Being a founder takes a particular type of person, one driven by a vision and with a zealot’s level of commitment. However, there comes a time when a founder realizes that their financial resources, ability to inspire people, and passion are simply not enough to fully capitalize on the opportunity, and that’s when the fundraising begins. There is no one-size-fits-all answer as to when fundraising should occur, but at any stage, the founder of a brand plays a crucial role in the process.
In the age of social media, founders can be as big as their brands and business can scale quicker then ever before, which provides a unique conundrum for investors. On the one hand, a founder’s passion and profile can be crucial to fueling growth and brand recognition. On the other hand, this also has the potential to become a liability—Lime Crime and Deciem come to mind.
Fundraising is a difficult, time-consuming, and important process for the growth of a business. As you go into fundraising mode it’s important to understand what potential investors consider and the founder’s role in the process. Having a good product, a compelling brand story, and a solid plan are all givens when preparing to pitch investors. However, often considering how the founder’s role is positioned and perceived is equally important, but not always part of the pitch prep. A fundraising pitch is a live performance and the founder plays the starring role.
Passion: Blythe Jack, Managing Director, TSG Partners, looks for founders that have unbridled passion for their product, brand, and team; strong business instincts; and true grit. Beauty is a crowded and hyper-competitive category, so a business with a passionate founder has a competitive edge especially in the early stages, so you need to sell your passion.
Authenticity: Tell a great story and do with in your voice. Lead with your strengths; don’t emulate others. If you’re more technical, then craft a story that leads with the numbers. If you’re a charismatic leader, emphasize the culture you’re building and the team you’ve recruited. Know that a pitch isn’t static—it should evolve based on your audience, where you are, and the points you need to get across.
Conviction and Subject Matter Expertise: Be prepared for a potential investor to question and poke holes in your pitch—that’s their job. The further you get in the fundraising process, the more difficult the questions will become. Be prepared. Don’t get flustered or combative. And don’t be arrogant. Robin Tsai, Managing Director at VMG Partners, looks for a founder to have strong conviction in why the brand matters, and to serve as a North Star for the brand identity—what the brand stands for, and more importantly, what it doesn’t.
Brand vs Founder: According to Rich Gersten, Partner, Tengram Capital Partners, it’s important that the brand can transcend the founder’s personality. He looks for an interesting brand, then a founder. It starts with a great product, a plausible growth story, with a unique and interesting brand and founder story that can be told. A business that is too reliant on a single founder personality can be a red flag.
The Team: It’s not all about you. It’s important to not underestimate the power of your team in the story of your business. While it’s your vision and passion, great brands don’t get built single-handedly.
CEO-Cum-Founder: Many founders are usually convinced that they are the only ones that can lead their start-ups to success. They have the vision, the passion, and the desire, so they have to be the one running it. The problem is CEO-cum-founders are a very rare breed. When funds are raised, the founder plays a crucial role in the transition required to scale. Don’t be a liability; be honest about your abilities—your brand’s future and your ability to raise capital depends on it. Julia Garces French, NextWorld Evergreen Fund, says a founder has to have the ability to execute on the vision, describe how their competitive advantage tactfully translates a successful long-term plan, and describe the resources required along each major milestone in that execution plan.
Co-Founders: Co-anythings in business rarely work, so if you have co-founders it’s important to demonstrate compatibility. Co-founders all need to participate, discuss their area of expertise, and speak in concert with each other. As co-founders, if you cannot manage this for the success of the fundraising process, choose one founder to run the process.
Advice from the experts:
Rich Gersten, Partner Tengram, Capital Partners: Surround yourself with good people. Don’t try to do everything yourself. And protect your brand.
Blythe Jack, Managing Director, TSG Partners: Believe in the laws of positive attraction. For great ideas, resources will come, as long as you keep believing authentically in them and sharing your vision with the universe. Doubters only help you refine and improve your mission.
Robin Tsai, Managing Director, VMG Partners: Surround yourself with great people and build a network of mentors and advisors who believe in you.
Julia Garces French, NextWorld Evergreen Fund: Building a team with diverse perspectives and distinct talents and skills from the beginning reaps huge benefits in the long term. It often feels more natural to multiply yourself to get the millions of things on your plate done, but if you bring a sparring partner with a different background and different perspectives to the table, you’ll find a better ability to divide and conquer, test theses and products internally, and grow personally with a broader understanding of your customers. I admire it in some of the best brands I’ve spent time with, and there’s certainly been a huge benefit in having diverse voices around the table here at NextWorld Evergreen. I credit our founding managing partner with not only recruiting in this way, but also consistently reminding us to bring diverse views to the table.
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