Raising money is hard. Raising money in NYC is even harder.
Although the tech / investor scene here is growing, you still have to work harder to raise funding in NYC than you would in more mature funding markets like the Silicon Valley. That said, with the right business and approach, it’s definitely doable.
Bartek is the co-founder & CEO of SkillSlate, a recently funded NYC-based startup that connects consumers with local people who provide services at a fraction of the cost of established companies. His article has been published with permission.
One of the key things investors look for is the right team to execute, and/or previous entrepreneurial experience. Given that New York has only recently begun its 'startup renaissance,' as a New Yorker you probably haven't previously started a successful company (unless your name is Kevin Ryan, Jeff Stewart, Jason Finger, or Scott Kurnit).
This means that YOU are unlikely to be the reason why your company gets funded -- your team will be. For SkillSlate, the team behind the idea was a key reason we were able to raise capital. Think about the skills and roles that are necessary to execute your vision and get those folks involved early. Hunt them down, be persistent, and talk to as many good people as you can - you'll be surprised how willing people are. Share your passion and communicate your vision; excitement and transparency are contagious and you'll be surprised how many people will want to stay involved in some capacity. These are the folks who will become your advisors and supporters. Some of them may even become your team members; this is precisely how I built our core team very early on. Brian Rothenberg, who leads product and SEO at SkillSlate, got involved early on while he was interning at Canaan Partners, the VC fund I used to work for. Lawrence Wang, our head of technology, first became interested in SkillSlate as we talked it over at a Halloween party six-months before he joined full-time. You never know when the right people will cross your path, so you have to always be 'on.'
After you get your first investment commitment (or even before), find a good lawyer who knows the startup space. A reputable firm (such as Gunderson Dettmer, Wilson Sonsini, or Lowenstein) will provide invaluable advice throughout the fundraising process, lend you credibility in the eyes of potential investors, and often make valuable introductions to new investors.
In addition, many of the leading firms in NY will allow you to defer some or all of the legal costs early on. This means that you pay only a small portion of the total bill up front, and pay the rest later when you raise a larger round of capital. Gunderson Dettmer, SkillSlate's legal council, has been fantastic and well worth the money.
The fact that your business is early-stage means that there will be a lot of unanswered questions. However, that's not an excuse not to understand your business. At the core, you need to know three things: (1) your customers (aka the market), (2) how much it's going to cost you get them (cost of acquisition), and (3) your plan for what you'll do with them once you get them (your product & business model). Don't plan meetings with investors until you have solid answers to these key questions.
While these tips will help, in the end, no amount of advice will get you funding -- your drive will. At times you won't be able to sleep at night because a pitch went well, and other times you won't be able to sleep at night because another didn't.
But if you have a solid idea, build the right team, and do your homework -- your chances of getting funding are good -- even in NYC.
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