StartUp Fundraising: Start Building An Advisory Network
As a startup consultant, I often get asked by solo entrepreneurs what the most challenging and time-consuming aspect of building a business is. Without a doubt, fundraising is at the top of the list. When you’re fundraising, you’re not focused on your product, customers, or team; you’re focused on securing capital. It’s a necessary evil, but it can also take an enormous amount of time.
For example, did you know that Airbnb was rejected 100 times before finally securing $150k for 10% of their business? That stake would be worth billions today. My point is that you will go through many rejections, iterations, and opportunities before securing funding. It’s a long and arduous process, but it’s a necessary part of building a successful startup.
That said, there is one game-changer that you can start implementing right now if you don’t have a network: the power of referrals. Referrals can accelerate your fundraising like nothing else. They can help you get feedback from investors, learn, iterate, and refine your pitch. In short, referrals can help you secure funding faster.
For instance, according to Mark Suster, a prominent venture capitalist and entrepreneur, “referrals work because they create a halo effect. People who are referred to you come to the conversation predisposed to like you, trust you, and do business with you. They feel like they already know you.”
Therefore, if you don’t have a network, start building one. Reach out to advisors, people in your space, target market, customer market, and other entrepreneurs who have fundraised successfully. Build yourself an advisory network, but don’t just send out cold emails asking people to be your advisor. Instead, focus on building relationships with them by showing empathy and asking for their feedback.
It may be discouraging to receive many “no’s” or to hear nothing back at all, but you only need one good advisor with a moderate network to kick-start your fundraising journey. It’s better to have a small network of supportive people than a large network of people who aren’t invested in your success.
In conclusion, fundraising is a necessary evil in building a successful startup. It can be challenging and time-consuming, but with the right approach and network, it can be an opportunity to learn, iterate, and refine your pitch. Start building your network today by focusing on referrals and building relationships with advisors and other entrepreneurs in your space.