Why You Always Need A ‘Ride Or Die’ Investor And Other Top Advice On Getting Funded

For aspiring founders, the art and science of getting funded and raising capital is no small feat. With an ever-increasing number of entrepreneurs competing for investor dollars, positioning a startup for fundraising success can be a long, steep climb, but one that has the power to transform visions into reality.

Here, six of today’s most successful female founders share their insights on navigating the funding process and what ultimately ensured a successful partnership.

What’s “The One Thing” you wish you had known going into the fundraising process?

Highlight Your Ability to Persevere

“I always like to stress, ‘Don’t invest in dots, invest in curves.’

Show your investors the progress you’ve made, even if you’ve encountered barriers or setbacks along the way. At ClassPass, we’ve had to pivot our product and business many times before we started to see success and adoption, so I think it’s important to remember to not get stuck on one idea and instead learn from those moments. If anything, you’ll show your ability to be nimble and redirect your pursuit after getting stuck. Highlight your ability to solve problems and persevere no matter what challenges come up. For me, and for ClassPass, it was about staying true to that core mission of making it easier for people to connect to the things they love, while also opening up to the realities of what the market wanted and pivoting in order to execute on that.”

-Payal Kadakia is the CEO & Co-Founder of ClassPass. ClassPass allows consumers to access the largest network of fitness studios through monthly membership. In November 2015, ClassPass raised $30 million in funding from Google GOOGL +0.50% Ventures, bringing the company’s total funding to $84 million.

Manage the Process

“When I first went out to raise a seed round for The Muse, I had heard about ‘managing the process’ but it wasn’t until our Series A in 2015 that I really understood what that meant. I wish I had known what was and wasn’t in my control, to keep a fundraise moving forward, capitalize on momentum, and get it done quickly so that my co-founder and I could get back to focusing on the business.

When I speak to first-time entrepreneurs now, my recommendation is always to keep a spreadsheet of all the investors you’re talking to, with how you were introduced, their location, typical check size, and any next steps. The critical part — and this is both an art and a science — is making sure that no one investor get too far ahead of the rest, nor too far behind. Being strategic with the timing of meetings or replies, and keeping everyone up to date on your expected timeline really helps here. The stronger your position going into fundraising, the more you can dictate timing, so be realistic about your situation, give yourself time to raise, and adjust accordingly.”

Kathryn Minshew, founder and CEO of The Muse. (Photo by Brian Ach/Getty Images for TechCrunch)

-Kathryn Minshew is the Founder & CEO of the career site, The Muse. In June 2016, the company announced a $16 million round of Series B financing led by Icon Ventures with participation from Aspect Ventures, DBL Partners, and QED Investors. This brings the company’s total funding to $28.7 million.

Don’t Marry After The First Date

“The most important piece of fundraising advice is to pick your investor like you would pick your spouse. Just as you wouldn’t marry someone right after the first date, you shouldn’t take money from the first investor you meet with just because they are offering you the money. Your goal should not be to raise money from just anyone, the goal is to raise money from the right partner who will go the distance with you. Get to know your investors and get references from other founders, because you are going to end up spending a lot of time with your investors through many milestones. The right investor partner for you is one who is aligned with you on vision, approach to execution, and culture. You will have to work through good and bad times together. You want a ride or die investor.”

-Shan-Lyn Ma is the Founder & CEO, Zola, the ecommerce site reinventing the wedding registry business. The company raised $10 million in Series B funding last year led by Canvas Ventures, with participation from Thrive Capital, BBG Ventures, Female Founders Fund and Forerunner Ventures. This brings company’s total funding to $15.85 million.

Reject Rejection

“When I first set out to meet with angel investors in Seattle, I had just been rejected from one of the most well-known incubators in Silicon Valley. I lost my co-founder and all of the volunteers who had been working with me. At the time, it seemed as if everything had fallen apart. For a moment, I thought to myself, ‘There’s no way I’m going to get these investors to support my cause.’ The rejection had waned on me, causing me to doubt myself for a split second, but I learned quickly after my meetings that the challenges I had faced no longer mattered. I had fallen into this trap where I felt as if the validation I needed would come from others I knew to be successful.

It was then that I realized what really mattered – I was creating something to inspire little girls. That was the only validation I needed. I wish I had learned much earlier on that when you’re passionate about something, you need to put yourself out there, be vulnerable, and be open and honest in sharing your ideas. That’s how you learn to be a leader and that’s what investors will see.

By overcoming failure and doubt, I was able to raise my first round. My advice is to never give up. I never gave up because I believe that this is what I was born to do.”

-Debbie Sterling is Founder & CEO of GoldieBlox, a children’s multimedia company disrupting the pink aisle in toy stores globally. Sterling raised a seed round through family, friends and angel investors before turning to Kickstarter where her campaign raised $285,000.

Do Your Due Diligence

“I think sometimes, we forget that funding is a two-way street. Not only should investors be considering the companies; but companies should be “interviewing” investors. You should speak to them about who they are, check their references (other founders will always tell you the truth – you should always call them!) and really do your due diligence. Founders should remember that selecting an investor should follow a similar process to selecting an employee. Not everyone is a fit for everyone, and finding investors who will be your partners is the most important decision you are going to make.”

-Olga Vidisheva is the Founder & CEO of Shoptiques which connects consumers with the best local boutiques online. Founded in 2011, the site has raised over $2 million in funding from Greylock Partners, Andreessen Horowitz, SV Angel, Benchmark, and Y Combinator.

Qualify Partners for the Long Haul

“If your start-up is kind of like your baby, then investors are basically the baby’s family. They’re there for the long haul and you want someone that can handle the ride – the ups and the downs. So you should choose true partners that you get along with personally as well as professionally. Talk to references and spend time with them before you jump into a relationship; evaluate them just as they’re evaluating you. Investing the time upfront is well worth the effort.”

-Lara Crystal and Lindsey Andrews are the Co-Founders of Minibar Delivery, a delivery service that brings the liquor store to your door. The company has raised $1.8 million in seed funding.

Source|Forbes