3 founders discuss how to navigate the nuances of early-stage fundraising

Fundraising isn’t a monolithic event but rather a series of meetings and pleasantries, each with their own vibe and nuance. Yet many pieces of fundraising advice to founders paint the process with a broad brush.

We heard from three founders at TechCrunch Disrupt last week: Amanda DoAmaral, co-founder and CEO of Fiveable; Arman Hezarkhani, founder of Parthean; and Sarah Du, co-founder of Alloy Automation, each of whom has raised in the extreme highs and lows of last 18 months. They spoke about navigating the process, what worked (and what didn’t) and how to customize your pitch to navigate the many subtleties of fundraising.

For DoAmaral, it was important to spend time researching which investors may actually back her company. She said she’s had investors take meetings with her due to a warm intro despite having no actual intention to invest.

“My co-founder and I got in a car and drove down to Tennessee thinking we’re gonna get this check. And this guy didn’t even trust me to like, be an attendee at this event. They’re not writing the check,” DoAmaral recalled. “People are not going to take me seriously if they’re not going to see me as someone that is their equal at all.”

Du added that performing due diligence on potential backers beforehand is helpful, not only to find out whether they might actually invest in the company, but also if they will be good to work with. This is especially true for founders raising at the early stages who are looking at a long relationship ahead.

She added that it’s helpful to think about the pitch more as sharing than selling — it’s more about who you want to build with than whose money you want to take. She also said that if an investor doesn’t get a good rating from a different founder, she’ll ask the VC point-blank why.

The founders all said that trying to build relationships with VCs over time, and not just during the fundraising process, proved to be very helpful. It also allows for founders to create a very different dynamic with an investor as opposed to the first interaction being an outreach for capital.

Hezarkhani said that he found success reaching out and connecting with investors over Twitter. He said that made for an organic way to build a relationship with various VCs and was how he ended up connecting with many of his future backers.

Du added that for her, a young woman of color, Twitter can also help get investors interested and excited about a business before their bias can get in the way when they meet an entrepreneur in person.

“I do think Twitter is the greatest equalizer these days. You can raise with an anonymous profile picture. You can raise without even people knowing your name,” Du said. “So honestly, like, sharing your thoughts, your thought leadership, the work you’re doing and letting that lead is more important.”

But she warned you should be careful about what you post because you never know what could rub a potential investor the wrong way.

Another way these founders were able to better navigate the fundraising process was by using the feedback they got from investors who declined to write a check, helping to sharpen and improve their pitch.

“When you’re fundraising, you’re just constantly iterating on [the pitch] like every single day,” DoAmaral said. “You’re updating your pitch, your pitch deck. You’re thinking, who else should I talk to? Or how else should I present this or, you know, when I said it this way, it really clicked [but] when I said it this way, they didn’t quite get it. So that’s sort of just like taking the feedback and you just keep going.”

It’s also important for first-time founders to understand that fundraising is just hard, all three agreed. And despite seeing numerous funding announcements that imply otherwise, it is challenging no matter who the founder is or what the startup is.

“It’s just so much different than what you expect because you always hear about the announcements of people who were successful, who just successfully fundraised,” Hezarkhani said. “You rarely hear someone going out to TechCrunch and saying, ‘Hey, I just failed [at] raising a bunch of money,’ right? That mixed with the fact that founders are rarely coming to it as professional fundraisers. We’re usually really good at something else.”

DoAmaral said that founders should try to lean into their passion and reason for starting their company when they pitch. Spoiler alert: The Disrupt panel that asked VCs the same question got the exact same answer.

Overwhelmingly, though, fundraising can be a long, hard slog, but it doesn’t have to be painful. The trio agreed that once you start landing your first venture dollars, you learn a lot more about yourself and your business. Plus, having money in the bank is a cool feeling.

“We’re kind of going in recognizing that it is going to be difficult but it’s also an opportunity to speak to largely incredibly intelligent people who have seen many companies similar to yours and kind of get that feedback,” Hezarkhani said. “That’s been really fulfilling.”