Would You like a feature Interview?
All Interviews are 100% FREE of Charge
Opinions expressed by Entrepreneur contributors are their own.
I run a company called Emilia George, a retail and lifestyle brand concept that I developed two months after I finished my PhD and one month before my first son was born while I was working at the United Nations.
I was the ultimate outsider. A first-generation American living in Manhattan, with no home in the Hamptons or family ties to a private school board, I had never tried to lose the post-baby weight (twice), and I wore makeup less than five times a year. I had no business or fashion degree. And yet, I launched a brand in a market that is difficult for even the rich and powerful to penetrate.
And before I knew it, I had done nearly $500,000 in revenue in my first year (even during COVID). I was profitable for 3 of the 4 years. The only time I wasn’t profitable was when I opened my first brick-and-mortar store and spent a lot of non-recurring costs on a branding firm. I built an amazing team that was there for me day and night, and I was able to hire multiple summer interns from Harvard Business School and Columbia Business School. All of this while being bootstrapped.
Every company raises money for different reasons and interacts with investors differently. I believed that we should only raise our own funds when we had developed a profitable model and were ready to scale our business innovation.
I’ve done six-figure angel investments through SPVs and direct investments, and now I can speak from the other side of the table: I learned so much in the first three months of preparing my business for fundraising and starting to receive checks and soft commitments. There are some things you only realize once you start the process.
Related: Three things I learned in the first three months of starting my company
Any response from investors is appreciated and should not be taken for granted.
Since I don’t come from the venture funding ecosystem or graduated from a school with funds waiting to invest, I went the route of a general solicitation under SEC 506(c), which means that companies must take the extra step of verifying an investor’s accreditation status before investing. There are online services that provide such certification quickly.
We dream of “yes,” but “no” is the next best thing. It saves you time and gives you insight into whether you’re talking to the right investor for your business. If the investor decides to share more information about the reason for “no,” I consider it a blessing. All your feedback on fundraising stage, sector interest, and investment thesis helped us further narrow down the list of investors to approach. Time is the only equity that is too expensive to dilute.
Focus on angel investors who also have strategic value
There are countless people with “Investor” in the title on their LinkedIn profile. Some meet the criteria set by the SEC to be considered an “Accredited Investor” and some don’t. Are you looking for direct investment or are you working with a fund that offers investor membership so you can always invest in an SPV with a much smaller check size? Personally, I’ve found angel investors to be invaluable because they bring strategic value either in their field of expertise or network resources. The strategic partnerships that investors bring can be worth five or six figures. The same mindset goes for the people who give up large amounts of equity to the Sharks on Shark Tank because it’s strategically important. That said, you should do your due diligence on the investors you talk to and share your business with. Going back to those LinkedIn profiles with Investor in the title, not everyone is accredited or active. Be wary of the first person to approach you because often they can pitch you their services. Usually, first time fundraisers can benefit from exploring their options for advisors. If you’re really going to be in it for the long haul, focusing on strategic investors can be very effective.
Related: Why investors with entrepreneurial backgrounds are important to startup success
Hurry Slowly – Protect Your Brand
When my VC friends told me to prepare for at least 6-18 months, I said, “No way!” Then I heard stories of founders who had been fundraising for 3+ years, or who had been fundraising non-stop from the day they launched to the day they shrunk.
It takes a lot of money to build a successful brand. It takes a lot of money to protect a successful brand. Money alone is not enough. The Techcrunch article doesn’t help founders persevere with the glamorous success of fundraising. No one talks about the long process and how much help from family and friends is needed to get momentum. Ceremonia founder Babba said at a recent fundraising event that she raised $1 million from family and friends to start her company. The brand is sensational and she was incredibly candid when she told us how her journey began.
The key is to do your best to position and protect your brand so that you can handle the judgments (good or bad) of external players. Once you expose your brand to others and ask for funding, it is impossible to take it private. Maintaining your reputation requires tenacity and resilience.
You only get one chance to make a first impression, and the question founders don’t ask themselves enough is “Why raise money?”