The fundraising experience

There is so much emphasis on user experience and design these days, it’s no surprise that this emphasis would make it’s way into how companies get funded.

I owe Mike McDerment, co-founder and CEO of FreshBooks for this insight. Together, we raised FreshBooks’ 1st and only institutional funding round last year. Mike has some very particular views on the importance of “experience”. In fact, the company’s manta is “execute extraordinary experiences everyday”. This saying impacts everything, big and small, throughout the company.

Back to fundraising: Investors see more opportunities than ever before. How do you stand out? First and foremost, have traction. This more than anything else gets investor attention. But assuming you have the three Ps (Product, People and Progress – aka traction), then I believe that the experience of raising makes all the difference. Continue reading The fundraising experience

Momentum

Momentum

I was reading this morning about Slack‘s rumoured $ 160M round, coming hot on the heels of last Fall’s $ 120M round. If this round closes then in the space of 7 months the company will have raised $ 280M and grown it’s valuation over 10x from the previous funding rounds.

This is a beautiful illustration of the importance of momentum in building a valuable company. Most startups take some time to find their stride. But once they find product/ market fit and scalable customer acquisition channels, the market-leading startups seemingly never stop raising capital. Instead, they raise more money, quicker to keep piling on to the growth they already have. This is why in most markets, the bulk of the market value goes to the leader. There’s just such a huge gap between that company and the ‘also rans’.

Continue reading Momentum

The Dolphin Dive

There are many reasons why startups fail. From bad timing to poor execution, bad hiring, too much competition, the list is almost endless. Despite these pitfalls, you can always live to fight another day so long as you have cash in the bank. So, for me, the technical reason why companies fail is that they run out of cash.

To avoid this, you need to perfect the dolphin dive. If you’ve ever watched those nature shows, you’ve seen great images of dolphins jumping into the air then diving. They stay underwater for a period of time, and then come up for air.

This is how you need to approach each funding round. Treat it like your last. Make sure your money gets you far enough to either not need more funding or, more likely, to have enough proof points to raise more capital at a significantly higher valuation.

Continue reading The Dolphin Dive

Fundraising? Be a Buyer, not a Seller

If you’ve ever raised capital before, or if you know someone who has, then you know that it’s not easy. It takes a long time, you get rejected a lot and it distracts you from your core business. And even for those who do raise, they often end up with investors or deal terms that cause issues down the road. For many, many reasons – raising capital sucks.

So, what’s the solution? Bootstrapping? No, not necessarily. I fundamentally believe that most worthwhile opportunities require capital. This is a fast-moving World. If there’s a great opportunity out there then someone else is going after it as well. So, capital can help give you an edge.

Continue reading Fundraising? Be a Buyer, not a Seller