After Blank Label raised outside funding through a seed round of $1.1 million, I started getting emails asking me how we did it. The email senders would write that they didn’t attend Harvard Business School or University of Pennsylvania’s Wharton, and that they didn’t have a big network with deep pockets.
For context, my co-founder dropped out of college, and I’m from inner-city New York. Having a large network isn’t the most important part of raising money, and neither is your idea. The most important thing is traction (how far you’ve come on your own), whether it’s six weeks, six months or six years. As successful entrepreneur and angel investor Gabriel Weinberg states, “Traction trumps everything.”
When my company first started thinking about raising money in 2013, we had traction–probably enough to successfully raise money–but we didn’t know how to do it. These are the steps we wish we knew then, and what we have learned as we raised our first $1 million and continue to grow.
Make Sure You Have Time for It
Before you start, realize it’s a sales process. Like landing your first customers or your first hires, or even interviewing for a job, it’s about building a wide funnel at the top and then converting your leads over time. At first, we thought that we could email a few investors to see if they were interested in coffee, and they’d happily give us money over a latte. Make sure the business can still be a going concern as you spend up to 50% of your time working on presentations, paperwork, traveling to meet investors, following up with investors, etc.
Danny Wong is an entrepreneur, marketer, and writer. He is the co-founder of Blank Label, an award-winning custom clothing company.
BusinessCollective, launched in partnership with Citi, is a virtual mentorship program powered by North America’s most ambitious young thought leaders, entrepreneurs, executives and small business owners.