What does it take to raise money for your startup? It begins with a winning attitude.
My co-founder at Enhatch recently directed me to a blog post about Rap Genius’s initial fundraise. It seems strange to think that the now hot lyrics website once had to scrap and claw to get its first funding. They were out of Y-Combinator, which exists in its own magical fundraising universe, so it is a story that is slightly more interesting and relevant than the typical cookie-cutter fairytale that gets spun.
If there was one take away from the post though, it would be encapsulated by this one paragraph:
So that’s one fundraising lesson: project confidence. But more than that you must actually BE confident because there will be times when things look so bleak that unless you truly believe you’ll trick yourself into thinking it’s all over.
It is not just in fund raising where this is true. In any business setting or competitive environment, having confidence can be the psychological lift to keep yourself going. It is easy to get discouraged to the point of giving up when all you receive is rejection. No one enjoys hearing a string of nos– that is simply the way things go in sales or fund raising or sports or any other endeavor.
There are some people that mistake confidence for arrogance or delusion. They feel that is more important to be humble and transparent. Those are great traits to aspire to in your daily life, but they do not help when you need to raise cash. Investors realize that things are tough early on and that reality is often quite different than the story presented in a pitch deck. What investors want to see is that you have the wherewithal and guts to stick it out through all the trials and tribulations. Quite frankly, most do not.
On the other hand you can come across as overbearing and pompous. Investors are not fools and will see through all sorts of guises to present yourself as something you are not. Being cocky conveys either foolishness or weaknesses, neither of which are winning traits when trying to convince investors. I have encountered these mini-Napoleons with Steve Jobs complexes and found them to be neither pleasant nor particularly thoughtful. Furthermore, they make the worst founders because they cannot take sound advice and never learn from their own mistakes, both of which makes it difficult to hire good talent or listen to customers.
If you are going to fund raise, you need to be confidence that you will succeed. Outside of a few folks, most entrepreneurs will speak with 50, 70, 100, or more investors before someone says yes. I spoke with an investor friend last week who mentioned that he got 79 “no’s” before hearing his first “yes”, and his startup went onto great success. Being humble is not going to convince investors. Being cocky is going to put off investors. This does not mean you should lie or hide stuff, but if you do not have that attitude of confidence about you, the fund raising trail is going to be a very long ride.
This article was originally published on Strong Opinions, a blog by Birch Ventures for the NYC tech startup community.
Image Credit: CC by Howard Lake