Fundraising Tips For Early Stage Marketplace Founders

1 Nov 2022 · 3 min

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2:45

In this interview, Speaker B offers two core pieces of advice for early‑stage marketplace founders who are fundraising in a tight‑money environment. First, founders must craft a personal, compelling “why now” story that resonates emotionally with investors, emphasizing deep personal connections rather than a high‑volume, impersonal pitch. He explains that his fund makes only 4‑5 investments a year (as do his colleagues Boris and Mike), so they prioritize spending time with founders who can tell a story that makes the investors care and think about the company daily. Second, marketplace founders should leverage the abundance of low‑cost tools (as described in Mike’s book) to bootstrap the business, generate early revenue or gross merchandise volume (GMV), and validate supply‑demand dynamics before seeking capital. By achieving early proof points—such as break‑even transactions and modest GMV—founders can buy time, demonstrate traction, and make their pitch more attractive to conservative investors.

Chapters

So do you have any tips maybe for early-stage marketplace founders that are fundraising right now that you might want to share?
Outside of the like, why now piece and kind of telling your story, I think 2 things. Like one, in this market where people are like holding their dollars tightly to their chest, Like, you have to really convince people, like, why they should invest in you in a way that's, like, very personal. I think maybe, maybe some folks look at us and they think, oh, we're money managers, or we don't— we don't— we're, like, soulless and we don't actually care about what we invest in. But, like, for example, and it depends on the fund, right? Like, I only make 4 to 5 investments a year. Boris makes 4 to 5. So as a fund, we make 10, which is a lot, but Individually, we think like, okay, we're only making 4 to 5 investments a year. Who do we want to really spend time with? And so I wouldn't underestimate the importance of that personal connection and telling a story that people can really, really, really connect with. One of our portfolio companies is building a managed marketplace for renovations. And And I keep telling them, I'm like, it's— this is great. Like, I think you guys have some really, really good traction, but you got to tell the story so that I care. Like, what, you know, so that most people care, that when they wake up, they want to think about your company. So I wouldn't underestimate that, because especially in this market where people are probably a little bit more conservative than before. And then the second thing is Specifically for marketplace founders. The cool thing is there's just so many tools out there that you can use to bootstrap your business, which Mike has written a whole book about. And if you build the marketplace right, minus the, like, obviously the cost of acquisition and stuff, you can run some good transactions through this. Like, this is what makes this business so attractive. It's like you can probably break even And so if you can bootstrap for as long as you can, buy yourself some time, really understand the dynamics that drive your supply and demand before you go out to fundraise, especially in this market where investors might want a couple of proof points, then go for it. I know it doesn't work for everybody, but I think that's the great thing about marketplaces is that, like, very early on, you can have a little bit of revenue or GMV.