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Hearing “no” constantly, feeling like you’re not enough, and the loneliness of fundraising can all be stressful byproducts of an already stressful entrepreneurial fundraising experience.
But last year provided worsening conditions for founders. Q4 2022 resulted in a 63% drop in year-over-year startup funding. This sharp decline was primarily due to the looming economic market volatility, which caused investors to make far fewer — and less significant — investments.
It might be easy to feel jaded, especially if you have already started your fundraising journey during this investor slump. But despite the current circumstances, investors are still interested in making investments. Warren Packard, operating partner at AI Fund and a 2x founder, explains, “While investors are going to be more patient now, they will still be actively meeting with companies. They need to find those great gems that are out there.”
To guide how to keep your cool during the long fundraising haul and navigate your way past imposter syndrome, microaggressions, and a lousy economy, our 2022 Project Diane interviewees are here to provide you with their expert fundraising knowledge. Three of these Project Diane interviewees are digitalundivided X Cosmopolitan 2022 C-Suite Honorees. They have raised over 25 million dollars and know what it takes to hit the pavement — without losing your head.
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Tip #1: Practice Your Way To The Top Funders
Name: Tanya Menendez, Snowball Wealth
Total Funds Raised: $1.6 million
My experience has been that fundraising is similar to stand-up comedy in the sense that comedians start with smaller venues. They start to test their material, see what sticks and what doesn’t, and like where people’s eyes start to light up when they’re chatting with them. I found that to be a pretty helpful analogy to fundraising because your first pitch isn’t going to be perfect. You’re still putting together the narrative and the story. Each time you do that, you get feedback that informs the story and that gets closer to the truth. My first recommendation is to talk to as many people as possible about your idea and to get as many different perspectives. That will continue to inform the narrative to get it closer and closer to the truth.
Image via Praxis Labs
Tip #2: Find a Community
Name: Elise Smith, Praxis Labs
Total Funds Raised: $18.7 million
What has helped me as a Black female entrepreneur has been finding a community and a tribe of folks who have shared identities and shared experiences so that we can support each other. It’s the roller coaster, and those you have in your corner and whom you have on your speed dial are the folks who can lift you up. For me, it’s been really important to have other Black female founders in my circle to whom I can send a text message and say, ‘Hey, this happened. What is your take? What’s your reflection?’ Even beyond founders, having friends and advisors in my corner who understand the unique experience of being a female founder is important.
Image via Farrah Allen
Tip #3: You Control Where Your Funding Comes From
Name: Farah Allen, The Labz
Total Funds Raised: $2.8 million
Iknow upfront what type of people I need to talk to. I do my research to see whom they’ve invested in. Are they going to be culture shocked by my being in their presence? I have a choice. I really do not want to have people invest in me who don’t believe in diversity. So, what does their cap table look like? I wouldn’t invest in my lawyer’s fee unless they have specific criteria. I think it’s time we change the game. At the end of the day, you have way more control than you think you do.
Imag via Nopalera
Tip #4: Plan ahead and raise for the unexpected
Name: Sandra Velasquez, Nopalera
Total Funds Raised: $2.7 million
I ran into one of my mentors over the summer, Margarita Arriagada, who is actually a former Chief Merchant at Sephora. She was the only Latina at Sephora. She just kind of quietly said to me, you know, you really should raise two million because you’re going to need the runway. It’s just as much work, raising two million as it is one million, and I was like, you know what, you’re right. I literally just went home that night, and I changed the pitch deck from a one to a two. All of a sudden, it became a two-million-dollar raise. And I’m so glad because now here we are at this moment where we’re heading into more economic uncertainty; no one knows what’s about to happen with the recession in 2023. So, I’m glad I feel like I got the money just in time to give us the runway to survive, which, you know, that’s the new anxiety, right? The first anxiety is like you’re running out of money. You don’t have money, and now we have money. And now the anxiety is like, how do we stretch this far to survive this recession, right? And still, grow at the same time?
Tip #5: Learn how to hear “no” until you get to a “yes”
Name: Farah Allen, The Labz
Total Funds Raised: $2.8 million
You’re going to hear ‘no,’ so prepare a way for you to feel. And you have to. You’re not going to feel great about it. But you have to learn how to ignore it and not let that affect you. Whatever that little chemical in your brain is that makes you feel sad, and like you’re not going to do anything the rest of the day because you heard, no, that’s what you’re fighting.
I fight that by just moving on to the next thing very quickly. Recover by doing something that feels good or gives you a small win. Sometimes, I’ll play a game on my phone right after a call, and I will win really quickly. Because there’s no way you’re not going to feel it. It’s just, really you’re moving past it extremely quickly so that you can get back to work and remain in that creative mode.
Read the rest of the fundraising insights these incredible women of color entrepreneurs have for you at digitalundivided immersive Project Diane Report!