Fundraising can be daunting at the best of times, but when you’re an early-stage startup founder looking to raise your first million, the idea of having to pitch to investors can be even more intimidating.
How exactly do you go about planning your raise while also trying to get a business off the ground?
I spoke to three tech founders to get a better idea about what the process entails.
Pleo’s Jeppe Rindom: Think about the ‘why’
Jeppe Rindom is the co-founder of Danish fintech startup Pleo, which offers a company payment card solution in hope of automating expense reports and simplifying company spending.
Pleo has raised €73.8 million ($80 million) to date, having closed a €51.6 million ($56 million) Series B in May last year.
Rindom describes raising his first million as a “tangible endorsement that some other people believed in our vision.”
“The biggest challenge is the constant seesaw between securing diversified funding while trying to find, mature, or instill your product–market fit while scaling, both in the market and as a team,” Rindom added.
So, how do you go about fundraising? Now with the benefit of hindsight, the entrepreneur believes it’s important for founders to trust their gut and “define why from the very start — not just what your idea is, but why it matters.”
Soldo’s Carlo Gualandri: Don’t pick the easy option
Carlo Gualandri, the founder of Soldo, recently closed a €56.3 million ($61 million) Series B led by Battery Ventures and Dawn Capital, with participation from Accel, Connect Ventures, and Silicon Valley Bank.
Soldo, which has so far attracted €76.6 million ($83.2 million), is Gualandri’s fifth company and offers a pre-paid business card and automated business accounts.
Raising the first million was easy given his track record, Gualandri told me, but he acknowledged he could have done things differently.
“You should always subject yourself to the highest level of challenge and criticism because if you don’t do it yourself, the market will do it for you and the world can be very unforgiving. So, in hindsight, choosing the easy path made me a little softer and I paid for it later on.”
Goodlord’s William Reeve: Planning is key
William Reeve, who previously co-founded LOVELFILM.com and Secret Escapes, is the CEO of Goodlord, a lettings platform in the UK.
To date, the London-based startup has raised €19.4 million (£16.2 million) and made headlines after closing a €2.4 million (£2 million) Seed in May 2016, followed by an €8.2 million (£7.2 million) Series A in March 2017, and an €8 million (£7 million) Series B in October 2018.
Reeve hasn’t been involved with Goodlord from the very beginning but explained that Goodlord’s first raise under his watch coincided with steering the business in a new direction.
“It meant the fundraise was actually a humbling process as it showed how people were willing to back us whilst we changed track,” Reeve explained.
The big learning at Goodlord, Reeve told me, was not in the fundraising, but in what the business did next.
“For example, time and resources were lost by trying to re-platform the technology following a fundraise. That sort of project is something we wouldn’t do again”
Raising your first million, although difficult, isn’t impossible: Just make sure you put in the hard work at the beginning, think about what you’re trying to do and why, plan accordingly, and consider raising larger sums from fewer investors.
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