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Ben Lerer is an active startup investor at Lerer Ventures. He’s also the cofounder of Thrillist, a media and e-commerce company for men.Lerer decided to raise a Series A round to scale the company and pursue M&A deals.
As an active investor, he thought he knew what to expect when the investor meetings began.
He was wrong.
“I went into this thinking, ‘Oh, these [investors] are my boys,’ and that everyone would say, ‘This is the best company ever, how much money can I give you?'” says Lerer. “It’s not that simple.”
Lerer says now that the process is over, he doesn’t respect all of his “boys” anymore.
Ultimately, Lerer raised $13 million at a valuation north of $150 million.
Lerer hand-picked the six to eight investors he met with. They were people who had been checking in on his company bi-weekly for years. He stayed away from investors friends warned him about.
But some of the meetings still went terribly. People he thought understood his vision and business did not. People he thought were nice weren’t.
“You have people who are negotiating with you, and a form of negotiating is to tell you all the reasons the thing you love isn’t as good as you think it is,” says Lerer. “They need to make you insecure about your business so they can have leverage.”
The hardest part of the process was finding an investor Lerer really wanted to work with. Lerer decided to “keep it in the family” and go with an investor his family has trusted for years, Fred Harman of Oak Investment Partners.
Harman has invested in many successful media companies including Bleacher Report, Demand Media, and his father’s company, The Huffington Post.
“To actually go through the fundraising process myself — it’s not what you think it is,” says Lerer. “We have a better company than 99% of people who raise $10 to $20 million but it’s still hard to put all the pieces together and find an investor you really want to work with.”
Lerer says Thrillist is profitable and is expected to generate $60 million in revenue this year.
His advice to other entrepreneurs is to pick an investor carefully. Look for someone who is a believer, who really understands your business.
“Life is too short; surround yourself with people you really like and trust in all of your relationships,” he says. “Find the right fit. I’m more confident that Fred is the right investor for us than I could possibly be.”
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