You’ve got to be prepared to pitch investors anywhere you find them.
When I first met Oliver Samwer, Chief Executive of Rocket Internet, he asked us to jump in a cab down the road with him as he was short of time. We had 10 minutes with him and now he’s one of our biggest backers.
My company Goodlord supplies software to estate agents and tenants that takes away the administrative headache and form-filling that is typically involved in renting a home.
We started building Goodlord’s early incarnation with our own money. It was never quite a complete product and it didn’t work very well but it took us to the next stage which was getting estate agents to test it. That led to our first bit of money.
On the way, we had a lot of people who said yes they would invest, but never came through with the funds. This was so damaging and disheartening. I don’t know why people do this: either they don’t like to say no or they feel big saying they will invest (even when they have no intention of doing so).
The hardest fund raising we ever did was our first round. Eventually it came from a client who was helping us fine tune the product. But it was hard-won.
Slowly we started to win customers and managed to raise £150,000 through the Seed Enterprise Investment Scheme – this is a Government backed initiative which gives investors in startups tax benefits.
As we progressed and got more users, we raised some more seed capital from several top tier investors who had heard about us through social media. Don’t overlook this as a great way to create a buzz but it was still, for us, the second hardest round of funding to get.
After that we started to publish some great user numbers to our investors, which got them very excited and that led to our series A round – worth £7.2m – which was actually the easiest round to get of all. This was the point where Ribbit Capital came on board.
It was a really big deal to get Ribbit – a Palo Alto investor that more usually focuses on fintech investments.
At some point, we’d like to take Goodlord to the US, so having the backing of a Silicon Valley investor is crucial. Global Founders Capital led that round and LocalGlobe got behind us again, which was another great endorsement.
When it comes to fundraising my top tip is that you should set a time limit when you are closing your round. This will help you control it and shake out the “no’s” quicker.
Avoid time wasters: in fact, tell them to get lost.
Having spent the last three years doing this, I find that if you ask for advice you get money. However, if you ask for money, you get advice.
It should go without saying that you need to know your numbers and your market inside out.
But always remember that finding investors is a two-way interview. Choose your backers wisely and only take money from people who share your vision.