As a start Founder, you have no shortage of voices to listen to. Most of these voices—especially from venture capital or other startups—tend to give you a single piece of advice when it comes to fundraising: Basically, raise as much as you can, as fast as you can. This isn’t “bad” advice, but it may not be very realistic given the funding environment we find ourselves in.
My partner and I started Reclaim.ai four years ago, and our approach to raising capital is far from conventional. We realized early on that we wanted to build the best (and the best) using a more scalable approach – rather than raising a modest amount of capital and raising multiple rounds as we grew. Doing this allowed us to build a sustainable business faster, with less distractions and more control.
I’ve written about this before, and since then we’ve continued to follow that mantra as Reclaim has evolved. We recently raised another $3.2 million to power our next phase of growth, bringing our total funding over the past two years to nearly $10 million. We’ve done all this without giving up a single board seat, and Reclaim employees continue to own more than two-thirds of the company’s equity.
Raise capital by all means, but be aware that raising too much means you may relinquish control at a very early and sensitive stage.
Here are three lessons we learned from this trip:
Faith goes further than the pitch
Our latest round of funding came from a mix of new and existing investors. In fact, the round was triggered by them believing in what we are doing and bringing other angels and organizations to the table to attack us. In the end we didn’t have to shout and deliver.
To do this, we first identified people in our cap chart who seemed interested in expanding ownership based on their profile and connections. Second, we used a tool called SAFE to speed up the process and reduce the pain of due diligence. Finally, we’ve emphasized lightweight development metrics rather than full decks to keep our focus on a few key points.