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In a morbid way, fundraising is to most startups what death is to humans: pretty much everyone's terrified of it, but we all have to do it at some point or another. And although there's a wealth of information out there about who's doing what and how, what works in New York or Silicon Valley doesn't necessarily translate to Austin.
So, we reached out to four heavy-hitting Austin-based entrepreneurs, including a venture capitalist, a CEO and two chief operating officers and got seven sharp pieces of advice applicable to almost any startup in its early stages. Here's what they said about chasing down those almighty rounds the right way.
1. Be the total package
"Experienced, early-stage investors get excited by the following: visionary, experienced entrepreneurs solving a valuable problem in a huge, growing market with some fundamental, defensible advantage that's been proven through scalable customer traction in a business with healthy margins and low capital requirements." - Kip McClanahan of Silverton Partners
2. Timing is everything
"Make your first raise only when your business model needs it, not when forced by your burn rate." - Joe Kelly, President and COO of Infochimps
3. Seek out a third party
"Look seriously at using a broker to help you connect your message to the VC climate and save the time of first connections with the "just looking" VCs". - Travis Oliphant, CEO of Continuum Analytics
4. Make the right match
"Take the time to research the VC firm and partners. Find a good fit. Not every investor is right for every early stage business. Have they ever invested in your market space? Do they have any direct experience in your category? Have they had success or failures in companies that look like yours? The entrepreneur must find a great fit by picking the right firm. Research to find it." - Larry Warnock, former CEO of Gazzang
5. Act consistently and quickly
"Be persistent -- follow up quickly with potential investors and look for it in any geography." - Kelly
6. It's who you know and then some
"Don't underestimate the value of talking to "associates" in the firm. Some say talk only to partners, but associates can help you prepare and hone your message. They can also become a network of contacts which may help you later with a different firm (when the associate gets hired by another firm)." - Oliphant
7. Build real relationships
"Get to know the actual partner that will be sponsoring your deal and be on your board. Go to dinner with them. Go to coffee. Meet in their office, meet in your office. Get to know them in different settings over multiple meetings. You will be working as a team. You need to know whether your personalities will come together when something goes wrong - because it always does." - Warnock
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