Dominique's Desk: Navigating the fundraising process

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Dominique Pahud

The most frequent question I get asked from entrepreneurs is “Where can I find dollars”?  Assuming that they have done the work (validate their idea and associated business model by talking to potential customers among other things…) the best I can do to help is to share the stories of entrepreneurs that have recently succeeded in raising funds in today’s tough environment.  The story below is an amalgam of recent stories I have heard from entrepreneurs:

Let’s meet our entrepreneur, Sally: She’s buzzing with excitement over her new idea and eager to get to work. Since Sally is part of a university community, she secures a grant to get started on early experiments. After that initial work, she’s ready to seek more non-dilutive capital through university, state, or federal grants. To get to that first proof of concept, she gets help from family and friends as well as taps into her own savings. Along the way, she finds experienced and already successful mentors in her field where she’s trying to launch her technology.   These mentors share her enthusiasm for what she is doing and really want her to succeed, so much so that they eventually decide to invest their own money to help her get to her next big milestone; they become her first angel investors.  Eureka! She has finally generated the data she needed and now the promise of what her technology can bring to patients feels very real.  She now needs more capital to build a more robust prototype and run a new set of experiments.  She reaches out to VCs, but gets no interest as they have now shifted further downstream from where they have invested earlier.  To her surprise, corporate investors, “the strategics”, are interested in investing and helping her refine her thinking on how to best get to market. And off she goes…

For entrepreneurs, fundraising is a never-ending job. But just because you’re constantly seeking your next source of non-dilutive capital or angel investment doesn’t mean you’ll eventually stumble on perfection. Every type of fundraising for entrepreneurs – from venture capital to angel investment to crowd funding – comes with its own set of positives and tradeoffs. You can get an in-depth look at several different fundraising options, as well as their individual pros and cons, in the new fundraising white paper (link) eMed released last week. 

Related to the issue of fundraising are partnerships. These collaborations could yield benefits around finances or access and validation (a topic we’ll cover at length in a white paper later this month). In the meantime, good luck achieving your fundraising goals!

Dominique


Dominique Pahud

Director of Innovation and Networks

Kauffman Foundation

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