5 Things You Need to Know Before Raising Money for Your Startup

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Asking for money is rarely fun. But it’s especially tough—and often futile—for women. Why? We’re less likely to get a raise at work, even though we ask at the same rate as men. And we’re especially unlikely to get money for our startups since only 2.2% of all venture capital goes to female founders. (The percentages are even worse for women of color.)

Even for those women who successfully ask this question, it’s as I write in my book Startup Money Made Easy: The Inc. Guide to Every Financial Question About Starting, Running, and Growing Your Business, “seeking outside money is a daunting, grinding, tedious process.” It can go horribly wrong. But raising money can also go tremendously well if you do your homework, network like crazy, and get lucky.

Over the course of nearly five years of reporting and editing money coverage at Inc., I’ve interviewed many successful women founders. Some of them avoided raising outside money entirely; others have raised tens of millions of dollars. So if you’re ready to take the VC plunge—or to start off by asking friends and family to back your business.

Here are five things to know about raising money for your startup.

You don’t necessarily need to do it.

VC-backed startups like Uber, WeWork, and Airbnb get a lot of the headlines, but most startups never ask outside investors for money and many thrive regardless. Take S’well: Founder and CEO Sarah Kauss turned her high-design water bottles into a $100 million business without ever taking outside investment.

There’s an increasing number of women funding women.

While traditional VC has a long way to go to close the gender gap, there is a growing number of investment firms focused on women-led startups. Some examples are Arlan Hamilton’s Backstage Capital, Susan Lyne’s BBG Ventures, and Anu Duggal’s Female Founders Fund. Women founders, meanwhile, told Inc. that female investors often better understand their target markets.

Still, it’s often a slog.

“When you see company after company raising money, you get the outside-in perception: ‘It's not that difficult if they can do it.‘ But this is not the case,” Policygenius co-founder and CEO Jennifer Fitzgerald told me about her initial fundraising expectations. “It was a very fruitless and frustrating few months,” she adds. Fitzgerald and her co-founder eventually raised their seed round through small checks from about 50 friends and family members, “which is a painful way to do it, but we had to get it done,” she recalled.

It can also be exhilarating.

“Raising money was a year and a half of my life, and I loved every minute of it. Boy, was it grinding and difficult,” Christina Tosi, the pastry chef who’s now the founder and CEO of Milk Bar, told me last year. “You're going to war … and not necessarily in a negative way. It doesn't have to be argumentative.”

It matters who your partners are.

Don’t accept just any investment. As your business grows, you’ll want to make sure you and your investors can agree on what’s best for the business (unless you want to try to buy them out). As Tosi put it, “You can't do a good deal with bad people, and you can't do a bad deal with good people.”

About the author: Maria Aspan is an award-winning business journalist and an editor-at-large at Inc. Magazine, where she oversees money coverage and writes about startups, technology, finance, and gender. She has also covered business and finance for The New York Times, Thomson Reuters, and American Banker. At the latter, she served as national editor and covered the 2008 financial crisis and its aftermath.

This post was originally published on March 11, 2019, and has since been updated.

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We Scrubbed the Internet for the Best Advice for Startup Founders During the COVID-19 Pandemic

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The COVID-19 outbreak is impacting communities—canceling events, shuttering offices, and suspending classes—around the globe. Of course, the focus is (and should be!) on preventing the spread of the disease, but the economic effects of the outbreak are impossible to ignore as companies large and small adapt to the ever-changing circumstances of the crisis.

In the last few weeks, the OECD cut global economic growth projections in half, the JPMorgan Global Manufacturing Purchasing Manager’s Index (PMI) fell to its lowest level since 2009, and U.S. stocks had their worst day since the 1987 stock market crash. Needless to say, supply chain disruptions, facility closures, and staffing deficits can put extra strain on startups.

Here are three things that startup founders can do now to adapt to the ever-changing circumstances, according to the Harvard Business Review.

Set up business tracking and forecasting.

Fluctuations are inevitable in the midst of a crisis. "Put in place rapid-reporting cycles so that you can understand how your business is being affected, where mitigation is required, and how quickly operations are recovering," notes Harvard Business Review. "A crisis doesn’t imply immunity from performance management, and sooner or later markets will judge which companies managed the challenge most effectively.”

Plan for remote work.

With the CDC recommending social distancing and zero-tolerance sick policies to prevent the spread of COVID-19, planning for remote work is essential. “Be clear on your policies—where they apply, how they will work, and when they will be reviewed,” advises Harvard Business Review for the best results.

Microsoft, Google, and Cisco Webex are among a number of tech companies providing free remote working tools during the coronavirus outbreak. Additionally, Slack’s Guide to Working Remotely, Gitlab’s Guide to Remote Work, and Google are all great resources for setting up a successful remote work strategy.

Be a part of the broader solution.

“As a corporate citizen, you should support others in your supply chain, industry, community, and local government,” notes Harvard Business Review. “Consider how your business can contribute, be it in health care, communications, food, or some other domain. Focus on the intersection between acute social needs and your specific capabilities—in other words, live your purpose.”

Head over to Harvard Business Review for more advice on how to lead your business through the coronavirus crisis.

For up-to-date information on the COVID-19 outbreak, we recommend referring to the Centers for Disease Control and Prevention or the World Health Organization.

5 Preventable Startup Culture Mistakes

Every founder knows that culture is crucial to a startup’s success — as Fred Wilson says, “If you want to be in business forever, you need to build a culture that sustains the business” — but there are a few common mistakes that startups make when creating their culture:

1. YOU THINK CULTURE JUST "HAPPENS."

Running a startup means your burn rate is always in the forefront of your mind, and as a result, everything takes a backseat to getting to MVP. Culture can be fixed later, right? The truth is that “culture” is just another way of saying “how we work here,” and by the time you get to your MVP, it will be deeply entrenched.

FiveStars’s founder Victor Ho never took the time to officially define the culture— he felt it was too “cheesy.” But as they grew from 40 to 80 employees, their culture got diluted and as people clashed over ways of getting work done. As quoted in Fast Company, Ho described it as “one of the hardest periods of the company.” Rather than waiting to define your culture, consciously shape your culture while you build your MVP. You don’t have to go on an expensive company retreat, or write an elaborate culture deck. It can be as simple as writing down five words that describe your culture and once a month, as a team, discussing whether they’re still appropriate.

2. YOU THINK HIRING MORE PEOPLE MEANS SUCCESS.

Celebrating is so important because success at a startup can be so rare in the first months. It’s comforting to be able to point something that’s a clear sign it’s all working. And as Buffer’s founder noted, “Team size is easy to understand. Sometimes it impressed people when I told them how big the company was, and I was proud to share it.” But the company brought on too many people, too fast, and was forced to lay off 11% of the company. Protect team morale by tracking more accurate measures of success, and find ways to celebrate small wins regularly.

3. YOU SPEND TOO MUCH ON PERKS.

Bribing employees is a common Silicon Valley practice — what else are meals by gourmet chefs, meditation classes, and laundry service but attempts to get more work out of employees? And those bribes don’t come cheap: shrinking VC funds forced Dropbox to cancel its free shuttle and and limit free meals a few years ago.

If you really want your team to do their best work, regardless of your compensation budget, give them meaningful work. Show them how their work is directly impacting the organization, and how the organization is making a difference in the world. In other words, give them purpose. Oh, and don’t worry — “purpose” doesn’t necessarily have to be a product or service that saves the world (though that’s a plus); it just means that you have a compelling vision and mission.

4. YOU OVERWORK PEOPLE IN PURSUIT OF THE PRODUCT. 

Signing up for a startup is a commitment; long hours and outrageous goals are part of the bargain. But push too hard, and you’ll flare out. At Zynga, for instance, long hours, “aggressive” deadlines, and an obsession with performance metrics led to a talent drain, and even hampered its ability to acquire companies. To prevent burnout, hold regular check-ins with your team to help them manage workload and stress levels. And don’t forget to check-in with the founder: 30% of founders report being depressed, as opposed to only 7% of the general population.

Again, we’re not saying you won’t spend some long nights and weekends at this office, but don’t make it a cultural norm.

5. YOU DON'T FIRE JERKS BECAUSE THEY'RE SMART. 

Hiring the best talent is highly competitive, but ignore the “no asshole” rule at your own peril. Despite their superior skill set, their personality will destroy your team culture, not to mention their productivity. In one of our engagements, we worked with an executive whose attitude turned the rest of the team against him. This led him to protect his own job by guarding his data more and more closely, leaving the startup completely in the dark when making crucial decisions.

The best way to avoid this problem is to carefully screen for jerks during the interview process, listening for self-centered answers and trash talking past employers. (As Raylan Givens of Justified noted, “If you run into an asshole in the morning, you ran into an asshole. If you run into assholes all day, you’re the asshole.”) But if one has slipped past your radar, talk to them and make it clear how you expect their behavior to change. If they don’t shape up, then it’s time to go your separate ways — the rest of the team will thank you.

Written by Paula Cizek, Director of Knowledge & Editorial at NOBL. NOBL is an organizational and team design consultancy that unleashes the creativity and capability of teams through new ways of working.

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Startup 101: How to Build Brand Trust from Scratch

I was inspired to talk about how to engage potential customers and build trust after a recent search on LinkedIn. I was searching for a sales funnel and email marketing specialist, and I came across several people who claimed to be consultants or specialists for hire. When I wanted to learn more, I couldn’t find anything about them online. No reviews, no website, and no information about why or how someone could hire them. This is an immediate red flag for me, but when I thought more about it, I realized that maybe people just don’t know how to engage potential customers and build trust.

As a personal branding expert, I often discuss why it’s important to cultivate a personal brand and optimize platforms like LinkedIn, so I was astounded that so many people who want to be hired as a consultant or expert don’t know how to create an online footprint. If you do not know how to maximize your online footprint, you are hurting your career and losing business. When you’re not a heritage brand, your online footprint is even more important when you’re trying to engage potential customers and build trust.

Optimize your LinkedIn profile

This is the first step of engaging potential customers. If you’re not on LinkedIn currently, create an account now. This is one of the most widely used platforms in career development, so underutilizing LinkedIn could be detrimental for your career. You’ll want to make sure your profile is fully optimized, but on top of that, make sure that your contact information is prominent, especially if you’re interested in getting hired for your services.

"If you don't know how to maximize your online footprint, you're hurting your career and losing business."

Tweet this.

Highlighting your expertise and how you can help others is also one of the most important aspects of engaging potential customers. Show examples of your work and your professional achievements to show potential customers exactly what you can do for them.

If you are offering professional services and are a registered business, create a company page on LinkedIn where people can learn more about your business and see that it is legitimate. Creating a company page on a trusted platform like LinkedIn helps build trust in your own brand.

Demonstrate a professional brand

If you’re offering professional services, you’ll want to demonstrate a professional brand that’s consistent across all channels. This means creating uniform content and being present on a company website, LinkedIn, Google, Yelp, and social media. The more channels and social platforms you utilize, the more reputable and trustworthy your brand becomes. If someone is unable to find a source of your work, including examples, contact information, and recognition, they’re unlikely to trust you as a brand and a professional. If you can’t establish trust among consumers, you won’t have a successful business. 

Utilize referral marketing

Referrals, recommendations, and testimonials are a huge part of building online trust and maximizing your online footprint. When a trusted friend tells you about a business, you transfer that trust to the company. Use LinkedIn recommendations, Yelp reviews, and customer testimonials on your website to help build trust and highlight your achievements. If real customers can attest to your quality of work and what you have accomplished for them, you will be able to establish yourself as a reputable resource.

As a side note, building up your presence on sites like Yelp will immensely help you because consumers trust that you cannot buy good reviews on that platform. Yelp uses algorithms which test and verify the reviews before posting them, which creates another level of consumer trust. When you’re using a trusted platform, it can appear more legitimate than simply writing down a customer testimonial with no verification. 

Cultivate a consistent personal brand across channels

Creating a cohesive personal brand is extremely important for developing your career, and using consistent branding across channels helps build your credibility. Think about it this way: If you search for a person or business and see multiple platforms and channels come up with the same information and visuals, you can assume that this brand has put in the time to create a consistent branding strategy. If you see different visuals, as well as inconsistent verbiage and service offerings across platforms, it’s harder to believe that the brand is professional and trustworthy.

________________

When considering how to optimize your online footprint, you want to focus on a few main factors:

• Providing resources such as contact information and examples of work
• Creating a consistent brand across channels 
• Creating trust through reviews and testimonials to establish yourself as a reputable source of work

The more information about yourself as a business professional you can put out there, the more trusted you will become. Note that this is not personal information, but information about business like business contact information, business information, services offered, etc.

---

A native San Franciscan, Michele Lando is a Certified Professional Resume Writer and founder of writestylesonline.com. She has a passion for helping others present the best version of themselves, both on paper and in person, and works to polish individuals' application package and personal style. Aiming to help create a perfect personal branding package, Write Styles presents tips to enhance your resume, style, and boost your confidence.

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The 7 Culture Mistakes Startups Always Make

photo credit: Molly Winters

Every founder knows that culture is crucial to a startup’s success — as Fred Wilson says, “If you want to be in business forever, you need to build a culture that sustains the business” — but there are seven common mistakes that startups make when creating their culture:

1. YOU THINK CULTURE JUST "HAPPENS"

Running a startup means your burn rate is always in the forefront of your mind, and as a result, everything takes a backseat to getting to MVP. Culture can be fixed later, right? The truth is that “culture” is just another way of saying “how we work here,” and by the time you get to your MVP, it will be deeply entrenched.

FiveStars’s founder Victor Ho never took the time to officially define the culture— he felt it was too “cheesy”. But as they grew from 40 to 80 employees, their culture got diluted and as people clashed over ways of getting work done. As quoted in Fast Company, Ho described it as “one of the hardest periods of the company.” Rather than waiting to define your culture, consciously shape your culture while you build your MVP. You don’t have to go on an expensive company retreat, or write an elaborate culture deck. It can be as simple as writing down five words that describe your culture and once a month, as a team, discussing whether they’re still appropriate.

2. YOU ONLY HIRE YOUR FRIENDS

Hiring for a startup requires a high level of trust: you need your team to work hard and make the right decisions, and the team has to believe in you and your vision. So it’s only natural to look for people from your existing network. This can be useful at first — homogenous teams communicate better and demonstrate greater cohesion — but can quickly lead to trouble.

Hyperloop One was launched with great fanfare, but was hit with a lawsuit due to (among other things) the co-founder hiring his brother as general counsel, and dating their PR consultant, whose fees then nearly tripled. Avoid this by establishing the rules of engagement early on, including what happens in a worst-case scenario (such as firing your friend). You should also think about how you’re going to integrate people into the existing culture; your goal is to prevent cliques from forming or for people to feel excluded from an “inner circle.”

3. YOU THINK HIRING MORE PEOPLE MEANS SUCCESS.

Celebrating is so important because success at a startup can be so rare in the first months. It’s comforting to be able to point something that’s a clear sign it’s all working. And as Buffer’s founder noted, “Team size is easy to understand. Sometimes it impressed people when I told them how big the company was, and I was proud to share it.” But the company brought on too many people, too fast, and was forced to lay off 11% of the company. Protect team morale by tracking more accurate measures of success, and find ways to celebrate small wins regularly.

4. YOU SPEND TOO MUCH $$ ON PERKS TO COMPETE WITH OTHER STARTUPS 

Bribing employees is a common Silicon Valley practice — what else are meals by gourmet chefs, meditation classes, and laundry service but attempts to get more work out of employees? And those bribes don’t come cheap: shrinking VC funds forced Dropbox to cancel its free shuttle and and limit free meals.

If you really want your team to do their best work, regardless of your compensation budget, give them meaningful work. Show them how their work is directly impacting the organization, and how the organization is making a difference in the world. In other words, give them purpose. Oh, and don’t worry — “purpose” doesn’t necessarily have to be a product or service that saves the world (though that’s a plus); it just means that you have a compelling vision and mission.

5. YOU OVERWORK PEOPLE IN PURSUIT OF THE PRODUCT. 

Signing up for a startup is a commitment; long hours and outrageous goals are part of the bargain. But push too hard, and you’ll flare out. At Zynga, for instance, long hours, “aggressive” deadlines, and an obsession with performance metrics led to a talent drain, and even hampered its ability to acquire companies. To prevent burnout, hold regular check-ins with your team to help them manage workload and stress levels. And don’t forget to check-in with the founder: 30% of founders report being depressed, as opposed to only 7% of the general population.

Again, we’re not saying you won’t spend some long nights and weekends at this office, but don’t make it a cultural norm.

6. YOU DON'T FIRE JERKS BECAUSE THEY'RE SMART. 

Hiring the best talent is highly competitive, but ignore the “no asshole” rule at your own peril. Despite their superior skill set, their personality will destroy your team culture, not to mention their productivity. In one of our engagements, we worked with an executive whose attitude turned the rest of the team against him. This led him to protect his own job by guarding his data more and more closely, leaving the startup completely in the dark when making crucial decisions. Still not convinced? Jump to 4:30 to hear Paul Graham, founder of YCombinator, talk about his “no asshole” rule.

The best way to avoid this problem is to carefully screen for jerks during the interview process, listening for self-centered answers and trash talking past employers. (As Raylan Givens of Justified noted, “If you run into an asshole in the morning, you ran into an asshole. If you run into assholes all day, you’re the asshole.”) But if one has slipped past your radar, talk to them and make it clear how you expect their behavior to change. If they don’t shape up, then it’s time to go your separate ways — the rest of the team will thank you.

7. YOU BELIEVE THE RULES DON'T APPLY TO YOU. 

Pushing the limits is a great way to get new customers and attract attention… until it isn’t. Zenefits was lauded as a major disruptor in the insurance industry, and its investors pushed it to increase its sales goals. Unfortunately, to meet those goals, the company ignored state regulations — which ultimately threatened to destroy the organization and forced the CEO out.

Before you even think about lawyering up, sit down with your founders and determine your company values. What’s most important to your team? When might you need to debate an action before moving forward? Check in every quarter so that when money’s on the line and deadlines approaching, you know what you stand for.

Written by: Paula Cizek, Director of Knowledge & Editorial at NOBL. NOBL is an organizational and team design consultancy that unleashes the creativity and capability of teams through new ways of working. Sign-up for one their upcoming team design bootcamps.  

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Startup 101: Your Year One Essential Checklist from Above the Glass

FEMALE ENTREPRENEURSHIP IS GROWING FASTER THAN EVER. BUT TO CAPITALIZE ON THE WHIRLWIND OF OPPORTUNITY, YOU NEED TO UNDERSTAND THE STORM FROM WITHIN. 

Enter, Danielle Yadegar and Heather Serden, co-founders of the freshly launched Above the Glass, an online platform providing women in business with straight talk interviews with women in business and actionable take-it-to-the-bank advice. Like free downloads, because Above the Glass wants to see you succeed. They believe that, "without a doubt economic empowerment and the capability to start businesses should be available for all women.”

So, if you are on the precipice of launching, download the Startup Essential Checklist from Above the Glass, and get the engine on your business running. 

To download the checklist, enter your information on the the form below and a link to the free download will pop-up. Good luck!