Startup general interest

Thick skin and sticking with a fundraising process

By January 27, 2011 5 Comments

Jessica Livingston, one of the founders of Y Combinator wrote an article yesterday titled What stops female founders? which was partly about the under-representation of women in tech (4% of Y-C entrepreneurs are women) but also has a good slew of general advice for all entrepreneurs.

I particularly liked the section headed ‘Thick Skin’ which started with the oft repeated but worthwhile reminder that for most entrepreneurs the ability to continue on in the face of widespread criticism and lack of understanding is a pre-requisite for success.

Founders face all sorts of rejection in the early days. You are suddenly in a world where you get slapped around a lot, so if you take slaps personally it is going to be distracting. People will dismiss your idea, complain about the functionality of what you’ve built, or publicly criticize you.

What is also worth remembering is that there comes a point when the business has reached a certain scale (say 20-50 people, low seven digit revenues) when listening and taking on feedback become more important and carrying on doggedly can be a limitation.

Then Jessica turned to fundraising:

Lots of founders find the fundraising process totally demoralizing, too. When you have a hard time raising money it’s hard not to start believing yourself that your company is lame. But even successful founders often have to meet with lots of investors before finding the one that agrees to invest.

This is spot on, I have seen founders get demoralised by a difficult fundraising process, and once that happens it gets even more difficult.  VCs like enthusiastic entrepreneurs much more than ones that are tired and dispirited, even when the reasons are understandable.  That said, for most businesses it is equally important to remain alive to the possibility that there might not be an attractive funding option open at any given point in time, and to be prepared to call time when a process gets too difficult/distracting. The trick is to keep alternative options open (and there are nearly always alternative options) and then set a date for making an objective call on whether the fundraising process is likely to succeed.  Keeping the call ‘objective’ is often tough as the non-funding route is likely to be much harder work.

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