What It Is Really Like To Raise Capital
Although this article is focused on start-ups and VC capital, the insights are very applicable to the hedge fund and alternative asset capital raising. Many of us have experienced exactly what the”Biotech Rebel” has faced. Enjoy!! Dave
Biotech rebel’: Here’s what it’s really like to raise money in Silicon Valley
- So-called biotech rebel Ethan Perlstein describes fundraising as a whole lot of rejections and “crippling self-doubt,” but he got through it.
- Here are the three biggest lessons he learned.
the birth of a start-up is greeted with fanfare and expectation. As a culture, we’re intoxicated by stories of entrepreneurial heroism. The larger and more oversubscribed the round — and the more earth-shattering the mission — the better. Nowhere is this ethos more true than Silicon Valley. It’s for precisely that reason that my start-up Perlarawas conceived and born three-and-a-half years ago.
With our latest round of financing behind us, here are some learnings from a tour of duty pitching Sand Hill Road’s venture capitalists. Listen up, founders.
Don’t get strung along
My first hard-earned lesson? Don’t take any meetings with a VC if their fund hasn’t already invested in your space or vertical. The onus is on them to prove to you and their limited partners why your company should be first. As founders, we forget that VCs know exactly how it feels to walk in our shoes because they have to pitch limited partners to invest in them. I’m consistently surprised that founder empathy isn’t the default disposition of every VC.
The biggest mistake I made over and over again before I got wise was giving free tutoring sessions to “biocurious” tech investors (a term I heard while networking) who were not all that serious about investing in deep science, in particular biomedical science. I don’t need to name names. Just cruise Sand Hill Road and pull into any office villa. You’ll find them. Mercifully there were public transportation-accessible tech VCs located in San Francisco, which cut down on my travel time and opportunity cost.