Urban Interns, an online marketplace that connects growing companies with people looking for part-time jobs, internships and freelance positions, has closed a round of angel financing. It's an exciting milestone for us. We'll use the money to fund our geographic expansion, product enhancements and new marketing programs.
Since making our announcement a few weeks ago, we've been asked about our experience raising capital by several other entrepreneurs about to embark on the same journey. Following are a few tips we've picked up over the past several months:
- Have proof of concept. We self-funded our business for more than a year before trying to raise capital. This allowed us to talk to investors while armed with real data about our business and the fact that customers were willing to pay for it. We proved that our business model works and that we were seeking capital for growth and expansion, not to land our first paying customer. Plus, with more than a year of operating experience under our belts, potential investors had the opportunity to see our founding team in action.
- Know what you're going to do with the money, and when. We approached investors with a very clear road map for the capital needed and our plans to spend it. We ran many alternative analyses to show how we'll make adjustments depending on real-time outcomes. The exercise of creating a solid blueprint does not mean that you are beholden to a given plan, especially if circumstances change or something doesn't work. That's not a good outcome for anyone. Instead, by undertaking this exercise, you're both focusing on your plans for the future and showing investors that you're ready to think on your feet.
- Consult the "experts." And by experts, we mean anyone who's raised money before you and can share some insight into the process. As an entrepreneur, you're already accustomed to keeping a close network of resourceful people. Tap into those around you to hear their stories and tips--what's worked and what hasn't. If you speak with enough people, you'll start to see some themes emerge and form opinions about the type of investors you want to approach and how you'll go about it.
- Patience, patience and more patience. We raised money relatively quickly, especially in a down market. That said, it felt like an eternity to us. Back to tip No. 3, consulting the experts: We had a strong network of entrepreneurs around us who applauded our early successes and encouraged us to keep going, even when we felt like each fundraising minute was an hour long.
- The show must go on. Raising money creates an interesting quandary for a business owner. It requires time (sometimes a lot), which you hope will yield capital that you can use to grow your business. But in the interim, even in the absence of capital, you still have to keep growing your business. That's especially true if investors want to see growth before capital. While raising capital requires a lot of time and energy thinking about the future of your business, it also requires the discipline to keep yourself firmly rooted in the present. This is a situation where you have to keep walking, even if you want to run.