Getting funding: 10 survival strategies for startups

Alexis Horowitz-Burdick is the founder and CEO of online cosmetics store Luxola, which has raised US$10 million from investors. But before she was able to get to that stage, she adopted a brute force approach to raising money.

Soon after starting Luxola, she created a list of 500 investor email addresses and contacted all of them. Half wrote back expressing interest in learning more, while the other half either turned her down or gave no reply.

But despite having worked in sales, she still found the process tough going. Raising her first round was one of the most painful experiences of her professional career, and she had to come to terms with it.

“I’ve had a cry before outside a meeting, I was like ‘oh it was going so well, but three weeks later it fell apart and I was like sad’,” she said at Tech In Asia’s Singapore Meetup, titled What to do differently when raising 50K, 500K and 5M.

Horowitz noted that pitches will inevitably get rejected after the first few attempts, so founders will have to learn to deal with failure.

“Go work in sales for a year, and it’ll be the most helpful thing you can probably do.”

Horowitz wasn’t the only one sharing war stories about fundraising. Darius Cheung, founder of long-term property rental site 99.co, was also on the panel discussion with Aravind Sulekha, founder of community discussion platform Scrollback.

99.co recently raised $560,000 from investors while Scrollback is in the midst of closing a round. Prakash Somosundram, founder of digital and social media agency Yolk, moderated the discussion. Here’s a summary of the key points:

1. No piecemeal fundraising

All three panelists agreed that fundraising should involve long-term planning and strategizing. Horowitz makes a list to prioritize potential investors and ranks them from those she’d really like on board, down to those she’s unsure about.

She’ll then arrange back-to-back meetings for the next two weeks. This builds momentum and creates a flow: pitching becomes easier and you’ll better understand the ins and outs of your business.

Cheung added that raising money is a long process of relationship-building. Investors may say ‘no’ once, but they could say ‘yes’ in the future. Treat them like potential customers, he said.

Founders can do a couple of things to prepare for a pitch. They can put their information on sites like Angelist or Techlist as a form of social proofing.

One tactic that’s ineffective is dressing up for a presentation. While Horowitz finds it a requirement given she’s at a beauty startup, Cheung and Sulekha can just wear their usual work attire.

2. Short pitch decks for seed funding rounds

3. Expect fundraising to be painful even after you’re successful

4. Project confidence even when you feel iffy

5. Know how to deal with investors from different backgrounds

6. Find a good reason to harass startup investors

7. Later funding rounds requires team effort

8. Get a frickin’ lawyer

9. Ask the right questions

10. Set the right expectations with investors