On Fundrasing

Having just closed our Seed raise I thought I would jot some thoughts down on what I learnt in the process for next time. I’m sticking this out there for any founders looking to raise today as well.

Thought number 1: Wear Sunscreen
To quote Baz Luhrman – “The long term benefits of sunscreen have been proved by scientists, whereas the rest of my advice has no basis more reliable than my own meandering experience.”
Or to put it even more succinctly; asking a founder how they did something is sometimes a lot like asking a lottery winner how they bought their ticket. Their advice may or may not have any utility to you at all.

So my strongest tip is actually:
1. Don’t take anyone’s advice wholeheartedly.
What I mean is, you think about your start-up 100% of your working and sleeping life (or at least you should). Even the best informed, most interested advisor will only manage 1% of that cognitive resource (if that). So don’t index on any one person too heavily.
I find the best way to take advice is to combine it all, triangulate the common themes, and then do whatever you feel is best anyway. At the end of the day you aren’t driving a train or even a car, you are driving a snow plough through a blizzard and only you can really feel the ground and make the decisions where to steer.
So don’t take anyone’s advice too strongly.

Listen, but don’t listen. Especially to me.

2. Build something good.
This might be obvious, but it’s a great mindset to hold when going out for fundraising (or in fact at any point founding something). Look at what you are doing not as a founder but as a shareholder (which you are). As Paul Graham points out, the best way to get funded is to build something people actually want. There’s no point trying to con your investors, because your largest investor in time and life opportunity is you.
But I suppose deeper than this is – you need to really believe in what you are doing, to the point that you get emotional or kick things when people don’t get it. That’s the frustration of an amazing opportunity being thrown away.
So build something you genuinely believe in. And keep building it till it becomes almost unbearable to think about not being able to build this any more. Then bottle that fury- it’s your rocket fuel.

3. Run a process
Everything is sales, including sales, but especially fundraising. You are selling equity in your company, and at this stage, you are really selling yourself and your co-founder(s). Like any resource you want to maximise the impetus for your customers to want to buy. As one of our advisors pointed out to us, you are optimising for three things, only one of which is money: speed, funds and time. Time is actually your most valuable resource, so funnel all of your meetings into a set time period (weeks not months). Limited time sales exist for a reason.

4. People not FOMO
Having said that you don’t automatically buy everything on sale every time you enter a shop, so you need to think about why. Why does the person across the table from you do what they do. Why do they invest at all, and what are they looking to do with their lives?
I asked every one of the 70+ investors I met in this process what they are personally looking for in their founders. The answers were surprising, here are some of my favourites:

  • Teams others will follow through fire
  • Teams with a chip on their shoulder, that is out for revenge on a problem (I call this the Michael Jordan mindset)
  • Teams that follow a scientific process
  • Teams that can’t imagine doing anything else

The relationship you create is way more important than anything you say out loud.
By way of an explainer here, you are basically pitching to someone that has to then take your idea and champion that themselves to their firm and partners. They need a) to truly connect with you and b) take that connection and defend it internally.

5. Tell a story
And that’s why the story so important. One of the most useful things we did was ask why we are doing this over and over again till we found something true and non-obvious.
For example ->
– Why are we creating AI to take over doctors admin? So doctors have more time.
– Why do doctors need more time? So they make less mistakes.
– Why is that important? Because mistakes in medicine are life and death, so what we are actually trying to do is to prevent patients dying as a result of medical error.

Finding the most important core of what we are doing is hard to do but essential. In that story there needs to be something about you- why youwhy do you care? Again, don’t con anyone – these questions are for the biggest shareholder first- that’s you. Why ARE you doing this? And money really isn’t a good answer- there’s lots of much safer and more boring ways to earn money.

6. Make it a conversation
Ask them what they’ve understood, ask them what they’re looking for. Plan to just talk without slides, but have a deck to present off or a demo if they want to. The goal here is make a real connection, to get to the next meeting, not to “win”.
They will remember about 5% of what you said, and about 90% of how it made them feel, so make the conversation fun. Remember the people sitting opposite you have often sat on your side of the table as well, usually have really interesting backgrounds and motivations themselves. Make the process about really trying to talk to them, as opposed to make a sale.
And lastly, you must make the meetings fun, because otherwise you will be so miserable at the end of this process you will probably want to quit even if you do get funded.

VCs are not risk-averse creatures (quite the opposite by the very nature of the game) but they are BS averse. Don’t lie. Don’t make stuff up. Don’t exaggerate. Again, the main person you are actually conning is yourself. If there’s an obvious hole in your business idea, don’t worry. If there wasn’t you’d be a small company, not a start-up.
“Start ups are exercises in de-risking uncertainty” – another Grahamism, so embrace the uncertainty. Here’s our hunch, here’s how we will prove it, and here’s the massive value if we are successful. If you aren’t getting much belief, de-risk it some more, gather some more evidence, talk to more people, try and build something non-scaleable that can rapidly give you more learning. Teams that learn fast from their mistakes win, and VCs want to see that. In fact, my hunch is most VCs want to invest in teams that have made loads of mistakes already, if they are clearly learning.

8. No is good
It’s obvious to say you don’t need 100 VCs to want to invest, you only need one. It’s slightly less obvious to observe the more VCs don’t instantly see the value in your business, the more potential value it has. The real gold is when you have someone tell you it’s impossible.
If you have genuinely done all of the above, believe you can do it, proven that belief out on some level and someone still thinks it’s impossible, you’ve found yourself a hugely valuable potential idea. This is the “contrarian insight” which Peter Thiel and others have identified as a key part of hugely successful future companies.

9. Be polite, be nice, be you
Remember you chose to do this. And that’s valuable. So don’t become someone else- be polite, be nice, but be yourself. Everything about founding a company is already so hard, don’t compromise your happiness and character as well. If people don’t like you, so what? I saw this a while back circulating on social media and it’s so so true.
“When you’re 25 you worry what everyone thinks.
When you’re 35 you don’t care what everyone thinks.
When you’re 45 you realise they never thought about you anyway.”

10. Practice makes perfect.

But also makes you resilient. A few things I found useful and a few things I will definitely do next time:

  • use your transcripts when you thought meetings didn’t go well – grab the recording and then make it more concise – learn that version
  • Over time you’ll find the optimum clear and confident answer. If you can’t find it you probably need to go and actually answer that again
  • Rank your top funds and go to them last, the funds you aren’t so excited about first. You can learn so much from those early discussions.
  • Having said that the very best funds asked questions we hadn’t heard before – index also on originality of thought as that’s useful to you in the long term in a partner
  • Cold outreach is not useless but nearly – seek warm introductions from portfolio founders, lawyers or even other funds where they passed for some reason that wasn’t because of you (eg wrong stage or geography). Ask for intros – most people are happy to oblige.

So that’s everything I know about fundraising. Whether any of it was useful or even the deciding factor in our raise I’m not sure- macroeconomics, investor thesis, framing bias – there’s so much you can’t see or control in the process as well. Don’t worry about it. My last and most important point:

You can only really fail if you give up, everything else is just learning.

So just keep going. Iterate with every no, chase down every intro. Having 100 funds in scope means it becomes a numbers game, not personal.