One of the most challenging hurdles for early entrepreneurs is raising money. To get funded, you need to do a lot of prep work: you need a great vision, savvy initial product development, thorough market understanding, thoughtful execution, a kick-ass team, and luck.
A critical part of fundraising is connecting with people; both the people who will help you along the road, and the people who will actually write a check.
You are essentially interviewing over and over for a job you’ve invented for yourself. Fundraising is a time when you will call on friends to give frank feedback and to make introductions. You’ll call in favors from people you know well, and graciously ask for help from more tenuous connections. You will also have to interact gracefully with potential funders; set up meetings, have thoughtful pitch conversations where they end up excited about you and your idea, and answer probing questions in a way that is respectful yet savvy.
Even entrepreneurs who are very well prepared often shy away from sending emails or making phone calls to reach out to potential funders. It’s impossible to get funded if you don’t ask for the money, but there are usually several weeks of procrastination after a great pitch is practiced and ready, but before the first email goes out to potential funders. Why?
A few weeks ago, I stumbled over a phenomenal a TED talk by Brene Brown, called “The Power of Vulnerability“. She has spent the last decade of her life studying worthiness, shame, vulnerability, and authenticity. I was struck by her incredibly powerful message, and how it might be relevant to fundraising: she found that the people in the world who have connection and belonging in their lives are the ones who feel they are worthy of connection and belonging.
What those worthy-feeling people had in common was courage: the courage to be imperfect, the courage to try something where there are no guarantees, the courage to invest in a project or relationship that might not work out. Brene’s talk has a powerful message for entrepreneurs: that to succeed, you have to believe you’re worthy of connection and success, and you have to be willing to be vulnerable. You have to be willing to show up, over and over, and tell the story of what you want to do with your whole heart, knowing that you will likely be turned down a lot of times before someone agrees to fund you.
So in addition to all of the “technical” parts of your job, you need to manage your emotional state in the face of lots of rejection.
From what I’ve observed, there are two common strategies for doing this.
Strategy 1: Pretend that you have it all figured out, and that you’re invincible. There is a level of self-deception that’s necessary to do this, and it can create a situation where the entrepreneur has themselves so pumped up that they are immune to any sort of feedback, and they actually argue with funders over basic elements of the business. Wrong. There is a huge power imbalance between entrepreneurs and funders, and as an entrepreneur, you are going to have to acknowledge that power imbalance and behave accordingly. (If/when you gain phenomenal market traction, that power balance can shift.)
BTW, I was just having dinner with a VC friend the other night, and confirmed what I’d already heard and read in many other places: that when a VC raises a fundamental question about the business with a founder, they do NOT want to argue about it on the spot. They want the founder to go away and think about it, and come back with a thoughtful response, in particular one that might have a small pivot from the original idea that takes into account the funder’s concern.
Strategy 2: Fully embrace the vulnerability of what you’re doing. Entrepreneurs are people who are able to embrace risk and uncertainty, and create amazing things anyway. When you are having a conversation with a potential funder, they are testing out your idea, but they area also testing you. Are you straightforward and do you listen? Can you riff in the conversation without depending on your slides or your notes? Being comfortable with vulnerability allows you to listen to the potential funder, stop worrying about looking like you know everything, write down their concerns, ask clarifying questions, politely say that you’ll think about it and come up with a response later (and then to follow through and do so).
If you numb the vulnerability, you will likely present to investors as scared, inauthentic, or oblivious, and along with numbing fear and pain, you will also numb joy, gratitude, and happiness. To be alive means to be vulnerable.
One of the fascinating parts of my job is working with a cross-section of company founders at different stages of company evolution. Everyone has days where they feel like they are doing exactly the right thing, and that there is no more perfect job for them than running their company at whatever stage they happen to be. It doesn’t mean that there aren’t more skills to be learned, connections to be made, features to be updated, or rough edges to be polished, but just that they have a sense of rightness and belonging that lets them move forward and accomplish whatever is in front of them powerfully and confidently.
There are other days when the very same person completely doubts themselves. They are not sure that things are going to work out, and they are thinking that probably someone else would be a better choice to make the pitch, or lead the company, or handle whatever the issue de jour is. The story that they are telling themselves is that they aren’t the right person to do this. This happens at EVERY STAGE of the startup (even IPO), and with nearly every founder. And of course, there are some times when it makes sense to step down and find someone with a different skillset to take a company to the next level. Part of my job is helping people distinguish between the right time to learn new skills and muster additional motivation, and the right time to pass the baton. But fundraising is a great time to realize that living with uncertainty and vulnerability is part of the job, and to figure out how to live with it gracefully.
Lady Gaga closed her August 2010 show in San Jose by saying to her fans “I want you to walk out of here tonight not loving me more, but loving yourselves more.” Seeking funding is a time you have to take steps to make sure you take care of yourself emotionally, so that you feel worthy of connection. How do you do that? Here are my tips:
- 1. Physical: take care of your body, and do what it takes to get good sleep. Some things that work well for many are running, a sweaty yoga class, great sex, snuggles, massage, and great food. Your physical body and your health is the foundation of everything else. Most successful CEOs do some form of daily exercise. If you want to be a successful CEO (or CxO), why not start now?
- 2. Personal connection: make sure you are spending some time in the company of people who you love, and who love you a lot. Not like, LOVE. A lot of your energy when going to events or pitches is trying to convince the world you’re awesome. You need to spend time with people who already think you’re awesome to recharge your batteries. This could be your romantic partner or family (if things are going well), longtime friends, or colleagues who really appreciate you. If you’re lacking people you’re close to, try doing a favor for someone you don’t know well. BTW, if you are going out to events, it really helps to go with a wingman (or woman). You can introduce each other to folks at the party, and networking will be tons easier for both of you, because the other person acts as social proof that you’re awesome and interesting to talk to.
- 3. Vision: Remind yourself WHY you want to do build this company. Many entrepreneurs I work with right now have a mission beyond making money. Who will benefit if you’re successful? Is it worth pushing forward so that those people can enjoy the benefits of what you are going to create? It is helpful to connection your success to something beyond your own financial profit. Then, every time you’re asking someone for help, you are asking them to support your vision, as well as you personally.
- 4. Story: What is the story you’re telling yourself about what is happening? Tony Robbins presents some good questions to ask about story in his TED talk Why We Do What We Do. What are you focused on: your past, your present, or your future? Are you focused on yourself, or others? Are you at the end of something, or at the beginning? Are you being punished or rewarded? Are you going to give up, or move forward? If you’re stuck in a story about how it’s someone else’s fault that you can’t move forward, an incredibly helpful book is “The Power of TED” by David Emerald. I first learned of this book when Bert Parlee was my coach several years ago; it’s worth ordering to have on hand.
- 5. Coach/Advisors/Peers: It’s very helpful at this stage to have a good support network. Some possible choices are to work with a professional coach, to talk to formal or informal advisors for support, or to team up with peers at the same stage to share insights and support one another. Whatever you choose to do, it’s worth figuring out in advance where you can turn when you need support. Ideally a co-founder can be part of your support network, sometimes that works well, but sometimes it doesn’t.
I recommend doing some experiments to see which combination of these works best for you. Everyone is wired differently. It’s worth making notes about this, because when you are feeling low, you will also feel unmotivated and uncreative, and it is way harder to figure out how to create a change when you’re feeling stuck.
The email, phone call, or pitch that you initiate from a place of feeling confident and worthy of connecction will yield far better results. Best of luck on the road to funding!