Back in summer 2009 we had just cleared $1 million in annual recurring revenue at Pardot after being in business for almost two-and-a-half years. Globally, the macro economy was in the dumps and Software-as-a-Service (SaaS) companies weren’t in favor. Marketing automation as a market appeared to be a huge opportunity and all signs from our customers pointed to the product being a pain killer and not a vitamin. The next logical step was to raise venture capital and build a huge company. Or so we thought.
Fundraising was a full-time job for four months. After talking to 29 venture firms, doing a half dozen full partner pitches, and getting to verbal term sheet discussions, we decided to call off the process and focus on building the business without institutional capital (see 4 Reasons to Raise Venture Capital). Here are a few thoughts on fundraising while still building a business:
- Know that fundraising is a full-time job, and plan accordingly
- Seek help from team members to offload non-essential tasks and free up responsibilities
- Align potential investors around a desired timeframe and close date, so that there’s a sense of urgency
- Create a competitive process to bring multiple options to the table in order to maximize strength
- Always have a backup plan in place in the event fundraising doesn’t work out as planned
Raising money is incredibly difficult, and, combined with building a business, makes it even harder. Fundraising should be a team effort and everyone needs to be on the same page around responsibilities and continuing to push the startup forward.
What else? What are some other thoughts on fundraising while still building a business?