Looking for your first investors but not sure where to start?

If you’re looking for traditional venture investment, I encourage you to:

• understand how venture capitalists think
• review these 3 secret tips
• make sure you’ve got your TAM-SAM-SOM dialed in
• know how to talk about revenue — even if you don’t have any
• show the money!

This works well when you’re in B2B SaaS, you know the tech industry, and you were born (or learned!) to sell dreams.

But what if you’re not in tech, too early for most investors, new to the fundraising world, or your business isn’t sexy to traditional investors (e.g. smaller market, high inventory, tighter margins)??

(NOTE: Do not despair if your business isn’t “VC sexy”! Real life success stories below!)

Here’s the question I ask when someone is thinking about capital:

Who has money that cares about this problem???

(ALSO NOTE: If the answer is “no one,” find a new idea! 😂)

Let’s go through a few examples…

1. Current Customers

Do you have any high net worth customers that might want to invest in your business?

Current customers are fantastic investors because they:

• Understand the amazingness of your product
• Are great ambassadors
• Want your company to grow and succeed (so they can stay a customer!)
• Have helpful feedback

Real Life

An Atlanta-based founder with a brick-and-mortar consumer business (who was nervous about fundraising!) reached out to her customers. She learned that one of her customers was a professional investor. They filled the full $2M round.

2. Future Customers

Who will be your customer once your solution is in the world? Are they business owners or high net worth individuals? Could they be investors?

Future customers are fantastic investors because they:

• Will be your first beta testers (warts and all!)
• Want the problem solved
• Validate the demand

Real Life

A company in the food tech space had restaurant owners participate in their first round of fundraising. Even at relatively small amounts of investment ($5,000-$20,000), these restauranteurs were key to growth and learning. They were the first users of the product, a great proof point for traditional investors, and provided capital!

3. Angel Investors, Celebrities, Individuals

Are there any well-known individuals who have been directly impacted by the problem you’re tackling?

Examples:

• Business leader outspoken about remote work → your productivity startup
• Celebrity who loves Chihuahuas → your lost pet tracker startup
• Entrepreneur who exited a company in martech → your martech startup

Real Life

A deep-tech startup in the cancer prevention space raised pre-seed funding from individuals directly impacted by cancer. These individuals were passionate about finding solutions with the means to support the work. They could write early checks that are too “risky” for traditional investors but essential to long term solutions.

4. Grants, Foundations, Accelerators, Niche VCs

With more support for entrepreneurship than ever before, there’s thousands of programs offering capital and resources.

When you ask, “Who has money that cares about this problem?,” the answer may be a nonprofit, an industry-specific accelerator, or an investment firm with a special mandate.

Examples:

• Flourish Ventures, an evergreen fintech fund for impact-oriented innovation
• Laerdal Million Lives Fund which measures investment ROI as # of lives saved
• Hudson Alpha AgTech Accelerator, one of many AgTech accelerators in the US
• Tory Burch Foundation offers grants, networking, and programs to 50 women founders per year
• Macy’s The Workshop, a vendor accelerator for diverse, Women, LGBTQ, and veteran founders

Real Life

An Atlanta-based fashion company went through Macy’s The Workshop and got a contract with Macy’s (along with great press coverage, connections, and a chance to win $100k in a pitch competition)!

5. Strategic Investors, Corporations

Strategic investors and corporate venture teams aren’t usually the first check but they can be a great option to explore if they care about your problem.

Too early for a strategic investor?

• Is there an executive at the company who would be an angel investor?
• Could the company be a beta or pilot customer (usually the first step to strategic investment later)?

Real Life

Get all the deets from this first-hand account on successfully raising from strategic investors!

6. HONORARY MENTION: Other Founders, Affinity Groups

While they might not care about your problem, they care about YOU!

Who in your circle may want to support your entrepreneurial journey?

Examples:

• Successful alumni from your college or high school
• Founders who have “made it” and want to pay it forward
• Someone else from your hometown (even if you don’t know them personally)
• A kindred sports/music/business/outdoors aficionado

Real Life

A successful consumer products founder in the Southeast got her first check from her hometown congregation minister.

Another founder in the Southeast got her seed round from a local “Garden Club” of high net worth women who loved supporting a founder but had never been asked.

Creativity is an essential trait of entrepreneurship.

Use your creativity to think outside the box when it comes to fundraising, especially if it’s a challenging economic environment or you’re not in a “typical” VC market.

What other strategies have you used for early fundraising? What’s the best story you’ve heard about someone’s first check? Any other non-traditional sources of funding to share?

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