Last week, I moderated a panel on Funding Civic and Political Tech at PDF. It was exciting to bring together 4 experienced for-profit investors and nonprofit grant-makers: Shaun Abrahamson (Urban.us), Stacy Donohue (Omidyar Network), Mike Mathieu (FrontSeat), Ben Wirz (Knight Foundation). Together, we attempted to lift the veil on the often mysterious and frustrating process of fundraising.
First, we shared what investors care most about. Not surprisingly, most investors care about the quality of the startup’s leadership team. That said, in some circumstances (such at the Knight Foundation Prototype Fund), the idea may be more important. For Shaun, the market you are targeting is paramount because it’s much easier to succeed in a large, fast growing market.
We focused our conversation on one of the biggest stumbling blocks for entrepreneurs: how to find the right investors in the first place. After all, most entrepreneurs’ rolodex do not include large donors or angel investors. The panelists acknowledged that this is often the hardest part of fundraising. Some suggestions included looking at who has funded other venture similar to yours, looking at lists of major political donors (which is public information) and applying to open calls (such as New Media Ventures’ Innovation Fund Open Call). We also noted other large funders in political and civic tech including Google, Microsoft, the MacArthur Foundation and Hewlett Foundation as well as Camelback and DreamIt Ventures.
So, once you’ve identified potential investors, how should you engage with them? It’s always a good idea to start by asking for feedback and advice. After all, “if you want money, ask for advice. If you want advice, ask for money”. If you get a “no”, ask for feedback. Most investors will be willing to share why they are not investing. You should listen closely and take the feedback to heart. If you can address an investor’s objections, you’ll demonstrate your ability to learn quickly and perhaps change the investor’s mind. The best entrepreneurs are incredibly persistent and great at learning. These are 2 qualities that the fundraising process will thoroughly test!
Finally, the panelists shared a few resources if you’re looking to learn more about investors and how to raise money such as the blog aVC, Sequoia Capital’s blog (and the blogs of other successful VCs), Civicist (!) and above all, other entrepreneurs.
Closing note: I got a lot of great feedback on the panel format – consider using it on your next panel! After short introductions, I asked the audience what questions they had for our panelists. I wrote down 20 or so questions and then used those to weave a conversation. Not surprisingly, the questions the audience had were quite different from the ones I had brainstormed with the panelists ahead of time! Taking questions first ensures the panelists answer the most interesting/relevant/provocative questions in the short time they have.