This blog could also be called How I Raised $2.3 million Through My Network When I Was 21, that’s how important warm introductions are. Your personal network is an entrepreneur's most important asset going into fundraising for your business.
The first time I raised financing I was 21 and new to Silicon Valley. I had a start-up that I had dropped out of university to focus on, mountains of passion, but was inexperienced in how to raise money from angels and venture capitalists. To be honest, I found the process intimidating and opaque
Fortunately, I made it my mission to meet as many mentors and advisors in Silicon Valley as possible. I set out to learn from them, and through these new contacts, I was then able to figure out connections to all the reputable investors who may like what we were building at my start-up Studypool, and hopefully believe in us too.
I met with over 100 people, and was able to create enough of an impression that although young, we were a determined, hyper-focused company, with the potential to make an impact. The power of these connections was everything. Without the strategic help, advice and warm introductions from my new network of advisors, I wouldn't have been able to raise $2.3 million, which we are now using to build the business.
I also may not have had the context (and decades of collective experience) on how to handle finding our lead investor, term sheet negotiations, and creating momentum to fill an investor round. Having a network that was gunning for me, made each step in the process not necessarily easy, but within the scope of what was possible. Advisors and contacts told me stories of how they had fundraised, and these same people helped me with strategic introductions so I could go pitch Sand Hill Road and New York City investors.
The start-up world runs on warm introductions, and a complicated network of entrepreneurs, angels and VCs. Reputation is important, and I quickly learned that maintaining close relationships was one of the keys to our success.
I also learned that entrepreneurs are some of the most strategic people in your network. Beside the fact that many have already been through fundraising before and so can give you the lay of the land - entrepreneurs also tend to have the most accurate feedback on investors. Where other venture capitalists may be diplomatic, a fellow owner operator can tell you what it's like to actually take money from, and subsequently work with, specific investors. Introductions, and advice from other entrepreneurs is golden.
Along with being a way to meet and gather information on investors, your personal network of entrepreneur contacts will get you through the tough times and keep you grounded. When you have spent weeks worrying about how to grow user numbers, sometimes a conversation with another founder gives you that rare insight that means your start-up turns a corner. Other entrepreneurs can also call you on your bs in moments when you believe that things will be easy.
While Silicon Valley may focus on metrics, hype, and innovation, with everyone running to the latest frontier technology or Virtual Reality venture, what's less discussed is the power of our human networks. Often it is your own ability to win over new contacts and convince them of your dedication and mission that is the difference between getting the next killer meeting, or not being able to pay your office rent. Technology will always be the key ingredient of a start-up, but not far behind is a founder's ability to hustle, meet with people, and essentially convince them to fall in love with your business. For this reason, great entrepreneurs never fail to recognise the power of our human networks.