What Unconventional Advice Would Benefit Startup Founders Seeking Funding?
VC Realm
What Unconventional Advice Would Benefit Startup Founders Seeking Funding?
Have you ever wondered what unconventional wisdom top CEOs have for startup founders seeking their first round of funding? In this exclusive Q&A, insights from leading CEOs and Co-Founders provide a fresh perspective on navigating the early stages of fundraising. From learning to 'Chase the Right Problem' to discovering how to 'Tell the Story of Your Market', readers will gain valuable advice across twelve unique insights. Prepare to be enlightened by the expertise that can make or break a startup's journey to securing their initial investment.
- Chase the Right Problem
- Show Real Customer Love
- Time Fundraising Around Milestones
- Create Quick Video Demos
- Highlight Unique Channel Strategy
- Leverage Personal Story Effectively
- Bootstrap to Early Traction
- Build Product with Real Customers
- Demonstrate Viral-Loops in Action
- Prioritize Relationships Over Returns
- Find Niche-Specific Investors
- Tell the Story of Your Market
Chase the Right Problem
Drawing from my experience at Spectup and having worked with numerous startups, I'd suggest something that often surprises founders: don't chase the money first—chase the right problem. At Spectup, we've seen many startups rush to fundraising without truly understanding if they're solving a real market need. I remember working with a fintech startup that had an impressive tech stack and was eager to raise funds, but they hadn't validated their core assumption that banks would pay for their solution. After three months of intensive customer interviews and pivoting their approach, they not only found their product-market fit but also secured funding much more easily because they could show real market demand.
The tough truth is that 35% of startups fail due to no product-market fit, and I've watched this statistic play out countless times. Start by becoming obsessed with your target market's problems, document every conversation, and build evidence that your solution is needed. When you eventually pitch to investors, you'll have something more valuable than just a great idea—you'll have proof that your business solves a real problem people are willing to pay for. This approach might seem slower at first, but it actually speeds up the fundraising process significantly.
Show Real Customer Love
I've learned that seeking funding isn't just about pitching numbers—it's about showing real customer love for your product. Last year, I actually advised a startup to spend three months doing free product demos at local business meetups before approaching VCs, and they ended up with two eager investors who saw genuine market interest. My suggestion is to get scrappy and build a small but devoted customer base first, even if it means giving your product away initially, because VCs are way more interested when they see real people actually using and loving what you've built.
Time Fundraising Around Milestones
After helping raise $7.6M for an insurtech start-up, I've learned that timing your fundraising around major product or traction milestones is crucial, rather than just when you need money. I always tell founders to start building relationships with VCs months before they actually need funding, so when you hit those milestones, you're not starting conversations from scratch.
Create Quick Video Demos
Instead of polishing pitch decks endlessly, I found success by creating quick video demos showing real users struggling with the problem we solve. When I pitched Webvizio.com, recording actual digital teams stumbling through project communication resonated more with VCs than any flashy presentation could.
Highlight Unique Channel Strategy
Being a founder in the tax space, I learned that VCs care more about your unique channel strategy than perfect financials in early rounds. I got better responses when I showed them our specific plan to reach 1099 contractors through partnerships with creator platforms, rather than just presenting market-size numbers.
Leverage Personal Story Effectively
Understand that investors are human too, with their own uncertainties. Relatability and clarity can be your biggest assets. Leverage your personal story effectively to show why you're passionate and uniquely positioned to solve the problem your startup addresses. When I transitioned from medicine to business, I used my journey to demonstrate my adaptability and deep understanding of diagnostics, which convinced investors I could effectively bridge gaps in technology and healthcare.
While expanding our diagnostic-imaging company in São Paulo, I realized the importance of showcasing tangible results early on. Highlight milestones and evidence of traction, even if they're small, to build confidence. For instance, we encourage startup founders to focus on demonstrating how even small customer acquisitions or product developments have paved the way for larger goals. This not only boosts your credibility but also aligns investor expectations with your growth trajectory.
Lastly, ensuring you don't scale too quickly is vital. I learned from my experience seeing startups like Webvan fail due to premature scaling; it's crucial to build a solid operational foundation first. By funding operational efficiency before aggressive expansion, you ensure your growth is sustainable and adds value.
Bootstrap to Early Traction
One piece of unconventional advice I'd offer is to bootstrap your way to early traction before seeking funding. When I was building Rocket Alumni Solutions, I focused on growth-hacking and working long hours to secure our first 100 clients without any outside investment. This approach provided us with solid proof of concept and revenue figures, which later made our proposition much more appealing to potential investors.
Moreover, leverage creative strategies like "reverse selling" to engage stakeholders constructively. Instead of merely pitching, I conducted workshops for school administrators to understand their challenges, positioning us as thought leaders. This insight exchange not only boosted client conversions by 30% but also established important relationships, demonstrating the value of innovative engagement over traditional sales methods.
Lastly, use strategic partnerships to build credibility and visibility without capital. When negotiating a deal with a major educational tech provider, I focused on showcasing our unique value through case studies and testimonials, successfully negotiating a deal that was 40% higher than the initial offer. This improved our industry credibility, showing that strategic alliances can substantially improve your startup's growth and investment readiness.
Build Product with Real Customers
Building a working product with real-paying customers before seeking VC funding helped us stand out when pitching FuseBase to investors. I learned that showing actual user engagement and revenue, even if small, creates much more interest than fancy pitch decks and theoretical market sizes.
Demonstrate Viral-Loops in Action
After investing in dozens of startups and founding PlayAbly.AI, I've noticed founders often overlook the power of showing their product's viral-loops in action. When pitching, I now focus on demonstrating how each user naturally brings in more users—like how our gamification features encourage players to invite friends—which VCs love because it means lower customer-acquisition costs.
Prioritize Relationships Over Returns
One thing that may seem unconventional is prioritizing relationships over immediate returns when meeting potential investors. It sounds basic, but focusing on how you can offer value to them, even outside of investment terms, sets a stronger foundation.
When I was starting Zanda-Wealth, I met with individuals who I knew were invested in the property space. I offered insights on mortgage strategies and demonstrated our dedication to seeing clients succeed financially.
Instead of a direct pitch for funding, I focused on showing the impact our strategies could make, sharing how our approach builds lasting wealth rather than just quick returns. When investors see your commitment to the mission and the value you're bringing beyond dollar signs, they're often more willing to support your journey.
Find Niche-Specific Investors
Instead of chasing the biggest check, I recommend focusing on finding investors who've actually built successful companies in your specific niche of e-commerce or tech. When I was raising funds for Digital Darts, I found that operators-turned-investors gave us the most practical advice about scaling our Shopify services, which proved way more valuable than just getting money from traditional VCs.
Tell the Story of Your Market
One unconventional piece of advice is to focus less on pitching your product and more on telling the story of your market and why now is the perfect time to disrupt it. Investors are looking for more than a great product—they want to believe in the market opportunity and your unique positioning to capitalize on it. Highlight the trends, pain points, and shifts that make this moment critical for your solution.
I've seen founders secure funding by showing how external forces, like regulatory changes or technological advancements, are creating a wave they're perfectly positioned to ride. This approach demonstrates vision and strategic thinking, making you more compelling than just showcasing features or early traction. Investors want to back leaders who not only solve problems but also understand the big picture.
