This week NewsWhip, the company I'm cofounder of, announced that we raised a round of investment. In the lead up to raising the money, we got a pile of advice about how to raise money, and now seems a good time to share it with anyone else dipping their toes in the water.
Cute or good, that is the question
95% of the fundraising advice we got broke down into two categories: (i) be cute, or (ii) be good. I reckon trying to be good is 20x more important, and in the end that's where we put our energy.
First though, being cute. Not cute like kittens or Japanese pop stars, instead, cute like a cattle trader with some questionable cows for sale - in Ireland, what we call a "cute hoor." Put simply, being cute means: "figure out what they want to hear, and then reverse engineer." Your full time job is producing plans, projections, strategic marketing manifestos with all the pieces people need to keep happy. Tell everyone your margins in FY3 will be 300% and your revenues will be $1.5 million. Say you'll create ten jobs here, five jobs there. Shoehorn your business into some strategic sector that's earmarked for investment by the local council or the EU or the or the Department of Telegraphs and the Islands. Get loads of tax breaks and grants ("you'd be an eejit not to").
Talk confidently about your cost per customer acquisition, even if you haven't tested market reaction to your product yet, or even built it. Bake a bullshit souffle, serve it hot, and make sure everyone eats it before it collapses. Don't ask how it tasted afterwards. The emperor is fully clothed, we all agree. And his garments are just splendid! And that souffle was delicious.
Phew. You might get a sense of how I feel about all of that. Thankfully, the other channel of advice is more inspiring. Try to be good.
This means know yourself and make sure you're a good team for the job. The super accomplished Silicon Valley people who come to Dublin for the Web Summit always emphasize the importance of a great team. That doesn't mean you have to be MIT/Stanford coders, you just need to have some skills, have found a good opportunity, and be willing to communicate and work hard together. You can of course be a one person founder, but you're better off clustering with others quickly.
Make sure you're building something that works and that people want. Doesn't have to be insanely original. Something that will solve a problem.* All the good tech mentors will tell you: having an authentic narrative around addressing a market problem/opportunity is a critical part of being good. And authentic means real, not real-sounding: make sure you really get the problem or potential client, don't force your solution.
Good is curious. The really successful founders I met are, I think, curious people. They tell you to make an honest assessment of your technology and market and your place in it, without too much fluff. They tell you to learn constantly. Me and Andrew are still in the early stages of knowing our markets. At least we've got better understandings than if we'd gone in with a pile of assumptions about them.
Good means being OK with trial and error. YouTube and Twitter founders have plenty of tales of things they did that just didn't work. Important note here: trial and error is not an excuse for half-assed end product, it's a frame of mind that allows you to let go of something that's not working without taking it too personally, even if you created it. That means you're OK saying the emperor has no clothes, even if you're the emperor. Remember, at the end of that story, the emperor laughs when he recognizes he doesn't have clothes. He doesn't chop off everyone's heads, or pretend he does in fact have clothes.
And being good means knowing your stuff. Revenue projections aside - hey, we all plan to make some money - what is important is to know your cost projections. Where do you really need money? What will you need to spend to get to x, y, z milestone? And on milestones: I suspect the only important milestones for a startup are product builds, traction, and sales. Anything else is just for keeping the Department of Telegraphs and the Islands happy.
The reality is that most startups are a bit cute and a bit good. They'll do whatever they have to do to survive and get funding, as they should. But it's distracting, wearing both hats - pretending you have all the answers about a market when in fact you should be recognizing that you have loads to learn.
For that reason, take with a pinch of salt anyone who urges you to just be cute, milk the system, "tell them what they want to hear". They might have a point, but if you internalize that kind of thinking too much, in ten years, I reckon there's a danger you'll be just like them. In other words, keep the bullshit at arms length, and don't over-promise to get goodies. Good investors will be more interested in verifying that you're good - or trying to be good.
And - whatever stage you're at, good luck with your endeavors.
* Footnote: While a problem solving attitude is critical, I'm tired of the insistence on narratives like "O Joe has this problem, then shazam! - my product solves his problem, just like that." I feel these stories sometimes betray a self-serving understanding of the problem Joe actually faced. It's hard to solve someone's problem just like that, and the reality is your product might improve things but won't really shazam all of Joe's woes away, unless he needed a light and you just invented matches. Like what "problem" did Twitter solve? In the real world, sometimes a product just improves a process or a habit or a work flow, or is useful, and that's a more accurate way of thinking about it.
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