First-time founder fundraising
I’m a first-time founder, and our startup FarmRaise just closed its initial round. The fundraising ride can be jarring; it’s an emotional rollercoaster full of ambiguity, adrenaline-infused sprints, and weird feedback from near-strangers. Despite the grind, I loved fundraising because it forced me to think hard and holistically about our big company vision and the steps we are taking to get there.
For other first time founders, underrepresented founders, or anyone hustling to fund their dream with outside capital, I’m going to share five takeaways that I hope can make your ride smoother and steadier.
Ask: “What does winning look like?”
Take space to explore what type of investors will best serve your company. Would you benefit from several angel investors who are mostly hands-off but willing to make intros when it matters? Do you want an involved lead investor who will brainstorm with your team every other week? Do you need a blue-chip VC backing you today to raise a Series A tomorrow? Is there subject-area investor expertise that could add value to your startup? Write down what you need, and reference this criteria throughout your fundraise. It’s a north star that will direct your focus amid inevitable distractions.
Next, figure out how much capital you need to achieve your core milestones. Conventional fundraising wisdom tells us to frame these milestones in terms of “key risks to address” over the next 12–18 months. In practice, we found that some VCs appreciated this framing while others pushed back with comments like, “Yeah, okay, but who are you going to hire?” However you decide to frame it, be sure you’re clear on your milestones, and why you chose them.
Once you know your dream investor and your 12–18 month KPIs, it’s time to craft a pipeline of 30–40 funds or angels who meet your north star investor criteria (unless you’re adept at Google Sheets, a CRM can make your life easier here). You’ll grow this list as you go, but this number is a good starting point. A mentor once told me that first-time founders need roughly 30 investor meetings before they receive a term sheet, and our experience at FarmRaise mirrored this pattern. Once you have the list, the next step is to start investor outreach.
Build your fundraising team
The best way to get intro’d to your dream fund is through another founder in the VC’s portfolio. Two other good ways to get connected is through a well-connected advisor or mentor who knows someone at your target fund (or works at the fund themselves) or through pitching at a demo day that the investor attends.
It is essential to build a community of other founders and mentors as part of your informal company ‘team’. These folks can intro you to your dream funds, and are often poised to connect you directly with the fund partners who make final decisions. This is where support groups, school networks, accelerators/incubators, and cold outreach comes into play. You might not know the right mentors or founders today, and that’s okay, but now is the time to start identifying and building those relationships. Search your alumni directory if you have one, and if not, find your dream advisors on LinkedIn and send some cold outreach asking for a Zoom coffee chat.
You should kick off the fundraising process (e.g. getting intros and talking to VCs before you’re officially fundraising) 9–12 months before you run out of cash. Building these relationships well before you ask investors for money helps to establish a human bond between you and your potential investors that isn’t defined by a transactional moment. You can get to know one another and give yourself time to discern if this fund is really the right partner for your team. Without immediate time pressure, you’ll find it’s much easier to get to a ‘yes’ down the line when you’ve built that trust and rapport.
Make it personal
You’ve discerned what winning looks like, built your target investor funnel, and have lined up some intros. Now you can build your pitch deck. It’s important that you check all the right boxes (company, market, and traction) so that you make it hard for an investor to give you a straight out “no”, but you also need to take your pitch one step further. As an early stage company, you’re first and foremost selling yourself. Embedding some aspect of your life, story, or personality into the pitch (whether through a personal narrative or well-timed humor) will bring your passion to life.
I struggled with how much of my own story to reveal in our pitch, and ultimately chose to lean into it, even including a picture of my farmer father as the first slide on our deck. It felt weird telling near-strangers about how hard my dad worked, his day beginning and ending in the darkness, but it also brought his experience, and the big problem we’re solving at FarmRaise, to light. Seeing his face on our deck in every pitch also energized me, almost as if he were in the room right there with us, cheering us on.
Put the fun back in fundraising
Unless you decide to become an investigative reporter or go back to school, fundraising is a unique life season that affords new connections and stimulating conversations about your greatest passion with some smart and (generally) objective people. Rather than dreading this season as a cross-examination from intimidating financiers, try approaching fundraising as a fun, intellectual exercise to share and discuss our life’s work with other people who care.
Many investors go into venture because they are innately passionate about (and often experienced in) entrepreneurship, tech, and transforming society as we know it. They read a lot, they tweet a lot, and they’re hungry to help ideas grow. Many investors won’t ‘get’ your idea, but you can still relish your discussions with them, solicit their feedback, and keep the relationship warm.
Some investors will be critical of your company to your face. Others will gossip about its weaknesses to other VCs behind your back. You will likely get dozens of ‘no’s’ for every yes, along with contradictory feedback that leaves your brain spinning. At the end of every fundraising day, I often wanted to lie flat on the ground because I was so emotionally drained. It’s crucial that founders don’t take this criticism personally, and view all investors — even the ones who have drained your emotional bank account — as allies, helping you and your company be stronger.
Most important, create space to recharge during this process. Do things that help your mind relax, wander, and be present, whether it’s an hour of informal playtime, calls with family, or ten minutes of meditation. Drinks lots of water and eat protein. Checking in with yourself, caring for your body, and staying rooted in the truth of who you are will help you show up fully when the pitches resume.
Seek the spark
When we found our lead investor, the conversation flowed. From our first discussion, we were brainstorming how FarmRaise could grow, how we could get farmers into our funnel, and how we could better automate our tech. It was like a first date in which we just couldn’t stop talking to the person across the table; it was comfortable, fun, and energizing.
Every founder deserves investors who get you and care about you, your company, and your vision. My parting hope is that you hold out for the person or fund you truly connect with and who shares your vision for building the future. Look for the spark. Wait for it.
Until you get there, keep your north star in mind, lean hard on your team, remember who you are, and enjoy the ride. And if you don’t stick the landing perfectly this time, don’t worry: review what you learned and move forward with hope!
