Vitavin Ittipanuvat: 4 Fundraising Tips for Founders — It’s about Preparing the Right Mindset

Fundraising is tough but with the right mindset founders can make it worthwhile and enjoyable. It’s all about making a two-way conversation, ensuring a good fit, keeping your integrity and build a genuine relationship.

This post summarizes some part of the discussion from my workshop topic “Founder-Friendly Tips on Fundraising: From Building Investor Pipeline to Term Negotiation” at Techsauce Global Summit 2022, with help from good friends at Beacon Venture Capital and Fuchsia Venture Capital.

1) Fundraising should always be a two-way process

The investor-founder relationship can be relatively long, over many years and it’s highly unlikely that the journey would only have rainbows and sunshine, therefore, both sides have the same responsibility to ensure it’s a good match. Despite the obvious, in reality, many founders fail to get on the right foot on this from the beginning, particularly when the fundraising climate is tough. Founders should look at fundraising meetings like job interviews, where the purpose of the conversation should not be to leave the best impression on the counter-party, but to help each other understand better whether this could be a good fit for a long term working relationship for both sides.

When founders have trustworthy thought partners, they feel comfortable to share more openly. Eventually, this helps them to gain a more holistic view on critical matters of the company and importantly, helps them to navigate through the ups and downs with a sense of partnership.

To get to know each other better, founders should do diligence before the meeting with investors and prepare to ask investors meaningful questions, including the hard ones, and observe the investors in a similar way, in terms of how the counter-party is when it comes to their track record or guiding principles.

2) Finding the best fit is about both value add and chemistry

With some basic diligence, founders can get a sense of an investor’s thesis and expertise even before their first meeting. This includes going through their website, reading their most recent thoughts online, and speaking with fellow founders who have worked with or are currently working with the investor. Having a better idea of the investor’s unique resources, strong area of value-add and style of work can help founders prepare for a deeper and more productive conversation within a limited period of time.

It is also equally important for founders to carefully observe whether there is good chemistry during the interaction with each investor. When it comes to chemistry, founders should ask themselves the following: was there any joy, mutual respect or positive energy from the conversation with each investor?

Entrepreneurship is always a long and difficult journey and the last thing any founder would want is to have a hard time with their shareholders on top of their operational challenges. Good investors will support the founders not only on the company building but also the moral support on a personal level. Founders need to keep this in mind when there comes a time to choose the investors to onboard and the founder’s journey could be more enjoyable.

3) Always integrity over perfection

Investors don’t actually expect founders to know everything and therefore it is very normal to not have a perfect answer to all questions, but founders should never lie or make something up. When investors ask questions, they rarely expect a perfect score on the spot, especially not in the first meeting. Many founders unintentionally try too hard to impress or become defensive during the conversation while they should remain focused on the key objectives of the engagement which are to check the chemistry and receive feedback.

While founders may generally hesitate to, many investors are keen to hear some past failures and learning from the founders to have a better view on the team’s dynamics, thought process and mentality. In fact, sharing the ongoing challenges of the company can allow the founders to assess the investors at the same time. This is highly essential for founders to be aware of their preferences on each investor as the company’s fundraising progresses.

Honest and open conversations creates trust, and trust is not something founders should compromise and fix later down the road for “temporary impressions” as it is the key foundation of any long-lasting relationship and successful business. Remember that every founder-investor relationship starts with or without the funding and goes a long way.

4) Build a relationship rather than trying to close a deal

Each investment decision is only a dot in an ongoing line of a longer relationship. Venture capitalists operate differently from investment bankers as it’s a much more people-business. For this reason, it is essential to build good affinity with each investor, rather than being too focused on closing a deal.

In fact, many investors prefer to connect with founders some time in advance before the investment. They do this in order to better understand the company and track its development over time. Getting a no at one point should not be the end but rather a start of the relationship. Investors meet hundreds of founders each year and so with this in mind, try not to be just another one but rather those few founders that investors admire and want to see you do well. When a rapport is built, some investors may even go an extra mile to introduce the company to other investors and, at the right timing down the road, eventually invest in the company.

At the end of the day, investors are not much different from founders, only sitting on the other side of the table. They don’t just look for strong founders, they look for people whom they feel excited to work with. Having this common view, founders may find fundraising to be a less stressful experience and even bear more fruits in the long run.

For more resources like this, follow us on LinkedIn or Medium. If you are an early stage company looking to raise a seed or Series A funding, please feel free to reach out to us.

Disclaimer: The opinions expressed in this article are that of my own. The facts and opinions expressed here do not reflect the views of Vertex Ventures.

Read his medium article here.

What is next for Thailand’s Startup Ecosystem? Our executive director Vitavin ITTIPANUVAT who’s based in Bangkok, Thailand, shares his insights and thoughts here, click to read more.

Edited by Elise Tan

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