Fight to get A grade investors.
Raising money takes time, it can be a distraction from the daily operations. Especially at an early stage where fundraising seems more difficult ( Tip: it’s difficult at every stage…), entrepreneurs tend to have as primary objective to raise fast and go back to business.
We have been there, we know the temptation to grab the first check handed to you and go back to work.
But taking uneducated money (No tech Angel investor, Angels who didn’t really understand the challenge of the business, my worst case: no tech angel who wants to be hands-on, etc.) comes at a cost. The time you have saved taking the first check, you will most probably lose up 100 times this time in useless or worth in confrontational discussions during the lifespan of your venture. Fred Destin has clearly described the disadvantage of having B or C Investors(article below).
Our opinion is you should view early stage fundraising differently, the objective is not only to get cash in fast, but also.
1) An occasion to have great interactions with A Grade Angel or seed investors. It will force you to better define your business, your market, your product.
2) Early stage investors have great connections with later stage VCs. They are a good source of the pipeline.
3) If they consider an investment, they will ask the tough questions that will help you make progress.
The bottom line, it’s an important part of the journey, not a task that should be closed quickly. The key is to raise smart not fast.
Enjoy your week.
We have listed on medium the past tips we shared