Getting Funding: Tips from the experts at Techweek LA
At Techweek LA last week, I attended a panel called “Things Investors Won’t Ask You, But You Should Ask Them.” This panel was made up of founders with very different types of companies discussing what they went through with VCs and investors to get capital for their ideas. The panel washosted by William Hsu of MuckerLab and included Aaron Hirschhorn of DogVacay.com, Matt Munson of Twenty20, Wade Eyerly of Surf Air, and Zach James of Zefr (pictured above). They all gave some great advice, here are a few nuggets of wisdom from the discussion:
Relationships are key.
Early rounds come from relationships, you should start by asking people for advice, not money to build a solid foundation for future funds.
Market, Team, Traction.
Make sure you have these three things defined and established before you start looking for money. This doesn’t mean you have to have sold thousands of products or have millions of members in your community, but this does mean that you should know your market inside and out, you should have a solid team in place, and you should have traction with your audience as well as investors. When you have all three of these, this is a good sign you should start looking for money.
Communicate when needed.
Once you get money from VCs, feel them out and make sure you cater to their communication needs. This means that some need to be updated daily on every detail of your company while others are good with just getting a quarterly report.
Handling bad news.
When you have bad news, it’s best to distribute it as quickly as possible. When sharing the bad news, make sure you share it with a plan attached as to what you plan to do about it. Last, if possible, deliver the bad news in person if you can.
3 Questions to ask:
- Ask for references where things didn't go well. Find out from these clients what the investor was in non-ideal situations.
- Ask about the actual fund size and know how liquid the fund really is.
- Ask what else they can offer besides financial support.
While there were many awesome panels at Techweek, this one was particularly eye-opening into the world of investors/VCs and the panelists really seemed to know their stuff. Are you currently working with investors? What tips do you have for others looking for funds?