While most of you were watching re-runs of Miracle On 34th St over the holidays, my partners and I were fundraising.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 complement 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 20 clients and received a letter of intent from one of the country’s largest big box retailers.
- Find a catalyst: As soon as we received a signed letter of intent from one of our largest prospective customers, we began scheduling meetings with investors. The contract proved that our product was viable and compelling. Perhaps just as important, it provided enough revenue to fund the company without seeking investment in the immediate future. Which leads us to my next point…
- Everybody likes a pretty girl: When approaching investors, it’s important to align your product with a hot macro trend that’s peaking. We knew that omni-channel was a trending theme, but even we couldn’t anticipate how quickly the market was moving. Launching an omni-channel strategy is on every retailer’s to do list for 2013. That fact made us a pretty attractive deal for investors. However, people want what they can’t have, so only approach investors when you’re not asking for their money We waited to pitch venture capital firms until we already had market traction and strong interest from angel investors. The fact that we had a veteran team, existing customers and alternative investment options provided important leverage during our negotiation.
Following this advice isn’t easy. It requires years, not days. But trust me when I tell you that if I can do it, so can you.
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.