Perhaps it’s the new ”American dream” of scaling like Zuckerberg or selling like Systrom, but every entrepreneur seems to think that if they’re going to make it big, they have to raise money asap.
The amount of money you raise has become associated with your perceived success, credibility, respect in the valley… as if you have to raise money to be legit.
As a result, way too many startups are raising money way too early.
I know this to be true, because I’ve been one of those people.
This past summer we spent about 3 months of our time trying to raise money. We weren’t successful. The truth is, it was too early to be fundraising. I know that in hindsight, but at the time I convinced myself otherwise.
We had taken $50,000 to join the 500 Startups accelerator which is built to help you fundraise and grow. After a couple pivots we still hadn’t figured out our product-market-team fit yet but figured if we could play the fundraising game right, we could still raise our round. Hell, we got into 500 because they liked our team, who’s to say we couldn’t get other investors on board?
That’s the story that’s told so often. You have to pitch 100 investors before one says yes, then the other investors you spoke with will want to get in as well. You have to create the perception that they’re going to miss out on a deal and that time is limited. If you know how to talk to investors with confidence and create the perception of demand, you’ll raise your round.
We bought into that idea…all in.
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Via Guillaume Decugis