I had raised $10mm from venture capital, AMA🫡

@jenna_farrell Hey Jenna, the initial stage of raising pre-seed funding can be just as challenging as the later stages. To kick off the project, you'll need three key elements: a reliable team, a minimum viable product (MVP), and some resources to get things going. When it comes to building a team, prioritize trust and skill sets over fancy titles. It's okay to lack a CTO at this stage. As for the MVP, remember that a well-designed website can serve as a solid starting point. If you can identify a problem that resonates with a meaningful market and attracts investor attention, you can raise significant funds even with just a website and a waitlist. Investors are often willing to believe in you if you can demonstrate early signs of pre-product-market fit. For instance, we raised $3 million with a 50k waitlist before launching our Cheese debit card. Acquiring resources doesn't solely rely on money. When I started my current startup, Cheese, I had only $5,000. It's crucial to build an investor network and a talent pool that you can inspire. A diverse team comprising designers, developers, accountants, legal advisors, growth marketers, and product managers is essential. Moreover, showcase solid results such as a long user waitlist, exclusive contracts, and your personal reputation from previous experiences, these are all unique resources you should try to have but takes time. Furthermore, it's worth noting that securing your first investment at the pre-revenue stage is possible. However, it's crucial to have a clear plan on how you intend to generate revenue and ensure that your business is viable with a roadmap to reach gross-profit breakeven and eventual profitability. During the initial raise, don't stress too much about company valuation. Many successful companies were initially valued as low as $1mm during their first round. Airbnb's early valuation was at $4mm. Your first investor take great risks, they deserve the reward.

@kenlian Wow thanks for such a detailed answer! May I ask how you grew your waitlist to 50k on a limited budget? That’s what I’m working on at the moment.

@jenna_farrell To be honest, it's a case-by-case answer and requires conducting numerous AB tests on the landing page, messaging, advertisement channels, and target audience. You're essentially building engines that work specifically for your product, with the aim of delivering the right messaging to the right audience through the right channels. So, your focus should be on achieving these three key aspects: getting them "Right." That being said, Facebook/Meta offers more attributes and interest groups that you can segment and target. It also provides valuable early signals to assess the relevance of your messaging and audience. Hence, it's a good starting point for your AB testing. Once you have identified the right audience and effective messaging on FB/Meta, you can then expand and display it on platforms like Google or other channels you believe would be effective. Keep in mind that this testing process takes time and can be costly at the initial stages. During the early days at Honey, we would try 100 creatives with different massaging then kill the less-performing 50 and then add another 50 new one and continues to test, after 2 weeks, you should have enough signals from users to know what works and what doesn't, and you just give all you have to the one that is working. Wishing you the best of luck with your testing endeavors.

@chrismessina let me know my summary of three key elements to get your first investment make sense, would like to know how did you get your fist check?

@kenlian I guess you had previous exits or good introduction? In 2018 I raised $1mm pre revenue but it took a lot off convincing, negotiation, and introductions from other founders to convince investors.

@vladimir_zivkovic yes man, it was very difficult even we have some good track records. It was an dilemma for us, we have to raise a certain amount of money so that our partner bank agrees to back us to launch our cheese debit card, so we have to raise a seed after the pre-seed. Each raise is complicated, you know.

@kenlian Good job man, financial sector is challenging but rewarding, I wish you and your team all the best, and to scale it to billion and beyond!

@vladimir_zivkovic Thanks bro, it means a lot from a founder to a founder. I wish you good success as well and don't forget to take care of yourself in this tough environment.

@kenlian I know how hard it is, and what it takes to raise capital while still managing company on a day to day basis. Unfortunately my previous startup failed even if we raised all that money, but it is a lesson learned... Health is most important while you are in that process, stress and sleepless nights can eat your mind...

@kenlian how did you get access/introductions to these 300+ investors? What do you suggest is the best way for someone with zero network to navigate this?

@heyjoshua I am glad you ask this question, this is also a struggle for me at the very beginning. The easiest way is try to be accepted in a incubator, you need to convince them to your idea and team, generally they write the first check, $50-200k and takes 10-15% of your equity, don’t worry too much about dilution at this point. Once you are part of the incubator community, you then can begin to reach out all the portfolio companies and ask for advice and in person meetings. Founders in general are very supportive to others founders from the same investor and are willing to meet you, chat over coffee or beer and then you get to know them, ask them for intro to other people you should meet, advisors you should get mentors from and just keep on expending your network. Add everyone you chatted with on LinkedIn so that you get mutual connections for upcoming networking. It takes time but this is how I grow from nobody to somebody.

@ramandeep_sharma1 It is getting harder, Q1 2023 has the less capital invested in the last 10 quarters.

@kenlian so what strategies you would suggest to someone who is looking to raise money for their startup from invester POV what they are looking for.

@ramandeep_sharma1 From a pre-product and pre-revenue standpoint, raising capital is both challenging and advantageous. Without a product or revenue, you're not obligated to demonstrate strong metrics like user growth, CAC, LTV, or revenue. Instead, your focus should be on providing robust signals to investors, convincing them that there is significant user demand for your product and a willingness to pay for it. Signals such as a substantial waitlist, user feedback from surveys, or partnerships with prominent brands can all serve as strong indicators of potential success.

@onchainparham sure, mine Linkedin is here: https://www.linkedin.com/in/runx...

@vladimirzh Establishing trust with the lead investor is crucial, as they typically make only a few deals each year. Your objective is to convince the lead investor that you are the one opportunity worth trusting and investing in. It is possible to secure funding even without generating revenue, provided the investor believes in your capabilities and potential compared to other founders. Remember, investors are pitched by numerous founders, so it's essential to differentiate yourself and demonstrate why you are the best choice.

@lydiawang Investors look for entrepreneurs who have vision, passion, problem-solving skills, execution abilities, market knowledge, strong leadership, coachability, financial acumen, integrity, and trustworthiness that is what ChatGPT will answer. lol. But my personal answer is that during the pitching process, investors will gauge whether you possess the essential qualities, skills, extensive network, and industry knowledge required to scale your business successfully and achieve remarkable heights. Additionally, they assess your determination and resilience to overcome challenges, secure your position in the market, and ensure the survival and growth of your venture. Basically, investors support founders who can rock it when things are going well and hold it together when times get tough.

@thesystemarchitect68 Hello Mike, $10mm is how much I raise in the past 5 years, not all in one round. At your pre-seed stage, you will expect 10-15% equity for the round.

@anshukg that is more for a product market fit discussion, and I think we have not yet reached a product market fit. Do you have a frame work I can learn from?

@kenlian We're still in the early stages of figuring it out, we're actively engaging with our users and their feedback to understand it better. I'm certainly interested in learning more about any frameworks or methods that could assist us in this process. Please feel free to share any resources you find valuable.

@ruby_smith01 In summary, I pitched to 300 investors, faced rejection from 270 of them, but received support and belief from 30 investors.