In thirteen days we raised three million dollars. Sound like a fairy tale? That’s because it is.
The formal fundraising process from first meeting to close may have taken thirteen days, but the reality is much more complicated. Laying the groundwork for that fundraise required years of hard work, longstanding relationships, and even then, a good deal of luck.
Here’s a step-by-step guide explaining what it really takes to raise that kind of funding that quickly:
- Tell a story with your team: Surround yourself with co-founders and advisers who compliment your expertise more than just on paper. Each of Nomi’s co-founders has made money for investors. Collectively, we have founded six startups and successfully sold four. All three of us spent our careers to date building CRM solutions and united around a simple vision: the relationship management part of CRM doesn’t work very well if retailers don’t know who their customers are across every channel: online, mobile, and in-store. Nomi would help retailers integrate these channels into their existing CRM solutions. To compliment the team’s experience, we recruited strategic advisers that include some of the prominent names in retail: the CEO’s of Benetton U.S.A., Loehmann’s, and Bonobos.
- Establish a pattern of success: Mark Suster is fond of saying “I invest in lines, not dots.” What he means is that it takes time to establish both trust and credibility with an investor. That credibility is established over years. Nomi’s first investment meeting may have been that day in December, but each one of the co-founders had spent years building relationships with venture capitalists like Bill Trenchard and Chris Fralic. In fact, First Round Capital had almost invested in my previous company, Spinback, before Buddy Media acquired the company. Another Nomi investor, Ian Sigalow of Greycroft Partners, served on Buddy Media’s Board of Directors. Because each had already conducted thorough diligence during those previous experiences, they were prepared to move quickly when the opportunity to invest in Nomi appeared.
- Let customers sell for you: The age of pitching a business plan is over. The cost to develop a minimally viable version of software has never been lower. Enterprise culture has never been more accepting of early stage technology solutions. Leverage that fact to pre-sell your customers while you build your product. Before walking into our first investor meeting, we did more than build a prototype; we had already signed twenty clients and received a letter of intent from one of the country’s largest big box retailers.
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