Fundraising: energetics
Part 5 of a primer on early stage tech fundraising based on YCombinator's guidance and my own learning in-the-trenches as a successful founder
Previous posts in this primer:
One of my founder friends gave me the fundraising embodiment advice: “it’s like you’re the prettiest girl at the ball.” While I dislike the sexist overtones of this statement, I think the message is fairly clear: you’re so popular, you have options, and any suitor (ehhem, investor) would be lucky to get a piece of your round.
This dances on the edge of arrogance in a way I find extremely distasteful, because I’ve been socialized not to act that way ever. We all have.
And yet, when it comes to fundraising, many investors run off fomo (fear of missing out). At the earliest stages of a business, it’s actually very hard to truly know what will succeed, so investors are either investing off their own deeper intuition or based on what everyone else is investing in - essentially the social proof of many people thinking it’s a good idea. (Hilariously, the best investing returns arise when a truly renegade thinker goes against the grain and invests in businesses overlooked by other investors, snagging investment spots at reasonable valuations. The best investors will see a great company regardless of its perceived “popularity.”) As a founder in the early stage, it’s much better for you to be the deal that everyone is chasing after, filling your round quickly and with ease. And of course, the best way to be a hot deal is to be a great company. This is a post about using your energetics to signal you have a great business.
So, the question is how do you cultivate this “in demand” energy?
First, you have to believe in your product and your business and believe it will succeed. You probably know there’s some percentage chance of failure. But for now, focus entirely on the version of the world where you succeed, and assume that outcome 100% of the time. Believing it will happen will actually make it more likely to happen, since the energetics of the inevitability of success that you communicate will enable you to raise more money to make that possible. If you’re in a competitive market, having more funding than your competitors will make success a more likely outcome, having better investors will help you attract better talent, etc. Being “in demand” first starts with you believing you will succeed and embodying that belief.
What does it look like to embody that belief, and how can you generate that belief and embodiment if it isn’t already there?
There is likely some part of you that believes there is some percentage likelihood of wild success. Close you eyes and imagine that wild success. Describe it to yourself in as much detail as possible. How does it feel in your body to imagine that wild success? Is it exciting? Energizing? Really imagine into that future. Spend time imagining all the details and describe them in your head or out loud. Be here for at least a five minutes. You’ve achieved all you set out to do and more. Wow!
Now bring that feeling into the present moment and feel it in your body as you practice your pitch. How does your language change when you believe fully in your own inevitable success? How does your body language change? Any investor who is smart enough to join you early on this adventure will be so happy they did later when you are inevitably massively successful. Investors will read your words and your body language - which is why embodying this future as you communicate it to them matters so much.
Next up: Valuation and how much to raise
Luna Ray works with post-PMF founders as an executive coach. She is the founder and Chair of YCombinator-backed Plura and ex-Meta, Instagram, Faire, and Bain & Company.