Understanding How to Fundraise | Lydia Fayal

Fundraising. I feel like this is something we always get asked by first-time founders. If you talk to later-stage startup execs and even, you know, serial startup founders, you'd think they would be able to give you a lot of great advice about fundraising. But they don't. I mean, I think they must have PTSD and just forget how scary it is to ask people for money. Even in an accelerator, you're repeatedly told, Don't let VCs slow you down. Focus on product. OK, this is fair. You don't want to spend all of your days getting coffee with VCs. A lot of people will reach out to you and they won't be that helpful. But if your fear of how you're going to raise money keeps you up at night, this is slowing down productivity. Sometimes it helps to have a plan, a future plan so that you can focus on the present. That's what we did by talking to a lot of people very early on, and we came up with a plan. So what we decided to do is we were going to go and present at various demos. We did the Imagine K-12 demo. We also went to various conferences. Most of them, especially presenting to angel groups, nothing came of it directly. But we'd meet one or two investors, and they'd say, hey, Love the idea. I don't do seed stage investing, but have you spoken to so-and-so? They invest in your space. Great. So take their card, send them an email afterwards, include a few bullet points about what your company does. You want to say, this is my team, this is why we're experienced, this is the traction we've received, this is our vision, this is where we're going. Like 4 or 5 bullet points max. Do not attach a presentation deck. Seed-stage investors, they, they don't invest in decks. They invest in people and vision. All the investors who we met with, the ones who dove into our projections, none of them went anywhere. I mean, none of these talks went anywhere. The talks that did were when I didn't even open up my computer at meetings, and we just sort of got chatting about what the market was doing. And, you know, they didn't need to look at projections. In fact, the best meeting I ever had, I remember it was with Social Capital, and at the end of the meeting, one of the partners said, you have a lot of gumption. I knew I'd be able to close on that. And we did. That being said, get used to rejection. I love Ron Swanson. This is how it feels a lot of times when you're talking to investors, you know, that they just like saying no to lower your enthusiasm. Because as startup founders, like, you are enthusiastic. You have to be. When you go into a room and you're taking meetings, you need to be so enthusiastic because you have this amazing idea, and it's like you have this— I'm actually stealing this metaphor from one of our friends, Sam, at ClassDojo, but he's like, you basically have this pile of gold that has a gate around it, and you need the investors to feel like you are the only one with the key, and they need to be friends with you. That sounds a lot better coming from Sam because he has a great British accent. But anyway, yeah. That's how you need to go into these meetings. You need to be very enthusiastic. But you will get a lot of rejection. Get used to it. Along this same sort of line, I want to talk very briefly about being a female founder. Because we get asked all the time, hey, do you think it's difficult to raise money in Silicon Valley as a female founder? And my response is always, No, I think it's difficult raising money in Silicon Valley as a non-tech founder. There is a huge premium paid for tech founders. If you are non-tech, realize that, you know, you are going to have to learn enough about the tech side to walk the walk and talk the talk. This helps just in general because you're going to be working with a lot of developers. But when you're talking to investors, I think a lot of times it's easier for male founders to sort of fly under the radar and be questioned less. There's an assumption that women don't code. And rightly so. I mean, there are a lot more male developers than female developers. This is changing, but right now that's how it is. And there's a huge premium paid for tech founders, despite the lack of evidence that they do any better. In fact, in a recent first-round capital study, they, when they looked at all of the companies they invested in over the past 10 years, they found that teams with at least one tech founder actually underperform teams with zero tech founders in consumer-facing companies. So if you're a non-tech founder, don't let that get you down. And don't necessarily make, you know, co-founder decisions based on that. You— there are other ways to make up for it. Like I said, get used to to doing mockups, learn enough about it, take some courses, sketch everything out, do a lot of research, you can make up for it in other ways. That being said, since I know the whole female entrepreneurship angle is something that's often discussed here, it's crazy to me that there's still only 7% of VC money goes to female-owned businesses. Hoping that changes over time, but you should be aware of that. You are gonna have to take 3 times as many meetings. Just factor that in. And when you meet with an investor who says to you, I don't know about this, but have you spoken to this investor? They invest in women. Understand the implied message is that the person telling you this does not. I mean, we've heard it a few times. You just kind of have to shrug it off, stand up, walk out. Channel your frustration into building a great product that they will regret passing on. You don't want every investor. You want investors that you can trust. They're going to be huge in terms of your overall career success. You know, we've found a lot of former entrepreneurs turned investors and also very just seasoned seed-stage investors who have served on boards to various companies. Before you take money from somebody, talk to the other companies they've invested in. Figure out how those relationships have gone, because you're gonna be with them for a long time if your company is a success, and I hope it is. Thank you.