How to Pitch and Raise Capital For Your Early Stage Startup

How to Pitch and Raise Capital For Your Early Stage Startup

How to Pitch and Raise Capital For Your Early Stage Startup 1500 1000 33Voices

Anyone who is passionate about Super Smash Bros and quotes Pitbull is automatically a winner in my book. Thus before we even met, Adam Draper was high up on my favorites list. 

While it’s difficult to believe that entrepreneurship insights can arise as much excitement as legendary video games, especially for the loyal Mario fans out there (Represent!), Adam’s thoughtful answers are among the best I’ve heard on 33founders. 

Between co-founding Xpert Financial to running Boost VC, a San Mateo accelerator for Bitcoin startups, Adam’s learned that entrepreneurs are hungry for action-oriented advice. 

Startup founders working at Boost VC are immersed in an ecosystem centered on thought leadership, mentorship, and collaboration. For those who aren’t running Bitcoin startups, Adam gave us a glimpse into some important learnings. 

Here are some of the key themes that emerged in our conversation.  

How to Apply to an Accelerator: 

Step 1: Build an MVP.  

Step 2: Run initial tests to determine if there is a need for your product or service. 

Step 3: Focus on a single problem instead of solving everyone’s problem. Adam and his co-founder Brayton Williams did this when they decided to work solely with bitcoin startups at Boost VC. 

Step 4: Be enthusiastic. According to Adam, it’s nearly impossible for VCs not to get excited about a contagiously passionate founder. Make it clear that you’re betting your entire career on this and that you’ll do anything to see it succeed. 

Take Brian Armstrong, for example, who left his position at AirBnB to start Coinbase. AirBnB is valued at $20 billion while the entire Bitcoin market is $20 million. Here is a founder who’s passionate about his work. 

Either he was absolutely insane, or he knew something I didn’t.

Adam on hearing Brian's Coinbase pitch.

Moreover, if you don’t have that ‘fire in the belly’ passion, it will be difficult to push through the inevitable challenges of running a startup. 

Adam’s survival solution is to find a co-founder who you can move through the ebbs and flows of your business with.

Once an accelerator’s reviewed your application you’re on to Super Smash Bros level 2: The interview

Here are a few tips about what you need to demonstrate in that conversation. 

  • The market size is big enough to support your product. 
  • The idea is fitting and timely. 
  • You’re right team to execute the mission. In Adam’s words, you are a cockroach. I know, this man is a poet! Put simply, he needs to say ‘yes’ when he asks himself this question: “If this team were out of money, living in their parents basement, would they still be building the product?” 
  • Your startup is pitching the why, not the how. 

You’re probably wondering why Adam and Brayton enjoy funding cockroaches. A cockroach’s core tenets are being strong, scrappy, and most importantly, surviving. 

You’ve proved you’re cockroach, and you’re on to Level 3. Mario just squealed “Super Mario!” and it’s time to fundraise.

Adam uses a poetic line from Pitbull to shape his teachings on fundraising. “Ask for advice, get money twice.” (Dalé!) 

Fundraising is extremely difficult. Thus, the headlines you read announcing Livefyre’s $47 million Series D or Thumbtack raising $100 million fail to represent the immense work and stress founders endure to raise capital. 

Despite his connections in Silicon Valley, Adam emailed 3,000 people, met with 300, and 40 people said they’d participate in the round. 

In the words of David Tisch, the most crucial thing founders need to focus on is making relationships with investors, not transactions. 

Adam similarly cites Mark Suster’s insight that investors invest in lines, not dots. Meaning that you need to have multiple data points, these are your relationship building points, to cultivate a potential partnership. 

One of the most impactful tips Adam shared centered on grounding investors in the present moment. 

Whether you’re asking about their family, making a joke about their favorite Mario character or even bringing up a recent sports win, connect as a friend before diving into your work. 

The purpose is to take investors out of their previous meeting. Adam’s the first to admit that earlier meetings stay with him. It’s not a fault or lack of focus; it’s simply a part of human nature.

The first step is to know why you’re raising money. 

Next, if you aren’t enthusiastic about your product and vision for the future investors won’t be either. Back to the Brian Armstrong story here. 

Aside from doing the Pitbull shimmy, an investor’s decision to participate in your round isn’t the most telling part of your meeting. 

Just because an investor says no doesn’t mean he or she isn’t interested. Whether they have a friend  who is or they personally decide to participate in a later round make it a priority to stay in touch. Adam suggests sending brief monthly updates detailing company progress. 

This entire industry is built on great relationships.

To gain more insight into Adam’s journey running Boost VC, fundraising, and for a mini class on Bitcoin tune into his 33founders interview and follow him on Twitter and Medium here. 

GIF retrieved from Pitbullofficial.com