1. Seeking Funding Sucks; Avoid At All Costs
Lessons I’ve learned: Funding is not a milestone or endpoint; it should be thought of as a necessary evil. It takes a ton of time; whatever timeline you have in your head, double it. If you’re not being told no on a daily basis, you’re not working hard enough. Also, remember that while it’s their money, it’s your company; you’re looking for the right fit…not the first offer.
2. Partner Up
I would have taken a few more risks and partnered up earlier. It’s tough to go through starting a business all on your own, and it really helps to have someone to bounce some ideas off of.
3. Be Ready To Share The Pie
Many first-time entrepreneurs and those who are raising capital for the first time, get stuck on how much they would have to share for how much capital instead of thinking how big the pie can be grown with the right connections and funding from the investors. So, get this straight–a small share in a bigger pie is larger than a bigger portion out of small pie.
4. Not All Money Is The Right Money
It’s important to get in bed with the right investors for your project. As you push your venture forward, the excitement will ebb and flow, as will revenue, so you need to have investors that are there for the right reasons. That’s why selling your vision is so important. If you don’t have the right investors, it’s like marrying for money and ending up bankrupt–it ain’t gonna work!
5. Many Months To Close A Deal
It took us 6+ months to close our Angel round. Start raising before you need the money: Meet investors at events, stay in touch with them by sending them a newsletter about your progress, and establish validation to raise your valuation. If you start raising money once you’re almost out of money, then it’s way too late.
6. It’s Hard, Slow, And Makes You Lose Focus
I heard from everyone that raising money takes time, is hard, and makes you lose focus on growing your business, but didn’t really listen. It is hard, it’s time consuming, it’s stressful, and makes you lose focus on your business. I wish I had started to raise money earlier in both companies so that when it did come time where I lost focus on the product, it would have been at a less critical time.
7. Get Professional Advice
I used to think valuation was everything. Get a large “pre” number and I would be worth lots of money–so I thought. The professionals that put term sheets together have plenty of experience in making money–for themselves. Get someone to help you understand the various exit scenarios that can show you how the waterfall of money works. Avoid the sneaky scenarios that VCs put in term sheets.
– Craig Fuller, TransCard
8. Learning Is Fundamental
Learn as much about the legal process as possible so you are aware of what’s going on around you. It’s not just nice to be aware of what you’ll be embarking on for almost a full month, it’s helpful to making sure the process goes smoothly too.
The Young Entrepreneur Council (Y.E.C.) is an invite-only nonprofit organization composed of the country’s most promising young entrepreneurs. The Y.E.C promotes entrepreneurship as a solution to youth unemployment and underemployment and provides its members with access to tools, mentorship, and resources that support each stage of a business’s development and growth.