strategy, you may have had a
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  Speaker 1: meeting with that person. It may not have went well,
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  Speaker 1: so they may not have invested, but you were never
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  Speaker 1: pitching them, so they don't have the ability to say
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  Speaker 1: I passed because you never went to them officially asking
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  Speaker 1: them for money.
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  Speaker 2: No, It's actually makes a lot of sense psychologically, because
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  Speaker 2: like you said, it becomes a virus once one person
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  Speaker 2: says no, and then another person acts. This person even
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  Speaker 2: if they want to say yes, it's like, well why'd
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  Speaker 2: you say no?
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  Speaker 1: Right?
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  Speaker 2: And then it's like, I don't want to be the
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  Speaker 2: person that says yes and be an idiot when my
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  Speaker 2: friend who I'm I have a high level of respect
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  Speaker 2: for said no. So I'm more likely to lean towards
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  Speaker 2: the no because that's just where the crowd is going exactly.
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  Speaker 1: And so what you're trying to create is a crowd
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  Speaker 1: momentum behind you. The hardest one to get the fall
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  Speaker 1: is the first one, and you have to get this
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  Speaker 1: person to fall just through your character and your pitch
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  Speaker 1: and this strategy that I'm outlining, and then that one
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  Speaker 1: will hopefully turn to two or three once you have
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  Speaker 1: like three people is the magic number where three people
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  Speaker 1: have now casually without you saying you're fundraising, have told
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  Speaker 1: you they want to get behind you. Now you can
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  Speaker 1: start a fundraising round with the wind that you're back,
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  Speaker 1: because you could say. The way I like to sequence
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  Speaker 1: it generally is, even when these people say I want
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  Speaker 1: to back you, I won't say, okay, how much? Here's
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  Speaker 1: the docs you want to then take a step back
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  Speaker 1: once again and say, okay, I'm honored. I'd love to
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  Speaker 1: work with you. Let's do another meeting. I'd love to
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  Speaker 1: get your advice on these other things. I'd love to
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  Speaker 1: learn how you work with founders. I like to, you know,
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  Speaker 1: have this discussion on what working together will look like.
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  Speaker 1: I asked for references. Say hey, can I speak to
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  Speaker 1: a couple other founders you've worked with? So uh, you know,
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  Speaker 1: when someone expresses interest, you don't.
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  Speaker 2: Just automatically jump and say hey, yeah, I'm ready.
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  Speaker 1: Yeah exactly.
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  Speaker 3: Yeah. I think that probably feels like the biggest mistake
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  Speaker 3: that most people make because you're in so much desperate
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  Speaker 3: not desperate need, but you're in need of the funds,
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  Speaker 3: and so once you feel it inklink of somebody who's interested,
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  Speaker 3: it's like I gotta jump.
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  Speaker 2: You got it.
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  Speaker 1: Desperate, you can't. You can't show the desperation even if
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  Speaker 1: you are. I've been desperate many times in my career,
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  Speaker 1: even beyond just so our seed round. Yeah, but you
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  Speaker 1: can never show it because this is what investors are.
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  Speaker 1: Just their job is to sniff out desperation, right, they're
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  Speaker 1: experts at this.
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  Speaker 2: So they can get the best deal possible.
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  Speaker 1: So they can get the best deal possible. Exactly, So,
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  Speaker 1: no matter what desperate situation you're in, I mean, you've
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  Speaker 1: got to come in with confidence. It's as simple as that.
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  Speaker 1: I mean, most people won't give this advice, but I
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  Speaker 1: mean it's just the truth.