Nivi · May 12th, 2010
Last week, I tweeted some thoughts for first-time entrepreneurs raising money and asked Naval, Chris Dixon, and Mark Suster to chime in. Here are the results.
If this is your 1st time raising money…
- It takes way longer than you think.
- You’ll assume you’re much further along than you really are.
- It’s not about optimizing the round, it’s about whether you can raise the round at all.
- If you’ve launched and have traction but you’re not getting funded, your team is likely the problem. Look in the mirror.
- Your financing usually goes nowhere until you’re suddenly oversubscribed.
- Launch first, raise later.
- Make sure the valuation is one that you can get a 2-3x step up on if you hit your milestones.
- The earlier the investment stage the more you should think of them as partner versus buyers of stock.
- After 3 months of pitching, you risk being perceived as damaged goods.
- The biggest problem is “anchor tenants.” Once you get them, the lemmings will follow.
- Everyone wants a “deal.” Even rich people. Get the highest profile anchor tenants and give them a deal. My commentary is specifically related angel investing.
- Everyone obsesses with dilution from investors. The biggest dilution comes from co-founders. If you have 2 co-founders, you’ve diluted 66% before doing any of the hard work. Start by yourself and bring in co-founders for smaller stakes once you’ve got initial momentum. Unconventional wisdom, but the most economically practical advice you’ll ever get.