Set Milestones Before Raising Capital

Sukhinder Singh Cassidy // Founder & CEO at Joyus

"What I have typically seen, it could be right or wrong, is no matter how much money people raise investors expect it to go 18 - 24 months. 

I think one of the biggest risks in raising money is raising it and running out in between key milestones. 

My bigger point is, at the end of the day, the way I think about raising capital, is that no matter how much money people raise it always seems to last 18 - 24 months. 

It's crazy because you could raise a lot of money and think that it's going to last you four years but what happens is that companies rise to the spending level of the money that they have. 

If you want to be prudent and raise less, of course, you raise less. The challenge with that model is Let's say you budget for 12 months. The reality is that things always take longer than you think. 

The worst position to be in as an entrepreneur is to be raising in between key milestones. 

For example, you raise money pre-launch for product and that money takes you to three months post launch. The danger zone is you are three months post launch and you're just starting to get interesting data. Now you're going to be judging the next round on the launch data plus three months which is much worse than the launch data plus 12 months. That's something to think about it. 

The way to think about a fundraising strategy is: What do you need to a milestone? 

I'm arguing that you think about your milestones pretty deliberately and you make sure that you can ask for enough money to get past your next milestone for your next fundraise. You need to know what that is. If you think it's just launch , I can guarantee you that it's one of the most difficult places to be. Having just launched a product with early metrics but really not doing any marketing.  You're getting judged on that for your next round of funding."


How to Get an Introduction to Investors

Sukhinder Singh Cassidy // Founder & CEO at Joyus

"The best way to get somebody to take a meeting with you is, first and foremost, through any network you have. That network may not be reaching out to a VC. It may a school alum, or a fellow entrepreneur who's in that portfolio.

I think this notion of networking, who you know, who knows you, is super smart.

If you don't have those networks develop them. You have to hang out where smart entrepreneurs are.

It's the idea of putting yourself inside of a network and developing authentic relationships. Those are the people who are going to help make introductions for you.

So you have to think about: Who knows you? Who knows your great? If you don't know anyone, how do you go about networking with those people genuinely? Not at a cocktail party. Go co-develop a product together. Do a boot camp together or a startup weekend. Develop an authentic relationship. Those are the people who are likely to help you get that intro. People who meaningfully know that you're actually really as good as you think you are.

There's no surrogate for that. Building an authentic network of people. They don't need to be Marc Andreessen. They need to be people who will say: 'You are awesome!' Whether it's a professor, school mate, colleague, or someone you met at a startup boot camp. It's a big one.

The second one is, quite frankly, the surrogate that VCs use if they don't know you is your body of work. What they look for most in new entrepreneurs is that you've launched something. That you've been able to bootstrap something and get it out the door. There is no surrogate for that.

It used to be in the Valley that you get a meeting on a pitch deck. Times have changed. Now you're expected to have launched a product, get into a program like Y Combinator or another incubator; If you haven't been able to get yourself into one of those programs you've somehow immersed yourself in that environment. You had the hustle to do it. You had the hustle to pull together a product on nights and weekends and ship it. That's the new standard for even getting a meeting.

Honestly, it's pure hustle. That's it. You have to find a way to get it done."


"No matter what you think it is, it may not be a VC boardroom,  if they're asking questions about your business and financials and you're telling them about your numbers they are judging you.

When you may finally come to pitch, they've already heard the story and made a decision about whether you're interesting before you actually get the opportunity to pitch.

If someone wants to have coffee with you, take the coffee. Use it as an opportunity to pitch the vision. Use it as an opportunity to ask a ton of questions and to show your own insight on the category without giving away the farm. If you give away the farm you may never get the chance to actually do the pitch.

There is no such thing as just a coffee date. It's not just me who says it. I was at an event with Ben Horowitz who said this 'You think it's just a coffee date. But let's be clear. You're meeting a VC.'

Pitching before you pitch, be clear, you may not ever get the chance to pitch. I'm not suggesting you don't take the meeting and build relationships. Of course, you want to do that so that when you actually go to pitch they'll take your meeting.

I think it's more about that. How do you create a relationship and a dialogue that makes them want to take the meeting, which is very different from pitching."


How to Manage Your Expectations Raising Capital

Josh Hix // Co-Founder of Plated

"Don't give up. That's the headline. All businesses hear no most of the time. Even companies like Facebook.

There's a famous VC who talks about letting the fundraising process get you down becoming a self-fulfilling prophecy. That's the most important thing to remember. It's really about managing your own expectations and understanding that there are probably 50 reasons a VC might say no and only five or 10 of them have to do with you. 

There are stage considerations: Is the business too early or too late? 

Does the VC have a competing business in the portfolio? Do they invest in your type of business? Are they SaaS focused or consumer focused? There is a lot that goes on behind the scenes that doesn't have to do with the entrepreneur's business which contributes to the low hit rate. 

Don't take your projections too seriously. It's important to have thought through them, but everyone realizes that they are a guess at best, especially during the early stages. It's good to build those models and be thinking about the drivers but also understand that there is a huge amount of variability. You will be wrong whether the number is coming above or below. 

Don't be too hung up on valuations. It's something that the TechCrunch's of the world like to talk about because it's a sexy topic. 

At the end of the day, you're here to build the best company you can. Taking huge checks from whatever investor you can find isn't always the best strategy. Sometimes it is. Being thoughtful about the amounts that you raise, from whom, and the partners you are going to work for years who will sit on your board and be in your office all the time is often overlooked. "


Four Ways to Make a Good Impression on VCs

Lauren Jupiter // Co-Founder of AccelFoods

"There are four things. You need to have an extremely well put together presentation that speaks about your business and plans that you have. It should be very well designed, not only from a creative perspective. You need to have a thoughtful deck. 

You need to have a management team that people want to invest in. We always say at Accel Foods that it's about the jockeys. That's what VCs are looking for. 

The third side is that you're tapping into a market and have a scalable product that people see the vision ahead for a very high growth round. 

Lastly, you need to have a grasp on your financials and understand what the key drivers are for reaching your revenue targets and  attaining a gross margin number that's going to be attractive for your business. 

It's really important that founders realize that your time is really precious when you're in front of investors and you need to put your best foot forward right away. You're making an impression the moment you reach out to an investor or they reach out to you. There are no second opportunities to make a first impression. 

Think through your presentation and your expression of your business as much as possible for that initial set of meetings."

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