It takes money to make money, and finding people willing to invest their hard-earned dollars into your startup or venture isn’t always easy. Raising money can be challenging and often downright dejecting, but it can also be inspiring and lead to significant progress within your company.
Whether you are a “garage” startup or a fully-funded company seeking another round of investment, there are always trials and tribulations that come about when raising money. In the process of raising $500,000 in 15 days for our startup Alumnify, I found several strategies that kept our vision clear and our team focused. Raising money is often a simple task, but no one said that simple was going to be easy.
Always Be Hustling
Demonstrating that you “hustle” or have a strong work ethic builds trust with potential investors and fellow peers. Furthermore, it allows you to tell a story that every investor will want to respect and listen to. Kanye West once said, “But for me to have the opportunity to stand in front of a bunch of executives and present myself, I had to hustle in my own way. I can’t tell you how frustrating it was that they didn’t get that. No joke, I’d leave meetings crying all the time.” Meeting with an investor could lead to a harsh wake-up call, but the more you hustle, the easier it becomes to take rejection and learn from failure.
At Alumnify, we knew it was imperative to get as many schools to sign up as possible to take a piece of the market share. I was tired of relying on warm leads or waiting for a friend who knew someone at a school to give me an introduction. We decided to just hit the phones and start cold-calling. Unfortunately, the first week we got voicemail after voicemail. In another article, I explain how we decided to implement that strategy into our sales plan: we would start cold-calling at 5:45 a.m. because that time allowed us to get on the phone with prospects on the East Coast before they started their 9:30 a.m. meetings, which ultimately allowed us to sign up over 100 schools in five months. This is just one example of a compelling story that would catch the eye of any investor.
Keep Your Prospects in the Loop
Fundraising doesn’t start the day you open the round, but rather the first day you speak to anyone about your business. You never know who people know or what they’re interested in unless you keep in contact with them. Your network is your net worth, so always make sure to stay in touch with the people in your network. At Alumnify, we send a shareholder update once a month to investors, mentors, friends, family and potential investors.
As a result, your startup is always on your contacts’ minds. By the time you are ready to open your round, potential investors have already kept track of your progress and will be more inclined to invest.
Position Yourself Around the Buzz
During my senior year of college, we won the largest pitch competition at the University of San Diego. Over 60 applicants were chosen, and only four made it to the finals with a total of $50,000 allocated to the finalists. We impressed the judges so much that we ended up taking $40,000 of the $50,000 available. After attending USD, we were admitted to arguably one of the most exclusive co-working spaces in the Silicon Valley: Founders Den. After that, we became part of 500 Startups in Mountain View, one of the most prestigious accelerator programs in the world. To top it off, we landed the largest deal in the history of our industry.
Being affiliated with major organizations and achieving regular benchmarks gives investors the confidence that you’re onto something and you’re surrounded by people who are going to propel you forward and reach your full potential.
When it comes to funding, there are plenty of ways to find money, but one must always be willing to work for it. Investors have worked hard to be in the position they are in and they have to trust that they are making a smart business decision by investing in you. Founders often struggle to get traction or funding when they stop hustling or try to take on too much by themselves. If you are adamant about your company and product, live by the old adage, “If there’s a will, there is a way.”
Author: Eghosa Aihie is the Founder/CEO at Donorkey Inc and Executive Board Member at Athena Technology.