By Julie Diaz-Asper
On the path to creating, building, and scaling a high growth startup, funding is critical. New founders often question where, how and when they should seek funds. The Funding Study has set out to help answer those funding questions by asking startup founders to share their challenges and experiences raising funds.
Here are 10 lessons learned thus far from over 100 startup founders:
1. Find the right investor who understands your business and offers more than just funding.
“Search for the right investor for you. If they don’t know your industry, they won’t understand your idea.” Justin Velez-Hagan, Co-founder, Unfoiled
2. Don’t overlook the importance of a good personality fit.
“Connecting with the right funding partner is akin to finding the right person to marry. It takes patience, lots of looking and effort. Your persistence, and follow through, will eventually pay off.” Dave Jensen, Founder & Executive Chairman, Aviacode
3. Focus on proof of concept first.
“If it’s a product, have a working prototype that reflects market feedback and make sure you’re providing something that people can’t already buy on Amazon.” Leigh Lepore, Founder & CEO, Crowdfunding Strategy
4. Increase awareness and authority.
“Participating in a competition like The Mobileys helped give our organization credibility and authority, and that’s especially important as we look for funders to support our app’s future improvement.”
5. Build investor relationships before you need them.
“It’s a process – meet investors early and come back with traction.” Karen Bantuveris, Founder & CEO, SignUp.com
6. Understand raising money might be more of an art than a science.
“The sooner you understand that raising capital is not a rational process, and you can’t argue your way to success, the sooner you will learn how to sense when investor interest is genuine and a deal is forecastable. “Phil Ressler, Founder & CEO, Sixgill
7. Consider bootstrapping until you have the right product market fit.
“I would much rather build a company through organic growth than by raising outside capital. If it’s necessary to bring in outside funds, I want to see very strong product market fit before committing to investors.” Peter Mellen, Founder, Netcito
8. Remember it’s a business, prioritize monetization.
“Most people confuse product strategy with a business plan. There has to be a clear plan as to how the business makes money. We are talking business, not creativity or innovation.” Oscar Torres, Serial Entrepreneur
9. Not being white, male or young might make it harder, but not impossible, to raise money.
“The challenges for women, especially women of color remain high. If you have a solid business, the numbers will speak for themselves.” Ximena Hartsock, Co-Founder & President, Phone2Action
10. Lack of a network contributes to the difficulty of raising funds for minority startup founders.
“I once asked VCs at a NYC tech meetup panel I hosted: ‘What’s the best way to connect?’ Unfortunately, the real answer is ‘You can’t connect with me, because I don’t know you!’” Eric Hamilton, Co-founder, Tinystic
Helping founders, especially ones who are inexperienced in raising capital, secure funding is critical to the health and future growth of our entrepreneurial eco-system. If you are an experienced founder, consider mentoring a newbie at a local co-working space, accelerator or bootstrap program. If you currently serve as a mentor, motivate your peers to do the same.
New founders can benefit from lessons you may have learned the hard way. What do wish you had known the first time you raised funds? Share your story with Mobile Future here.
The Funding Study is being conducted by Social Lens Research for Mobile Future, the producers of the annual The Mobileys competition which recognizes and supports early stage mobile innovators.