Whew. We’re in business at WorkHere. We’re in all the app stores, and we’re getting users. WorkHere is my fifth try at starting a business. WorkHere is also the first time I’ve raised money instead of bootstrapping. Turns out that raising money (especially outside Silicon Valley) is harder than it looks.
There’s a few reasons that people you think are great founders with great ideas struggle raising money:
Nothing is “Everything”
You’ll hear speakers say “traction is everything” or “revenue is everything” or “users are everything”. Ignore them. There isn’t one single thing your startup will do to raise money that is everything. There’s lots of boring checkboxes to fill and a lot of attention to detail. Some details will matter to some investors, and some investors will care about others.
The structure of the deal matters.
How you put your company together and the details of the investment matter a lot. For some investor, tax credits and loss carry-forwards are it. For others it’s being part of the story. For others, it’s the founders and their track records. Some investors can only invest in C Corps. Others will only invest in LLCs. Some investors are OK with convertible debt. Others want stock. Understand who and where you are raising money from and structure your deal accordingly, and keep in mind that you will never be able to please everyone.
Experience raising money makes a big difference.
Having a founder that has been successful raising money with a venture funded startup is important. No matter how much domain expertise, no matter how awesome the idea, and no matter how much traction: having someone on the team that understands what it takes to get to yes with investors changes the game.
Get Traction Fast
AngelList founder and serial entrepreneur Naval Ravikant defines traction as ‘Quantitative evidence of market demand.’ Getting traction acts as an accelerant to getting to yes with investors – and the more traction you have the better off you are… but all of the other points above are still important.
So, back to WorkHere. Did I mention you can get WorkHere in all the app stores?