Perhaps sitting perched somewhere in sunny Miami, Florida, is a founder wondering the best ways to fundraise for a company when situated outside a traditional tech hub like the Bay Area.
They need not worry. Last week, Mike Asem from M25, Elizabeth Yin of Hustle Fund and Accel’s Rich Wong answered that question at TechCrunch Disrupt.
The consensus of the venture capitalists was that remote work accelerated the trend of VCs looking at emerging markets, founders and companies throughout the nation. That and social media — specifically Twitter — have made it easier to connect with people. To some, sliding into an investor’s DMs can be just as legitimate as diving into one’s network for a warm intro.
“We noticed a couple of years ago, in looking at our own analytics, that most of our deals were coming through Twitter,” Yin said at Disrupt. “If I look at my portfolio, my companies who are active on Twitter actually do have an easier time raising money because investors feel like they know them.”
Overall, though, Wong said it matters less where one connects with someone than with whom they are connecting. It also takes a lot of time and energy to build an online presence, which might not be beneficial to all founders and companies, he said, adding that meeting people in person is still an important technique.
“I might invest more of my time to find the most important networks and influential people in a space and that might not necessarily be through social media.”
Still, social media plays its part in connecting people from across the world, which could lead to in-person interactions. Some of the top emerging venture markets include the U.S. Southeast, home to Miami and Atlanta. Austin remains a solid tech hub, as does Chicago, the leading startup city in the Midwest. Flights connect these places, but so does Twitter.
There are times, however, when being a digital nomad might not suffice for investors. Asem, Yin and Wong agreed that social media makes it easier to raise pre-seed, angel and seed rounds, though Yin said as a company continues to scale, investors might start looking for it to settle down in a suitable location so it’s surrounded by the proper resources to grow.
“While everyone can read about startups and get angel investors online, you cannot get the same equivalent for Series B [regarding] advice, talent and money,” she said. “So for that, I think you do maybe need a headquarters or a main office in a major city; most ideal is probably still Silicon Valley or New York.”
For early-stage companies, Asem pointed out that it helps to pick pre-seed or seed investors who can later introduce founders to other VCs, particularly those located in big coastal cities and who can help when the company starts looking for later-stage financing.
With location out of the way, one big challenge is always gaining momentum for your startup. Yin suggested taking advantage of the rise in Zoom calls and trying to book as many investor meetings as possible so that word about the company can start to spread. Wong, meanwhile, said to look at connecting with experts in your startup’s sector who can vouch for your company to VCs. That way, even without metrics, a business’ technical expertise could remain a selling point to investors.
During the panel, each investor also pointed out some of the emerging markets on their radars. Yin is paying close attention to international markets, while Asem called out Chicago, Indianapolis and Minneapolis, naturally — his fund invests solely in the Midwest. Wong, meanwhile, highlighted Los Angeles and Seattle, expressing a bit of skepticism about markets like Miami.
“I just don’t know if there’s enough technical talent to scale it beyond what it is, at least so far,” he said, adding that the city could work as a place to work remotely. Yin somewhat countered, saying technical talent isn’t as important as finding a good product-market fit. “Most software ideas these days; the tech is not rocket science,” she said.
Overall, the way a founder raises in a remote market is quite similar to a traditional one. It’s still networking, finding good product fit, appropriate investors and ways to stand out. The main difference is perhaps the founder is at home, in a place where the cost of living is much more reasonable. But there always remains that needed element of luck, and for some, lots of it.
You can watch the entire panel discussion here.