Maybe You Haven’t Asked Enough People Yet

I have raised over $50M from over 160 investors for four different startups. And it seems that every time I close a fundraising round, someone NOT close to me congratulates me and says how amazing I am to be able to “just” pull together these funding rounds. They seem to think it is luck or opportunity or network or track record – and there is no doubt that all those things contribute. However, the most underappreciated aspect of high potential startup fundraising is perseverance.

To illustrate my point, let me tell you the story of initially raising money for my first venture-backed startup, Accuri Cytometers. As the CEO, my number one job was to make sure my startup had the resources needed to become a success. Effectively, that felt like having two full-time jobs. The first was building my company. The second was fundraising for it. 

My CTO and I co-founded the company in 2004 and bootstrapped it for the first year while we secured a license, built a business plan, began developing a product, and worked like crazy to raise our initial round of capital. To raise that first $800K, I talked to over 100 potential investors over the course of nine months. I had a “no” rate of over 85% as I worked to land that crucial initial group of 14 angel investors for a Series A round.

That first round lasted only eight months, less than the time it took to raise it. What that means is that after I closed that round, I took a breath for only a month or two to build value, and then began raising my next round.  I traveled all around Michigan meeting with angel group after angel group. Nearly all opted not to invest after I had worked my way through their multi-step processes. I extended my reach further in the Midwest to talk to other angel groups even as I simultaneously was seeking meetings with VCs. Another 100 or so “no’s” later, and I was able to close a $1.6M convertible note to keep the company growing and going for another eight months.

After taking another couple of months to build value, I began raising again. Once again, I traveled the angel group circuit, spoke to every introduction I could muster, and simultaneously continued the long, slow process of cultivating relationships with potentially interested VCs. This time the convertible note round totaled $2.7M to extend our runway by another ten months. Once again, I experienced “no’s” in the triple digits, but I did manage to build my angel investor group to a total of 53.

By now, we had nearly completed our product, and my angel investors were getting less interested in continuing to invest in more rounds. I had pitched dozens of VCs, and, as usual, almost all of them declined to enter due diligence. 

There was one potential lead VC investor who had been talking to me for over a year, monitoring each bit of incremental progress and each additional raise. As we began to field test our instruments, he began to get serious. In parallel, I was able to get a second VC to start due diligence. With two VCs intrigued, I was able to use their competing interest to encourage them to move toward term sheets over the course of three months.

We managed to sign one term sheet just before Christmas. We met as a Board of Directors every day for two weeks, and, in the process, I developed two ear infections, a sinus infection, and walking pneumonia. I had to leave my family in Florida to drive home without me so I could fly back for a VC diligence meeting on January 2. Then we spent a few more months making many more contacts to get the rest of the syndicate built out and finally closed the $5M Series B round. 

Now I was officially leading a venture-backed company. Fast forward three years and three more rounds later, Accuri had a great exit, and the investors all made five to six times their money.

The point of this story is to highlight the incredible perseverance required to raise money for startups. I estimate that I spoke to over 500 potential investors to raise that first $10M in capital that carried us through product development. The personal cost was tremendous.

My path is not unique. I have talked to many entrepreneurs who, when gently pushed, will share that they cannot believe how many people they need to talk to as they raise money for their startups. When you reach triple digits, I recommend you stop counting. Focus on those who are interested and supportive. Those are the ones who matter.

[By the way, I want to extend a special thank you to Brian Hayden, who encouraged me to tackle this subject. Together, we recorded a version of it as a podcast for his Finding Your Venture course, which you can listen to here.]