— -- Getting a business off of the ground is a massive undertaking. Often, it takes outside money to grow your company to scale. And asking for that money can be intimidating, so it’s good to know what to expect.
In a recent interview on "Real Biz With Rebecca Jarvis," Tiffany Pham, founder & CEO of Mogul, shared her best advice on what every start-up should know about fundraising. Mogul, which has been called “the Reddit for women,” connects 18 million women in 196 countries every week. Pham is a self-taught coder who learned English by watching films and listening to the radio as a child. Her company has widely been recognized as a successful start-up by Forbes, Business Insider and Harvard Business School, among others.
Here are three things Pham says every start-up should know about fundraising:
1. Build authentic relationships before you ask for money
“One of the worst things you can do is meet an investor, and immediately upon that meeting, ask for money at that time,” Pham said.
This might work on rare occasions (like ABC’s "Shark Tank"), but building relationships and networking prior to the fundraising stage can help potential investors get to know you and your company, without any strings attached.
“Around the time that you ask for funding, you’ll be ‘due-diligenced’ with a lot of people making reference checks around you and your networks, and the past work you’ve done,” Pham said.
That means these investors will be doing their homework about you before they shell out cash -- so if you’re already established in their network, they may feel more comfortable taking a chance on you.
2. It’s a numbers game
In fundraising, most companies hear far more “no's” than “yes's,” so it’s important to cast a very wide net.
“You will hear many, many no’s along the way, especially as you start in the beginning. But all of those no’s are actually 'not right now’s'.”
3. Wait it out … then prove you’re worth it
Every investor is hoping to increase the investment. If you can hold off on fundraising until you have proven numbers that show your company is growing successfully, you’ll have much more luck getting investors to take a chance on you.
“Be backed by metrics which showcase the need,” Pham said. “I’d actually launched Mogul already before I approached investors because I knew that I might be faced with doubts.”
To hear more of Tiffany Pham’s story, watch this week’s "Real Biz With Rebecca Jarvis" and follow @RebeccaJarvis and #RealBizwithRJ for more start-up advice.