How My Experience as an Investor Prepared Me to Be a Founder
Sage advice from a former venture capitalist.
Photo: Courtesy of Naomi Shah
It’s difficult to think of anything in my life that has required a wider or more dynamic skill set than founding and running a company. Unlike the way founding is sometimes described in pop culture and media, you can’t just have great ideas for products and services. You have to be capable of building a healthy company culture, understand how markets evolve, and anticipate what consumers will want in the future. Personally, the last year and a half have honed a higher tolerance for uncertainty, an irrepressible curiosity about our market and users, and the ability to communicate exactly what the company is trying to achieve to inspire all of our people.
While there’s nothing quite like running a start-up, I’m grateful that I had an opportunity to work at a venture capital firm before taking the helm of my company Meet Cute. Because VCs work directly with founders every day, they need to be capable of seeing the world from a founder’s perspective, which means identifying gaps in the market, crafting the right narratives about promising companies and ideas, gathering a lot of information from disparate sources, and making informed decisions in the face of incredible uncertainty. Due diligence is the central task for VCs, but they also have to be willing to take risks on the companies they believe in.
Investors and founders are on the same team. The best partnerships are often described as a marriage. That analogy rings true especially because of the ups and downs of founding over the years, which requires an intense trust in the people you work with that they will be there when you need it. Aligning on the direction of the company, personnel, and emerging market opportunities is critical. Ahead, I’m sharing some of the many lessons I learned as an investor that have also served me well as a founder.
Lesson #1: It all starts with curiosity.
Successful VCs are always on the lookout for companies that capture and hold their interest and users’ trust. Founders should want to work with investors who have thoughtful questions about their products and services, understand their industry, think differently, and believe in the founding team. It isn’t just a matter of cutting a check and hoping for a quick return. In turn, VCs should add value by thinking creatively about what the market will look like in the future and advising the company. I learned from shadowing partners at USV that the best VCs were also the best listeners, and think of VC as a service industry.
This starts with genuine curiosity about what a company does and what impact it could have on the world with the right guidance and resources. The average holding period for VC investors is eight years. This is a reminder that investors need to be mission-aligned as they will work with companies over the long term and are investing in the sustainable success of their portfolio companies.
VCs and founders should establish open lines of communication right at the outset. I’ve never been afraid to ask questions or contact experts who know more than I do about a subject, and these skills served me well as an investor and a CEO.
When I was at the VC firm, the best way to learn about early-stage companies was to work directly with them on forecasting, marketing strategy, fundraising, and other issues and consult with experts outside of the company to bring new perspectives to the table. The same collaborative mentality is an essential part of the culture at Meet Cute today. If we need to talk to an expert about something specific, we are not shy about asking and learning. Time and time again, smart people in the industry who we look up to make time for those who are genuinely curious.
Lesson #2: Make the best decision possible with incomplete information.
Early-stage investing offers unique benefits, such as the ability to identify innovative companies before other investors, help steer those companies in a positive direction, and ultimately secure more growth over time for taking on a much larger risk. These are all reasons why it’s no surprise that early-stage VC investments have surged over the past decade from $14 billion in 2011 to just over $47 billion in 2019. Early-stage investing is on pace to set a record this year. The first quarter alone saw greater deal value than the entire year in 2011.
Early-stage investing also comes with quite a few obstacles, and a lack of information is one of the biggest. Early-stage investors don’t have as much data about a company’s growth, operational efficiency, etc., so many of their decisions are based on pattern recognition and intuition. The founders of early-stage companies face similar constraints. There’s no playbook for what many of these companies are doing, so we have to be comfortable making decisions with limited information. Just as investors need to accept the fact that they will sometimes make the wrong call, founders should be willing to fail. If everything is going too smoothly, you should ask yourself if you’re scaling ambitiously enough.
All of that said, founders and VCs should be as fastidious as possible in their research. Due diligence as a core focus means putting in the time to learn and develop opinions and perspectives. But due diligence always has to be placed in the context of the realistic constraints you face, especially in building something completely new, and knowing what level of risk you’re willing to tolerate.
Lesson #3: Always tell your story
A company’s story is integral to its identity, and it serves as one of the most effective ways to reach your audience and let them trust our brand, galvanize employees around a common message, and attract the best investors. As an investor, I frequently told stories about innovative companies to convince my colleagues that we should back them, often in the form of an investment memo or a short and sweet presentation in a team meeting. I also helped start-ups craft their stories when they launched fundraising rounds or needed to prepare for board updates. Storytelling is the most powerful tool we have as humans and we know that the emotions of a story are remembered far better than facts.
Moreover, I’ve realized how sharing your story internally is vital to improving morale and helping employees rally around a consistent set of values and objectives. Gallup reports that only 27 percent of employees strongly believe in their company’s values, while less than half say they strongly agree that they understand what the company stands for or what sets it apart. By telling the company story and vision often and consistently, the team can rally around what they’re working toward and why it matters.
Reflecting on the last year, there is a significant overlap between my experiences as an investor and a founder. By making a conscious effort to understand how my experiences tie into and bolster one another, I hope that I can show where founders and the VC firms that support them can build stronger relationships and thereby more unique and impactful products in the world.
Photo: Courtesy of Naomi Shah
About the author: Naomi Shah is the founder and CEO of Meet Cute, a venture-backed media company that has produced over 300 original light-hearted romantic comedies in podcast form. The company celebrates human connection and the full spectrum of love with the core mission of having every person feel like they are reflected in Meet Cute stories. Since its inception in February 2020, the podcast has had over two million listens across over 150 countries and has been featured in the top 10 of Fiction on Apple Podcasts and Spotify.
Before starting Meet Cute, she was a member of the investment team at Union Square Ventures, a technology venture capital firm in New York, where she spent most of her time talking to companies in the consumer and well-being space. Prior to that, she was a macro equities trader at Goldman Sachs and studied mechanical engineering and human biology at Stanford University.
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8 Women in Venture Capital Share Their Best Fundraising Advice for Female Founders
From what you should (and shouldn’t) include in a pitch deck to how to identify the right investors for your business.
Statistically, women-led and owned businesses make more money but they’re still woefully underfunded, especially when it comes to venture capital. And, unfortunately, those stats aren’t improving year-over-year. A recent report published by Fortune discovered that companies founded by women received less VC investment in 2020 than in 2019. By the numbers, female-founded companies raised $3.31 billion in VC in 2020, or 2.2% of the year’s total sum, compared to $3.5 billion and 2.6% in 2019.
So, we reached out to eight women in the venture capital industry and asked them to share their best fundraising advice for female founders—and they didn’t hold back. From what you should (and shouldn’t) include in a pitch deck to how to identify the right investors for your business (spoiler alert: they need to bring more than just money to the table), scroll on for their words of wisdom, including insight into how they choose which companies to fund. Needless to say, if you’re an entrepreneur who’s thinking about bringing VC into your business, you’re going to want to heed their advice.
Sarah Kunst, Managing Director, Cleo Capital
“If the terms are clean and the money is green, they are most likely the right investors.”
—Sarah Kunst, Managing Director, Cleo Capital
How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?
I look for founders with an incredible amount of grit, coachability, subject matter expertise, and resilience. I look for businesses in large markets that I'm excited about. If I can find all of those things in a pre-seed startup, I'm likely to invest.
What are three crucial elements everyone should include in a pitch deck when raising money and why?
Make sure you explain the problem you're solving (and the solution you're building!), why your team is the right team to solve the problem, and why the market is large enough to build a billion-dollar company.
What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?
Mistakes to avoid are bad decks and pitches. There are tons of resources available from simple searches about what a good pitch deck looks like and how to pitch angel and pre-seed investors effectively. Make sure you're putting your best foot forward by preparing both your pitch deck and pitch meeting speech.
What advice can you share for entrepreneurs on partnering with the right investors?
If the terms are clean and the money is green, they are most likely the right investors. At the earliest stages, most founders won't have a surplus of options so making sure you can live with the investment terms is very important so you can raise money and keep growing your business. Resources like CooleyGO and YC have great examples of boilerplate investment terms.
What is your #1 piece of financial advice for new entrepreneurs?
Save money on things that don't matter. Fancy offices or expensive business cards likely don't matter, great employees do.
Jaime Schmidt, Co-Founder, Color
“Fundraising means giving up equity in your business, so the earlier you raise money, ultimately, the more it will cost you.”
—Jaime Schmidt, Co-Founder, Color
How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?
My fund Color invests in things people buy, and the places people buy them. This includes personal care, food and beverage, retail, publishers, tech-enabled marketplaces, and e-commerce platforms.
To make an attractive investment, first and foremost the product must offer a clear solution to a problem, and provide for a timeless need versus a fleeting trend. I look for brands that start out catering to a niche customer base, but that can show a clear path to reaching the masses. I’m excited about founders with an authentic passion for what they are building and who can make a case for why they are the right person to be building it.
What are three crucial elements everyone should include in a pitch deck when raising money and why?
It’s important to show a clear understanding of the competitive landscape and how your product and brand will add value to the category as a whole. Show who the existing competitors are, those on the rise, and where your brand fits amongst them. The best pitches focus not on how a product is better, but on how it is different.
Investors will also want to see your distribution strategy. Lay out your plans for where the products will be sold, whether that’s through your website only or across different retail channels. This requires knowing what customer demographics you are targeting, too. I’m personally drawn to brands with an openness to exploring sales channels otherwise overlooked by competitors in their space. For example, when I was building Schmidt’s Naturals, I wanted my products available to the mainstream consumer, where most of my competitors in the naturals space catered to a more niche market.
Show images of the standalone product, plus pictures of it being used. This might sound obvious, but so many decks are lacking bold, high-quality photos. These are especially important in the earliest slides, so the investor has a clear understanding right away of what you are selling. The deck should include colors and design elements of the brand, too. This shows that you care about how your brand is represented and that you understand its unique positioning in the category. Make it pretty!
What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?
The biggest mistake I see is founders raising too early. Fundraising means giving up equity in your business, so the earlier you raise money, ultimately the more it will cost you.
Media often paints a picture that landing investor money means a brand is positioned for guaranteed success. But this isn’t necessarily true, and founders don’t always spend investor money wisely. I like to encourage founders to bootstrap for as long as possible—this teaches you how to be scrappy and intentional with your spending, which will serve as a valuable skill throughout the growth of your business.
What advice can you share for entrepreneurs on partnering with the right investors?
The right investor will ask smart, relevant questions and show real enthusiasm for you and your brand. Be wary of those you suspect might have different goals for your company. Listen to your gut, and don’t settle for partners you aren’t excited about working with.
Not everyone will get what you’re trying to do, and that’s okay. Be patient, and believe in yourself. I recently tweeted: “10 yrs ago I started a business that, as a VC, I probably wouldn’t have invested in. As a founder, I was all in, but as an outsider, there was good reason to be skeptical. 7 yrs later the company sold for $100M+. The rejection you might see today is no indicator of your potential.”
What is your #1 piece of financial advice for new entrepreneurs?
Allow yourself to be simultaneously frugal and willing to spend by knowing where to cut corners to invest in things that matter most. This takes some of the rigidity out of financial management, while still providing boundaries for responsible spending.
Sydney Sykes, Co-Founder and Co-CEO, BLCK VC
“Look for someone who answers your calls and texts. You should feel comfortable asking them questions and reaching out to them, even if they may not have the answer to your problem.”
—Sydney Sykes, Co-Founder and Co-CEO, BLCK VC
How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?
I look for a combination of two things: vision and numbers. If an entrepreneur has an incredible vision for her company and she's been able to motivate others to believe in her but the numbers aren't incredible, I may be willing to invest. On the other hand, if an entrepreneur has incredible numbers, but the vision of what the business will be in the future is still developing I may also be willing to take a chance. Ideally, she has the perfect combination: an incredibly strong vision with economics or growth that is starting to show traction.
What are three crucial elements everyone should include in a pitch deck when raising money and why?
1. Why your problem is important? Why should you/I/the customer/the employees care about this? You should be able to easily convince me about this. It means this is an important issue that needs to be solved and you're the person who understands that best.
2. Any traction. This comes back to the numbers. What indications are there from the market/customers that this will be successful? It could be sales, but it could also be customer conversations, conversion rates, or engagement.
3. Growth projections. How do you predict sales to grow and how many customers will it take to get you there? This helps me (and you) understand if these assumptions are reasonable. It also helps me understand if this is a long or a short run investment? Some companies need a little bit of money to go really far, and others need a lot more. Neither is right or wrong, but I need to know if your expectations for the business align.
What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?
A lack of focus on the target customer. Especially when seeking venture capital investments, entrepreneurs frequently aim to have the largest TAM possibly and therefore try to expand who their target customer is. However, these two things aren't inherently linked. There can be a large total addressable market, but your product needs to appeal to individuals -- and you need to know exactly who those individuals are.
What advice can you share for entrepreneurs on partnering with the right investors?
Look for someone who answers your calls and texts. You should feel comfortable asking them questions and reaching out to them, even if they may not have the answer to your problem. This free communication can set the tone for the relationship.
What is your #1 piece of financial advice for new entrepreneurs?
Make sure the unit economics makes sense. Especially with consumer companies, there needs to be an understanding of how each customer could be profitable. Ultimately, incredible growth is unsustainable without strong unit economics.
Jesse Draper, Founding Partner, Halogen Ventures
“Remember one thing, not all money is good money. This is a long-term relationship. A marriage you cannot get out of. It will be a 10-year partnership. Do your research.”
—Jesse Draper, Founding Partner, Halogen Ventures
How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?
We invest in consumer technology so I start there. The three main things I look for in an entrepreneur are:
1. Founder, founder, founder. Why are you the best person to run this company? Are you going to take it all the way? Are you in it for the quick exit or the 10-year marathon? Do you know your strengths and weaknesses? And mostly, is this someone I want to get into business with?
2. Product. How is your product a unique offering? Is it defensible? If it's a busy space, why is yours the one that will stand out?
3. Traction. This could mean $1 million in revenue, 100,000 users but don't let those numbers dissuade you, many people especially in hardware need to raise capital to get their product to market. If that is the case, show me some research or data that there is a need for this.
What are three crucial elements everyone should include in a pitch deck when raising money and why?
A. Know your market size. Make sure you are going after a billion-dollar market. As a venture capitalist, my business only works if you sell your company for a billion dollars, I have many investors who I need to pay back. If you are going after a $50 million dollar market, my business model doesn't work. I often have to say to founders, go find the bigger market here and come back to me.
B. What problem are you solving? The best businesses are built out of a need. Be clear about what your solution is and why you are building this company.
C. The ask! I am always perplexed when this isn't in the deck. What are you looking for? $1 million? Advisors? Put the ask in the deck and it's much easier to ASK for an investment, etc.
What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?
Founders who think they have all the answers. I certainly don't have all the answers and I don't believe anyone should ever think they are the smartest person in the room. Whenever I see a founder who tells me, “This is the only way it will work.” that is a big red flag and I usually run in the opposite direction. The best companies are able to pivot and evolve when needed. It's never a straight line up a mountain, there are ups and downs, and who knows, we may end up in an international pandemic!
What advice can you share for entrepreneurs on partnering with the right investors?
Remember one thing, not all money is good money. This is a long-term relationship. A marriage you cannot get out of. It will be a 10-year partnership. Do your research. Call their other portfolio companies to see that what their work ethic is like, how they partner with founders, are they in the trenches with you, or hands-off. One bad investor can poison the well. You will find the right capital for your company even if it takes a little longer because you have to turn some down. Be diligent and selective.
What is your #1 piece of financial advice for new entrepreneurs?
Fundraising is a grind. Don't get discouraged by the “no’s.” I often have founders say, “Well, everyone said ‘no.’” And I say, “Who is everyone?” And they respond with, “Well, I talked to eight investors!” That is NOT a lot. Plan on having 100 meetings because you have to cast a much wider net to find your investors. If you plan on having 100 meetings, you will be pleasantly surprised because it probably won't take 100. Also, ask for more. Get clear on the number you think you need and double it. It is what I like to call a "misc" category. If your goal is to raise 1 million, go for 2 million instead. It always takes more money and more time than you think. Set yourself up for success.
Arielle Loren, Founder, 100k Incubator
“Not every business can start small, but the vast majority can. Get a small amount of capital, start testing, collect your data, know your conversion rates, and then think about an investor.”
—Arielle Loren, Founder, 100k Incubator
How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?
The most successful and scalable businesses place a heavy focus on their analytics and numbers. They pay attention to their mistakes, learn fast, and are quick to pivot to where they’re seeing traction, whether that’s an increase in their user base, higher revenue, or increased profitability. We love women entrepreneurs who are obsessed with those details, and who aren’t afraid to get creative to reach their growth goals. We don’t expect things to go smoothly, but we do expect for the bumps to be measured.
What are three crucial elements everyone should include in a pitch deck when raising money and why?
Know your conversion rates before going after large amounts of capital. If I give you something small like $10,000, could you take 10% of that ($1,000), invest it in an ad campaign, and turn it into $2,000 in sales? Can you go granular and know how much it costs you in ad spend just to get one customer? Could you measure and see how quickly a first-time customer makes their second purchase? Too many entrepreneurs get caught up in creating a perfectly branded pitch deck when really the decision comes down to proof of concept and real-time data. Gary Vee posted a great quote recently that said, “When you overthink, you slow down and you get passed.” Not every business can start small, but the vast majority can. Get a small amount of capital, start testing, collect your data, know your conversion rates, and then think about an investor (if that’s really what you want to do).
What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?
There are so many entrepreneurs not taking the time to get educated on all of their funding options, and part of that is because angel investors and venture capital have become so popular in the media, that entrepreneurs jump to make that their desired funding vehicle. The vast majority of entrepreneurs do not need venture capital; we teach and help entrepreneurs access 11 other types of funding. When our members first enter the 100K Incubator app, they're asked to take our 50-video boot camp on how to prepare for funding, what their funding options are, and how to use funding to scale to their first $100,000 in annual sales. And for the entrepreneurs who are already earning over $100,000 in annual sales, they still find extreme value in the boot camp, because it breaks down funding and scaling in a way that most of them have never heard. Getting the funding is the easy part, they actually have a lot of options, but learning what drives and scales their business, getting into the data, that’s where their true talent, grit, and creativity is tested as a business owner.
What advice can you share for entrepreneurs on partnering with the right investors?
When partnering with the right investor, it’s more about having an honest conversation about what they expect in terms of a return on their investment, how fast they want it, and how much control they expect to have in the business. Then it’s making sure that you have a skilled lawyer to put those terms into contracts so that there’s little misunderstanding down the road. Most small businesses don’t need investors. What they really need is access to capital, customer acquisition and retention process, a deep understanding of how it works for their own business, and how to scale that into a six and seven-figure in sales with a healthy profit. The TV and social media world have made angel investors and venture capital funding sexy without telling how much stress it puts on founders, and how much it costs financially. At a minimum, make sure your investor is bringing something to the table other than money because if your company is successful, that investor capital you took in exchange for your equity will end up being the most expensive type of capital you’ve ever taken.
What is your #1 piece of financial advice for new entrepreneurs?
Make your move, learn from your mistakes, and trust the process. How much you raise in funding is nowhere near as valuable as what you learn along the way. And while helping women get access to funding is rewarding and an accomplishment in itself, it’s far more exciting to help them use that capital to create real sustainable six-to-seven-figure businesses that change their lives, their families’ lives, and their futures. We love to be the catalyst and support system for more women understanding the complete cycle of entrepreneurship. Getting funding is truly just the first step.
Elizabeth Edwards, Managing Partner, H Venture Partners
“Make a big list and do your research. You should be putting a list of 100 investors together based on stage, sector, and geography focus.”
—Elizabeth Edwards, Managing Partner, H Venture Partners
How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?
We're looking for next-generation, iconic consumer brands that we can help scale from $0 or $5 million in revenue to $10 or $50 million in revenue within a handful of years. These are products in your home that you use every day, like your Peloton bike, baby food, or skincare. We look for brands that are fundamental to life, better for human health, and better for the environment, and we like to support underrepresented founders and consumer groups of all kinds.
In particular, we also like businesses that have one or more of the following in the business model: superior products, scientifically-proven claims, intellectual property, network effect, owned channels, the convergence of media/retail/brand. We tend to lean towards inclusive brands vs. exclusive, and we're particularly strong with omnichannel brands that are going to ultimately scale in retail.
What are three crucial elements everyone should include in a pitch deck when raising money and why?
The pitch uses a combination of stats, calculations, product photos, and charts to tell the following story:
We know this consumer inside and out - and they have a big problem that we deeply understand.
We have a unique way to solve that problem, sell the solution, or make the solution because we have a lot of domain expertise and credibility in this particular space.
This problem represents a huge market, our approach has compelling unit economics, and this brand has clear exit opportunities — strategic and otherwise. If you invest X dollars with this round, we’ll spend the money in these ways to turn it into Y revenue over Z timeframe
What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?
Not using DocSend is a common mistake; it's industry standard in venture capital, and anyone who tells you otherwise is suspect. There was a Twitter controversy over this not long ago, but as Ronald Regan said, "Trust but verify." There are a lot of thoughtless (or bad) actors out there, who will forward your deck on without thinking - because it's not their business, it's yours. If you're sending your business plan to strangers, DocSend is a good way to track and control it. If you are sending it to a current investor in your company, go ahead and bury them in PDFs of decks and attachments. But there's no reason to do that with strangers.
What advice can you share for entrepreneurs on partnering with the right investors?
Make a big list and do your research. You should be putting a list of 100 investors together based on stage, sector, and geography focus. Crunchbase Pro is relatively cheap, and you can get access to thousands of VCs this way. Then, put together a "Perfect Triumvirate" of three venture investors that complement the weaknesses of your management team; those that can help you with strategy and open their network. It's important to have three deep pockets in any deal. It's tough for the entrepreneur, and the investors, if there's only one set of deep pockets when times get tough — as they invariably do.
What is your #1 piece of financial advice for new entrepreneurs?
Cash is king. Spend your venture capital money like you don't have any money. Growth hack, test, iterate, and once you figure out a way to get a 7x LTV/CAC, go for it. Raise more money, hire the absolute best talent money can buy and your cap table can bear, and then change the world.
Maria Salamanca, Investor, Unshackled Ventures
“The right investor will be a combination of ‘they get what I am trying to do’ and ‘they push me to think deeper about the problem.’”
—Maria Salamanca, Investor, Unshackled Ventures
How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?
We are sector agnostic. We know founders see the world differently than everyone else so we are open to all sectors. Like most VCs, we look to invest in companies that can grow at “venture scale” in large market opportunities.
What are three crucial elements everyone should include in a pitch deck when raising money and why?
Answering the question: what is new about your solution that others haven't tried before (what’s your secret sauce/unique insights), why is this the right team to tackle this, and why is this a massive opportunity?
What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?
Founders don't always do their homework on the competitive landscape, many times only focus on big older companies but the real competition is often from peers only a few steps ahead or behind.
What advice can you share for entrepreneurs on partnering with the right investors?
The right investor will be a combination of "they get what I am trying to do" and "they push me to think deeper about the problem"
What is your #1 piece of financial advice for new entrepreneurs?
Figure out what is the best form of capital that will help you scale and why (VC, loans, bootstrapping, PE, etc) because this impacts how you think about company building. There are many ways to build a profitable business and venture is not always the right capital to get you there.
Maya Baratz Jordan, CEO and Founding Partner, Founders Factory New York
“Partner with investors who can help you beyond writing you a check and help in the areas you actually need help in.”
—Maya Baratz Jordan, CEO and Founding Partner, Founders Factory New York
How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?
As an early-stage investor, I always weigh the team’s DNA heavily when considering an investment. A business at the startup stage will go through many changes—and will look and be as different two years in as a newborn is from a toddler. It takes a lot to keep a business not only alive but thriving. That's why over 90% of startups fail. The consistent piece is the team. Does the founding team have the unique superpowers required to get their specific company off the ground, along with the experience to allow them to stay the course and attract the best talent and returning customers as they grow?
The second piece that's important is the market: Is the ultimate market this business is targeting large enough to be investible? For a business to be investible, it needs to generate returns for investors that make it well worth the risk and opportunity cost. There are a lot of great examples of successful businesses that are not investible, but still wonderful businesses. For an investor, the potential reward needs to be multiples higher than the risk—which often means that the company can serve a very large group of people.
The third piece that's important is the problem that's being solved and how it's being solved; this is the glue that bridges together the first two pieces (i.e., the founders and the market); it's what dictates whether or not the business is truly fitting the needs of the market it is targeting.
What are three crucial elements everyone should include in a pitch deck when raising money and why?
What you put in your pitch deck will depend on the stage of the company. The general areas you'll want to cover include, but aren't limited to, the problem you are solving, how big that problem is (market), and what it is about your company that puts you in a position to win. You'll want to weave them all into a story with a natural arc; it needs to flow in a way that would answer someone's questions as they listen to your pitch.
If you're an early-stage business with little or no traction to show, you'll want to highlight what it is about your business that will defend it over time and help you win the market over, despite current or future competitors who enter that market. Sometimes that defensibility relies on the experience of the founding team, if relevant. For instance, if you know that the CEO of a wildly successful venture is now starting a new company in a related space, their experience and learnings from running their previous business will likely help them in their new venture. You ideally want to focus on the things that differentiate your company from competitors, specifically zeroing in on the aspects that can't be easily replicated by others and that are necessary for the business to grow and be successful.
If you're a company with traction that shows you're growing quickly, a so-called hockey stick growth chart can help tell the story of why you are already running a rocket ship. Every company should have its own way to express its ultimate "right to win."
What are some of the most common mistakes people make when raising money and how can others avoid these mistakes?
One of the mistakes I've seen founders make when pitching is speaking but not truly listening. Partnering with investors is a two-way street. The questions and feedback you will get will help guide you to refine your pitch as you go, and perhaps even help your business. And you never know when you may get a "no" from an investor now and perhaps that turns into a "yes" in a later stage of your company. Relationships matter and you can use the fundraising process to grow relationships, even with investors who say no. It's likely that, especially if this is your first time fundraising, most of your pitches will end up with rejections, so you may as well use each interaction as an opportunity to learn. You also want to know your pitch like you know your business; don't memorize it or it will feel unnatural. The best pitches feel like conversations.
What advice can you share for entrepreneurs on partnering with the right investors?
Partner with investors who can help you beyond writing you a check and help in the areas you actually need help in. Try to avoid bringing on partners who either don't know your market or haven't invested in companies that are in the same stage your company is in. You'll want to partner with investors who are empathetic to the journey you're on and can be helpful in the right ways when you need help, whether that means giving you the right advice or making the right introductions. This is why former founders or operators within startups make great angel investors; they understand the challenges of building a business and know the importance of helping a company beyond the capital they put in. You'll also want to partner with investors who generally agree with the path you're going on so they can best support it.
What is your #1 piece of financial advice for new entrepreneurs?
Your biggest financial job will be ensuring there is ultimately more money coming into the company versus out. It sounds simple, but if you have this mandate in mind, you'll be protective of your runway when you need to be and push your company to grow in a long-term, sustainable way so you can ultimately be independently profitable. You don't want to spend money on frivolous, performative things upfront. Think about your runway as fuel; if you're close to running out of it, the company can quickly grind to a halt. Spend money where it's truly needed and understand exactly how every dollar you spend will ultimately get your company to your long-term goals. Most people in successful early-stage companies wear multiple hats and have the urgency/scrappiness to pull things off with limited resources for this reason.
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Five Ways to Make Your Nonprofit Brand Stand Out
How can you break through the clutter and away from the “me-too” marketing?
by: Julie Cottineau
The world of non-profit marketing has become much more challenging than it ever was. No longer is competition coming from other established non-profit organizations; now, it’s also from individual fundraising resources like Gofundme.com pages and requests on Facebook from friends for support in cause-related marathons, walkathons, etc. In some ways, social media has made it easier for your organization to connect with potential supporters; yet, on the other hand, it’s amplified the noise in the category, making it harder to get noticed and connect.
How can you break through the clutter and away from the “me-too” marketing to get the vital resources your cause needs and deserves?
It starts with better branding. And by brand, I don’t mean a more colorful logo or a catchy slogan. I mean the fundamental story your organization is telling – who you serve, what your promise is, and how you’re different — what I like to call your TWIST.
Here are a few tips you can implement right away for stronger non-profit branding.
1. YOUR BRAND IS THE EXPERIENCE YOU CREATE
Branding has become a buzzword and one of the most overused and least understood terms in marketing lexicon. Many people tend to limit the definition of brand to the logo, name, and website. These are important elements, but the real value of a brand is the experience you create. How you make people feel. It’s this relationship that creates long-term brand ambassadors as they rave about you to friends and family, and even strangers, on social media. How can you provide a better experience to your community? Not just an easier way to donate, but in all aspects of the brand journey. When I was VP of Brand for Virgin, we didn’t just think about the time in the air as the Virgin airline journey. We thought about the whole continuum. From when someone was considering a trip, all the way to when they got home and were telling their friends about the wonderful experience. Where does your brand journey begin and end? And how can you keep your organization top of mind and engage your stakeholders in between core events? Let your brand ambassadors be part of your ongoing story.
"Branding has become a buzzword and one of the most overused and least understood terms in marketing lexicon."
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This could mean providing regular opportunities on social media for them to share their own experiences related to your cause. It could also mean inviting some of your more loyal members in to create the next chapter of your story. What do they hope for the future? What do they love about your brand experience, and what do they wish could be different or better?
2. BRAND BLINDERS GET IN THE WAY. TAKE THEM OFF!
If you printed out the websites of your organization and other non-profits in your sector and covered up the names and logos, could you tell who was who? The answer is probably not. That’s because many non-profits spend too much time trying to look “legitimate” that they end up using the same words and imagery as everyone else. The problem with this is your important message won’t cut through. Take off those blinders and question the “givens” in your category. Look for outside expertise and new perspectives whenever possible.
3. LOOK BEYOND YOUR CATEGORY AND TWIST FOR INSPIRATION
How do you create a brand that has tangible value, is authentic, and stands out? How do you TWIST? It starts with looking at your story from new angles. Cast aside the do’s and don’ts, colors and imagery and so-called best practices of other non-profits in and out of your sector; find fresh ideas by using an out-of-category perspective.
Think of brands that you love in all areas of your life and learn how to use these brands to inform and influence your own branding strategy and execution. Get inspired by a brand like Apple with its empowering Genius Bar, or Starbucks with its focus on customization, or Amazon, who helps customers with suggestions for additional products. How can your non-profit take these lessons and TWIST them for a stronger, more distinctive brand experience? For example, think about the fun moment when you open a Snapple and look under the cap. What kind of inspiring and unexpected message could you include in the flap of your fund-raising mailers that could create a moment of surprise, delight and connection?
4. USE YOUR BRAND AS A DECISION MAKING FILTER
I’ve worked with several large non-profits and one thing I’ve noticed is that many organizations, in an effort to please everyone, take on too many initiatives. Their websites become overwhelming with a hodge-podge of programs and messages and it's difficult to determine what they really stand for. Brand building is not easy. Many organizations have great ideas, but what will make you successful is your ability to bring your idea to life, into the communities you wish to serve. Identifying your brand TWIST can help you say yes to the right opportunities and stay focussed. But just as important, it can also help you say no when necessary to ideas that distract from your core resources and cloud your message.
5. MAKE SURE THE ORGANIZATION "WALKS THE TALK" OF THE BRAND
A clear brand TWIST is also critical for internal alignment and guiding behaviors. Writing and sharing your TWIST within your organization helps ensure everyone from the Executive Director to the part-time helper is presenting a unified vision of the brand. Your employees and volunteers should be able to answer the question, “What does your organization do?” highlighting your unique TWIST. Make the brand story part of the on-boarding of everyone who is a key resource for the organization, including staff, volunteers, and key partners.
"Make the brand story part of the on-boarding of everyone who is a key resource for the organization."
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One of my Brand School graduates makes brand a part of their weekly staff meetings. He repeats the core brand promise and values and leads an interactive discussion on how each individual is living the brand promise in their specific role and what kind of actions they should stop or start doing to make sure their actions, and not just their words, are bringing this promise to life. Your brand promise is not something that should be sitting on a plaque in a conference room. It should be felt in every interaction and every brand touch point.
A strong brand can be a non-profit’s secret weapon. It can help you make the most of limited resources and share your story more effectively with those who can help make your mission a reality.
Julie Cottineau is the bestselling author of Twist: How Fresh Perspectives Build Breakthrough Brands, founder and CEO of BrandTwist, and creator of Brand School Online, an actionable branding class for entrepreneurs, small businesses and non-profits. She is the former Vice President of brand for Richard Branson’s Virgin Group and served in executive positions at Interbrand and Grey Global. She has taught integrated marketing communications at Columbia and Cornell universities, and is a frequent commentator on brand strategy and innovation in top business media.
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How to Write a Killer Grant Proposal for Small Business
There's no such thing as easy money.
(Credit: Laura Dee Photography)
Grant proposals are similar to business plans, include many of the same elements and have the same purpose: to get that money.
Most grants fall into three categories: federal, private, and corporate grants. There are no federal grants specifically for women, but there are private grants for women from foundations, private organizations, and businesses.
Grantmakers usually distribute funds through Request for Proposals (RFP), concept papers or grant announcements and bidding processes. Committees read, score and make recommendations for funding. But what are they look for when allocating funds? Decisions are based on the applicant's ability to fit their idea or proposal into the grantmaker's area of interest. If your goals are not in line with the grant's goals, it is unlikely that they will fund your program or idea.
So just as a cover letter should be tailored to the job for which you're applying, your grant application needs to be as specific as possible. Writing a competitive grant proposal takes time as well as a thorough understanding of your mission. When we're talking "free" money it's going to take a chunk of your free time.
Here are 5 steps to ensuring you're in the running.
1. BE MORE SPECIFIC
We can't overstate this: Your grant proposal should be finely tailored to the organization offering the grant. For example, the Eileen Fisher Women-Owned Business Grant Program is in its 13th year and support leadership programs for women and girls, women-owned businesses and local communities. It is a grant program offering aid to women in business that are beyond the start-up phase and ready to expand their business, their potential for positive social and environmental impact. The program has very specific eligibility requirements. For example, the business must be in operation a minimum of three years, at the time of application. But is also has more nebulous requirements. Here is where you pull ahead of the pack. There are plenty of female-owned business that have been in operation three plus years. But how many of those align with the Eileen Fisher company mission and leadership practices? Nail this.
Many grant proposals are scanned first so you need to be very clear and have sentences that stand out. Don't be over-flowery and don't try to "sound smart." Jargon is your enemy in this case.
2. DO YOU HAVE TO START ON PAGE ONE?
No. This isn't the SAT. You can start in the middle and jump around. Or start with your strengths and work from the inside out. If there is a section of the proposal you know you can nail, begin there because it will give you the confidence to move into sections you find more intimidating.
Some applicants like to start with the executive summary (always used in business plans) or introduction. It's the highlight reel that will help you develop an outline for the remainder of your proposal. Others like to start with the budget because numbers are easier to crunch (and more concrete) than ideas.
Ask yourself: What are my strengths? What are my priorities? What problem am I solving? Why am I the person to solve it?
3. THE EXECUTIVE SUMMARY IS YOUR FIRST IMPRESSION
If the cover letter is the hello hook, the executive summary is what draws the reader in and commits them to reading the rest of your proposal. It is one of the most crucial pieces of writing and it is your chance to make a powerful first impression and identify yourself clearly. So what do you need to include?
1. The business idea and mission, proposed title, the problem it solves, and why it's needed in the marketplace.
2. Describe not only the need but objectives and deliverables as well.
3. An overview of the key points that match the funder's interest. (Refer to earlier point about the Eileen Fisher grant.)
4. How much the total project will cost.
5. Keep it at one page.
6. Make sure to thank the funder for consideration.
The committees that read grant proposals for a living know when details have been thought out and when they haven't.
4. MAKE YOUR OBJECTIVES SMART
Use the acronym SMART when developing your key objectives to make sure you're on-track.
S - Specific
M - measurable
A - Action oriented
R - Realistic
T - Time oriented
5. REACH OUT TO A FORMER AWARDEE
If you're really stuck most grant programs make former winners public. If you want advice reach out to a company that received funding and ask for guidance. They may be willing to offer it to you, they may not. But if you ask for a 30 minute coffee or phone call and the request is granted, well, you're one step closer to writing a killer proposal.
Remember: this is a complicated and long process. These suggestions are the tip of the iceberg. One of the most important things you can do is give yourself ample time to complete the proposal. As well as give someone you trust ample time to review it.
It can be a game-changer to have someone validate your work, but there's no such thing as easy money.
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Never Make It Perfect: Laurel & Wolf CEO Breaks Down How to Launch
Leura Fine gave us 30 minutes. And we're giving you all her advice.
LAUREL & WOLF IS THE FUTURE OF DESIGN.
At least if Leura Fine, CEO and Founder of the interior design company that offers its services online only, has a say.
An innovator in the online design space, Laurel & Wolf has developed a platform and software to allow for easy communication between a client and a designer, from anywhere. The entire service takes place in the digital world, and has opened the industry of interior design to people who never thought they could afford such services.
We put 30 minutes on the clock with the busy entrepreneur to pick her brain on everything from bootstrapping your business to the future of tech.
IN THE BEGINNING YOU MAKE IT WORK & GET IT DONE, NO EXCUSES
In January 2014 Leura began concentrating full-time on Laurel & Wolf. The first version of the site was up that month.
"I was the algorithm" she says about the company's beta site, a very bare-bones version of what exists today. Instead of spending 100k on a website build out, she paid a local LA-based developer 5k to build out eight pages with no backend. "I started spreading the word through friends and friends of family, putting it out on social media, saying, 'Hey who is looking for interior design services that only cost 300 dollars?'"
She had about 1,500 people signup over the course of six weeks. The first iteration of Laurel & Wolf took users through a "style quiz,"-- that had no outcome. What Leura was testing was the public's interest. The BIG question: Would people be willing to pay for an interior design service online?
"It was many, many long nights, of me staying up, calculating and emailing people their style quiz results. If you had this many As and this many Bs, you were 'Contemporary Eclectic.' It was terrible to demo, but between the MVP and servicing actual paying clients, we validated that not only there was a demand for the market, but what it would be like to acquire customers."
By the time they were ready raise money the company (which was two people at that point) also had a good, working idea of what the basic functions of the platform needed to do.
[define it: Minimum Viable Product (MVP): In product development, the minimum viable product (MVP) is a product which has just enough features to gather validated learning about the product and its continued development.]
By June 2014, just six months later, they had launched the site.
WHEN RAISING MONEY, YOUR RESPONSIBILITY AS FOUNDER IS TO CONTROL THE PROCESS
The interior design world provides a service that typically 1 percent of the population can afford. People like venture capitalists and those with money to invest in the business. In the beginning, there was a little pushback-- angel investors who didn't understand the service, but what Leura had was proof: the basic function of what the service needed to provide. With that proof she had the confidence to control her fundraising. The goal of Laurel & Wolf's seed round was $500k. They hit $650k in a month and a half.
[define it: Seed Round: The initial capital used to start a business. Seed capital often comes from the company founders' personal assets or from friends and family. The amount of money is usually relatively small because the business is still in the idea or conceptual stage.]
"I received this advice early on and tell every founder I meet who is fundraising the same thing," Fine explains. "You as the founder, your job is to control the fundraising process."
"You as the founder, your job is to control the fundraising process."
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She was resolute, telling potential investors: "'This is the amount we’re raising, this is the day we’re closing, you’re either in or you’re out.'" And she got it done that way. "I couldn't continue to chase people in circles, it was crazy towns. I had to build a business."
In both Series A and Series B she took a similar approach. She was strategic and thoughtful, meeting with VCs when it made sense and getting to know them. When it came time to raise, it was go time. She took meetings, had term sheets by the end of those meetings, and then made decisions very quickly.
[define it: Series A: Series A is usually the first level of fundraising where VCs get involved. The name refers to the class of preferred stock sold to investors in exchange for their investment. Usually in this round you will see the company's first valuation.]
Another part of controlling the process she says, is taking all of the multifaceted variables into account. "There are questions," she explains, "that you need to ask yourself when you talk about why you're raising money. Are you raising money to accelerate growth? Could you build this business without raising money? Do you know what your business model is? Do you know the metrics that you’re trying to hit?"
That's your job as founder: to have a business model and monetization strategy in place from day one.
Your job as founder is to have a business model and monetization strategy in place, from day one.
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TAKE A SERVICE ONLY AVAILABLE TO 1% AND DEMOCRATIZE IT
It's a simple, but brilliant idea-- take a service that only a small percentage of households can afford, and open it up to more people. More people=more work=more revenue.
"You’re talking about taking a small pool of people in the U.S. who could afford to hire interior designers. We’ve opened up the market to 30% of the U.S."
This represents enormous opportunity for growing a consumer base, while offering designers the ability to extend the arm of their business. It's simple supply and demand, where both parties benefit. People get spaces they loves; interior designers get to do the work they love.
"Design is more of a science than I think people realize," Fine says. "You don't have to be in a space to make it impactful. As long as you have good assets in place— whether that’s photos, video, and obviously dimensions, then you have the opportunity and ability to design just as well as if you were in person. And most importantly, make an impact in someone's life."
CHICKEN OR EGG? DOESN'T MATTER, JUST LAUNCH
"I’ve been meeting with a lot of female founders," Fine says, "and I’ve had the same conversation the last three meetings. They tell me they want to wait to launch until they feel that they’re ready."
There is however, no such thing as ready. Sometimes the founders don't want too many eyeballs on an unfinished product. Sometimes they are worried about letting down a customer or not being able to deliver.
But, Fine notes, "When you’re building a company from the ground-up there is always the chicken and the egg. You have to go for it. You have to put it out there and see what it does."
"When you’re building a company from the ground-up, you have to go for it. You have to put it out there and see what it does."
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In the beginning Laurel & Wolf was far from perfect, but that didn't matter. "The last thing you want to do as a tech company is go out and build the entire working product from A to Z," says Fine. "You really have no idea what it needs to do and what it's going to look like."
Adding, "There is no such thing as perfect."
THE FUTURE IS MAN & MACHINE, WORKING TOGETHER
"Our software," she says, "represents the best combination of humans and technology working together to really transform people’s lives. Our clients get to live a better way through the spaces that they spend time in."
At the end of the day, she realizes that all the product recommendation and algorithms can’t predict how someone will feel in their space. But that’s where the designer comes in.
“A designer,” says Fine, “really understands, beyond the aesthetics of the space, the aesthetics of the person."
Arianna Schioldager is Create & Cultivate's editorial director. You can find her on IG @ariannawrotethis and more about her at www.ariannawrotethis.com
Fundraising Fundamentals with Away -- Plus a Carry-On to Fly For
Get your company off the ground. Advice from two former Warby Paker execs.
Away, founded by Jen Rubio and Stephanie Korey is a direct-to-consumer luggage company from two former Warby Parker execs. To get their company off the ground they raised over $2 million in seed funding, banking on the idea that luxury travel accessories needed rethinking. They wanted to create luggage for the way "people really move" that didn't also cost an arm and a leg.
The duo created a beautiful, high-end minimalist carry-on without the high-end price tag. At under $250, Away just made traveling in style (hello: silk lining, removable laundry bag, TSA approved lock, charging ports) a whole lot easier. In fact, you're going to plan a trip just to take this bag for a spin.
We checked in with Jen and Steph to talk fundraising, believing in your product, and of course, the best meal they've ever had at an airport (shoutout to the Delta terminal at LAX).
For someone looking to raise capital, where is the first place to start?
STEPH: The best place to start is researching how companies in a similar industry and stage as yours have raised capital. There’s a ton of information online. If you can get introductions to founders who have done it and learn from their experiences, that’s the best route forward.
What went into fundraising for Away? How did you establish what you needed?
S: We thought first and foremost about building a company, not fundraising. We developed a plan and a financial model, and figured out where in that plan we would need capital to keep moving forward. We worked for many months and only started fundraising when we reached a point where additional capital was needed to keep making progress.
Women notoriously don’t talk about money. Do you find asking for money scary?
S: Not at all, investing in a promising early stage company is a great opportunity, not a donation. Early stage investors are constantly looking for the next big deal and early stage companies are looking for great investors who can help the company grow. It’s a win-win situation for both parties.
"Investing in a promising early stage company is a great opportunity, not a donation."
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For women who don’t have a background in writing business proposals, what would you suggest?
S: Utilize your network, that’s exactly what mentors are for. There are actually a ton of great resources online, and if you can couple that with advice from someone you trust, that’s ideal.
If comfort and trust are key to any good business deal, what would you say to women who are offered the funds, but don’t like the deal?
S: With any negotiation, the most important thing is understanding your options. If you don’t like the terms of the deal, you can absolutely go out and try to find better terms elsewhere. Once there are multiple investors interested, that helps to set a “market rate” for the deal.
What did working for Warby Parker teach you about direct-to-consumer brands?
S: We learned so much from Warby, they’ve set an incredibly high bar for modern retail brands. The most important takeaway was the power of an incredible customer experience - if you singularly put your customers first in every decision you make, they will be loyal brand ambassadors forever.
How do you gain the trust of a customer? How do you gain the trust of investors? Are the tactics similar?
S: I think it’s very similar. You gain trust from anyone by being very honest, thoughtful, genuine. Never try to trick or exaggerate to an investor or customer, you’ll lose that trust forever.
What sets Away apart from other luggage companies?
S: It’s so disappointing to be bogged down by cumbersome luggage, dying electronics, or lack of organization. More than anything, we wanted to eliminate some of that so people can really focus on the joys of travel.
While working at Warby Parker and Casper, we saw those companies completely transform the previously poor consumer experiences and high prices for the eyewear and mattress industries. In January of this year, we decided the luggage industry needed similar improvements, and created Away to offer consumers the highest quality luggage for a fraction of the price with a great consumer experience.
JEN: While we’re starting with luggage, we’re really on a mission to create a brand and community that encourages people to explore new places and cultures and equips them with whatever they need to do that as joyously and seamlessly as possible. Our own travel experiences and desire to cultivate authentic connections globally have been huge driving factors in the product, brand, and community that we’re building. Away takes a people-driven approach to everything we do: making things beautiful and functional, creating things that are emotionally and technically meaningful, and continually thinking about how people will interact with us.
People’s attentions are more scattered than ever. Do you think the “elevator pitch” is more or less vital than before?
J: People are being pulled in so many different directions now that you need to be able to communicate your idea in a way that they’ll remember after your conversation. What’s more important than a staged “elevator pitch” is being able to gauge the person’s interest or initial reaction so you can tailor your conversation to be something they’ll remember. A polished, effective pitch is nice, but to be engaging you have to be able to be fluid.
"To be engaging you have to be able to be fluid."
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What are some of the most important questions you need to ask investors?
J: Do you understand our business and our approach? Can you refer me to entrepreneurs you’ve worked with? What kind of follow-on investments do you see the company needing? What’s your preferred way (method, timing) of communicating about the business? What’s your end game?
Not only do question like these help you figure out if you and the potential investor are aligned in the business and the strategy, but also aligns expectations for future investment rounds, a potential exit, and involvement in the company. It’s also important to be aware of potential personality or culture clashes since you could potentially be working with this person for a long time.
Best meal you’ve ever had at an airport:
J: The Salt Lick at AUS for a last shot of BBQ before leaving town. Pak Loh Chiu Chow for dim sum at HKG. For best selection, the Delta terminal at LAX wins: airport versions of some of my favorite LA restaurants, like Lemonade, Border Grill, Real Food Daily, and Lotería.
Tip for being a good traveler:
J: Leave time for the unexpected. Some of my favorite travel memories are experiences that came up along the way that I never could have planned. It’s great to have a sense for what kind of trip you want—seeing friends, touring sights, total relaxation, etc.—but allowing yourself to take advantage of surprises along the way will often lead to something really special.
When you want to get Away:
J: I go on Kayak with a budget in mind and then start typing in airport codes.
Images courtesy of @joannepio for @thestyleline