Founders and CEOs of early-stage startups are frequently faced with the daunting task of raising venture capital for their companies. Many face that challenge ill-equipped, just as serial entrepreneur Carol Realini had in 1997 when she co-founded her first company. Since then, Carol has successfully raised over 175 million in financing for her companies.
Women entrepreneurs can be especially challenged in raising venture capital for their startups because they lack training, role models and sometimes just don't see themselves being able to succeed. Because of this, Carol coaches Women 2.0 entrepreneurs to tackle this with determination, saying "it is not rocket science, but it is very hard work."
Promoting your company successfully to raise capital is a skill that can be mastered, and unfortunately there is no formal training process for this. Everyone has to learn it from a mentor or advisor, and Carol is candid when she explained "the first time I was scared and intimidated. Luckily, I reached out for help from others with more experience".
Over the years she has formulated a rubric for raising money, building on lessons learned to create a more efficient and less risky approach. Here are highlights of her advice for first-time entrepreneurs seeking capital for their ventures:
The first step to raising venture capital is realizing that your idea is bigger than you.
- Get advisors. Having advisors will expand your network and provide introductions to investors and influencers that you didn't know. Advisors will push back and tell you what parts of your business plan are weak.
Getting the meetings is very important, but being ready for them is even more important.
- Don't rush into VC meetings. Venture capitalists (VCs) are like bloodhounds ready to sniff out any inconsistencies in your stories, so make sure your pitch, team and plan are well-coordinated.
Carol's Law of "10-5-3-1" is her tried-and-true method to manage your VC pipeline.
- Get 10 successful first meetings with VCs. This is your rich pipeline of interested investors.
Check out Carol's presentation below for more tips on raising capital:
For more advice and thoughts on entrepreneurship, follow Carol Realini on Twitter at @carolrealini.