Raising your first million is probably one of the hardest challenges you’ll face as an entrepreneur, but it’s also an exciting milestone.
The thing about new challenges, though, is that it’s hard to know exactly where to start. Do you shout your idea at anyone within earshot? Do you work on your pitch, or do you devote time to your product and make sure it ‘does the talking’?
To get closer to a definitive answer, I spoke to two tech founders about what they believe mattered most when they were raising their first million.
[Read: Betting on remote workers fixed my startup’s talent shortage]
Larger sums, fewer investors
Elsa Bernadotte is the COO and co-founder of Swedish food waste app Karma. She describes raising her first million as an “unreal” experience:
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“It was both great and scary to think we suddenly had access to a lot of money. But as you grow, you realize that one million gets you far in the beginning with a small team but can be spent fairly quickly on salaries and office space alone.”
Bernadotte founded Karma back in 2016, which specializes in connecting restaurants, cafes, and grocery stores with users who are keen to buy unsold food at a lower price. The company entered the UK market in 2018 and opened an office in Paris last year — so it looks like the funds raised came in handy.
To date, Bernadotte and her co-founders have raised €15.3million ($16.7 million) from investors. So, how exactly did she go about this?
“You need to be persistent and clear in your vision of what you want to build and what your company should achieve over time. A clear challenge for us was sizing the food waste market opportunity, and we used the total food waste problem value of $1 trillion to describe how big the opportunity is.”
Thinking back about that first fundraise, Bernadotte said she would probably have raised larger sums from fewer investors to optimize her time.
“Not that we have many investors, but it’s always simpler to communicate with a few than with many,” she noted.
“We got a couple of great angel investors in the beginning, and it might not have been possible to convince a single person to invest more than they did combined. But if we were to do it again, we’d probably keep the number of angels small and exclusive.”
Set deadlines and get your ducks in a row
A former investment associate at Nauta Capital, a venture capital firm focused on capital-efficient B2B software companies, Andrea Oliver Garcia is well posed to discuss the need to plan efficiently from both sides of the arena.
The VC-turned-entrepreneur co-founded Emjoy, a Spanish femtech startup in December 2018.
With her audio guide for intimate wellbeing, Oliver Garcia is looking to change how women embrace self-discovery and achieve sexual fulfillment — and has so far raised €1.3 million to do so.
Similar to Bernadotte, and now with the benefit of hindsight, Oliver Garcia told me she would have also paid more attention to planning. “Looking back, I would have narrowed the number of investors we talked to and I would have set a deadline for receiving a term sheet.”
“Fundraising can take anything from one month to six months. Therefore, it’s important to know who to talk to in order not to waste time, prepare documents ahead of time so that you have a data room you can share with investors instead of generating ad-hoc and customized reports based on each investors‘ requests and set a deadline,” she concluded.
Take this new-found advice and use it wisely!
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