Are You a Startup Founder Looking to Raise Funds? Here Are the 10 Things You Must Know First.
Starting up is hard. Raising funds? Even harder. If you’re a startup founder, you’ve likely been bombarded with advice on securing funding—but no one may have told you the hard truth: in today’s world, knowing the right people is everything.
With only 0.05% of startups ever securing venture capital, your network might just be the single most crucial asset you have. Here’s an unfiltered look at why, and a few key insights for the 99.95% of founders who may not secure the golden ticket of venture capital:
1. Know the Right People—Really Know Them When it comes to securing funds, it’s not just about knowing the right people. It’s about really knowing them. Think family members, lifelong friends, or respected mentors who have the ear of the gatekeepers.
Investors tend to be cautious with their time, especially as they hear pitches all day from ambitious founders. When someone they trust vouches for you, your chances of getting in front of the right decision-maker skyrocket. Without this inner circle, getting a serious hearing might be as rare as winning the lottery.
2. Know the Right People, Because the Odds are Stacked Against You. The vast majority of startups will never secure external funding. The reality? Most investors aren’t business owners themselves. Many are financially savvy individuals who have accumulated wealth by other means, and while they might recognise a good pitch, their experience is often limited to funding, not building.
In this game, if you manage to pitch someone who has owned a business, it’s probably someone who has run a funded business. More often than not, they’re successful because they knew the right people who got them through the door.
3. Know the Right People Because Investors are Really Investing in You.
Yes, investors look at your idea—but what they’re really sizing up is you. They need to feel confident in your ability to execute, and a major part of that confidence comes from trusted validation. When someone they respect vouches for you, it goes beyond the usual pitch; it becomes a personal endorsement.
Consider Airbnb’s early days, where co-founder Brian Chesky leveraged connections with influential tech figures to gain credibility. Investors were more inclined to bet on him because people they trusted had put their faith in him first.
4. Know the Right People Who Are Drawn to Your Charisma. It’s no secret that charisma plays a huge role in securing funding. Investors are constantly looking for the “next big thing,” hoping that someone from their trusted network can introduce them to the next unicorn. If you can find someone who has helped secure investment for a previous unicorn and who genuinely believes in your vision, they can paint a compelling picture of your idea, embellishing it with the promise of high potential.
Early investors in Uber, for example, were drawn in by the charisma of Travis Kalanick and the endorsement of influential figures in Silicon Valley who vouched for the founder’s ambitious vision.
5. Know the Right People Who Can Help You Overcome Investor Bias.
Let’s be honest—investors, like everyone else, are influenced by bias. If someone from their circle champions you, it can help them see beyond their initial scepticism or doubt. Investors who know you through a trusted source may be more willing to give you the benefit of the doubt, even if your idea is rough around the edges. This dynamic helped the founders of Slack, who initially pitched the company as a gaming platform but pivoted to workplace communication. Investors trusted the pivot because they trusted the people involved.
6. Know the Right People to Help Navigate Investor Expectations.
Many investors have certain ideas of what success looks like—and it often doesn’t include waiting patiently for slow, organic growth. Investors who get involved in early-stage startups often expect fast returns. Knowing people with insight into these expectations, or who have succeeded in the startup scene, can help you shape your pitch to match what investors want to hear. Dropbox’s Drew Houston famously caught the attention of big-name investors by using his network to understand how to position his product in a crowded market, tailoring his pitch to meet their expectations.
7. Know the Right People Who Can Smooth Over Rejections.
Rejection is common in the startup world, and often, it’s not a flat “no” but a “not right now.” Having influential people in your network means that even if an investor turns you down, there’s a chance that they’ll come back around if someone they trust nudges them. In the early days of Facebook, Mark Zuckerberg had several influential figures in his network who helped him overcome early rejections. Later on, investors who initially said “no” came back with open checkbooks, simply because they trusted the people who stood behind him.
Now That You Know the Importance of Knowing the Right People, Let’s Talk About the 3 Things You Need to Know If You’re Part of the 99.95% Who May Not Secure Funding.
If you’ve read this far, you understand that connections can be game-changing, but the hard reality is that the right connections are few and far between. Billionaires and influential investors are a rare breed, often surrounded by established millionaires who guard these networks tightly. For those who don’t have the luxury of such connections, here’s what you need to know to give your startup the best chance of survival and success.
8. No Idea is 100% Bad—It’s About How Your Market Sees It.
Even the best idea in the world won’t go anywhere if your target market doesn’t see its value. Instead of focusing solely on investor pitches, focus on validating your concept with real users. Your market might surprise you, identifying aspects of your product you hadn’t considered. As an example, the founders of Airbnb initially struggled to secure funding because the concept seemed too unconventional. However, by testing their product with real users, they were able to prove demand, ultimately winning over investors who were initially sceptical. If you’re bootstrapping, consider leveraging barter systems, collaborations, or trade agreements to get your product into the hands of potential users. This way, you’ll gain valuable feedback and adapt your product to fit what the market really wants—without burning through cash.
9. Build and Test Your Offering with Your Own Resources.
If investors aren’t biting, it’s up to you to build your vision from scratch. Bootstrap, barter, and trade your way to an initial prototype. Everything looks amazing in a PowerPoint deck, but the market is the ultimate test. The founders of Mailchimp initially launched the product as a side project funded by their web design agency. This approach allowed them to fine-tune their product based on market feedback, eventually leading to a billion-dollar exit—all without a single round of funding. It’s tempting to dive in full-time, but unless you have the financial cushion to do so, keep your day job while you test the waters. Real-world validation is invaluable, and by minimiinsg overhead, you’ll be more likely to achieve sustainable growth.
10. Master the Art of Selling Your Product with Minimal Cash Whether you have funding or not, a lean approach to sales is crucial. Learn to market your product on a shoestring budget, leveraging organic marketing, community engagement, and social media to raise awareness. Educate your market on the problem your product solves, creating demand by showing them what they’re missing. For instance, the founders of Basecamp (formerly 37signals) built a thriving product by focusing on content marketing and community engagement rather than traditional advertising. Their approach helped them reach profitability without external funding, proving that a well-executed strategy can drive success even in a crowded market.
Conclusively, in the world of startups, knowing the right people can indeed open doors, but it’s not the only path to success. For the vast majority of founders who won’t land that life-changing investment, these strategies offer a way to build something sustainable, resilient, and potentially just as impactful. The reality is that success isn’t defined by your valuation or your investor pitch deck. It’s defined by your ability to understand the market, test your concept, and adapt with agility—regardless of who you know.
Edited by: Momodu Evans
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