You’re reading an excerpt of The Holloway Guide to Raising Venture Capital, a book by Andy Sparks and over 55 other contributors. A current and comprehensive resource for entrepreneurs, with technical detail, practical knowledge, real-world scenarios, and pitfalls to avoid. Purchase the book to support the author and the ad-free Holloway reading experience. You get instant digital access, over 770 links and references, commentary and future updates, and a high-quality PDF download.
Tips and Strategies
In addition to the high-level strategies above, here are some important tips to remember as you build and grow your network.
If you don’t know where to start when it comes to networking with a goal of raising venture funding, there are a few specific ways to set you and your company up for success:
Work at a VC-backed startup. This may be beneficial for several reasons. Founders are often willing to introduce their best performing employees to their investors if those employees express interest in becoming founders themselves. If the company does well, the company’s brand will be recognizable to many investors.
Apply for your startup to participate in an accelerator.Applying for a spot in an accelerator for a chance to meet other founders, develop your idea and product, practice pitching, and get introductions.
Work on open-source projects. Being a part of a shared, available project—if it’s good—can build your reputation and can impress venture capitalists, helping you get a foot in the door, if those projects are successful.
Ask for Help
The best angel investors, venture capitalists, and venture-backed founders go out of their way to help those who are new to the ecosystem. Nearly everyone in the startup ecosystem who has had some success is standing on the shoulders of giants. Be cautious of those unwilling to recognize that fact. Those willing to admit how much they owe to those who helped them along the way may just turn out to be the difference between success or failure. At the very least, you’re likely to make some damned good friends along the way.
Fern Mandelbaum, partner and co-founder at Vista Venture, advises VCs and founders alike that “We can all be a part of this virtuous cycle. Key is to help each other and build this community, to build on the friendships we started today, and to be entrepreneurial. And by being entrepreneurial I mean to see and seek out opportunities, to be optimistic, to be passionate, to take risks, to be leaders, and to execute and act upon your ideas.”
important Not everyone is outgoing or comfortable asking even close friends for help. While asking for help—and networking in general—may appear easy for some people, know that it only looks that way. Some people have it easier than others, but your growth and progress are in your hands. No person is an island, it takes a village—these phrases exist because it is impossible to accomplish anything without the help of others. Getting comfortable with asking for help is just something you’re going to have to do.
Many new founders make the mistake of thinking investors and successful founders are too busy to meet with them. Of course, sometimes they are too busy. But if the most you do is ask, they still might remember your name.
The Ben Franklin Effect
The Ben Franklin effect is a theory that suggests someone is more likely to help you after they’ve already helped you once. The idea is that, once they’ve invested some time or energy in you, they want to see you succeed. Back in the day, Ben Franklin was having trouble getting through to a colleague, so he devised a plan. He asked the man for a favor—to borrow a book in his collection. The fellow immediately obliged, and continued to help Franklin throughout his life from then on.
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Let’s look more closely at the favor Franklin requested. He didn’t have a messenger deliver to the legislator a scroll that read “Peanut soup at the tavern???”—perhaps the eighteenth-century equivalent of an email with the subject heading “Coffee???” or “A quick chat???” Franklin knew this sort of overture would seem dangerously vague to a busy professional. He was more intentional—and strategic—than that. Franklin did research on his target and found out the legislator’s areas of expertise. He presented himself as a serious person with a need that matched. He made himself interesting. He made himself relevant. And he asked for a clearly defined favor: the use of a book.
Look for Experience, Not Advice
One signal to watch out for when speaking with an expert or someone you look up to is to beware anyone who tells you too often, “You should do X.” and “You should do Y.” Even if someone has been successful in your field, they may have only done so once. The environment changes. Great advice often comes in the form of phrasing like, “I can’t tell you what to do, but I did go through something similar once. Can I share how I handled that and you can determine what’s useful?”
Givers, too, can be dangerous. If you spend too much time seeking counsel and listening to advice, you’ll inevitably suffer feedback fatigue or analysis paralysis.
Another common pitfall entrepreneurs should avoid is seeking advice from a highly experienced expert whose knowledge just isn’t applicable in their field. For example, if you’ve set out to raise a Series A for your e-commerce company, your friend who sells software as a service to electric utilities may not be the best person to talk to about how to pitch your company to a VC.
The knowledge needed to raise venture capital overlaps with everything needed to run a company effectively. We won’t get into all of that here, but suffice it to say that learning when to listen to the advice of VCs and other founders and when to listen to your instincts is an essential skill to develop; it can be the best thing you do at the start of your company through to exit.
Don’t Be a Jerk
We don’t devote nearly enough scientific research to finding a cure for jerks.Bill Watterson, creator, Calvin and Hobbes*
If you’ve worked in startups—and it’s probably not unique to startups—for half a minute, you’ve met The Jerks. They went to Fancy Schools. You know this because they tell you within three breaths of hello. They got 4.0s and got degrees in cutting-edge fields.
The Jerks have been academically and intellectually challenged their whole life, and they’ve been winning. Except now, The Jerks might be having a hard time. They’re getting told, “No.” Or they’re meeting people who have been more successful than them—by their yardstick at least—who didn’t go to Fancy Schools or schools at all.
There’s a lot of wisdom to following your own north star and avoiding the trap of seeking validation from others, but you can do that without joining the ranks of The Jerks. Rejection, whether you’ve been stood up for coffee or told your company isn’t a fit for their firm, is something any practiced professional knows will happen a lot. Putting someone on their heels for missing a meeting or a decision not to invest is unlikely to get you anything more than a brief sense of satisfaction followed by long-term regret and a damaged reputation.
If you come across one of The Jerks, and you probably will, we recommend taking the high road. Remember the words of Yoda, “…anger leads to hate…hate leads to suffering.” Instead of losing your temper, consult a friend who will listen to your rant, remember The Jerk’s name, and steer clear of their path.
No matter what, we recommend everyone familiarize themselves with the idea of “paidthe brilliant jerk.” You’ll inevitably meet them, work for them, or hire them. The important thing is to try not to be one.
important There are of course cases where meeting a jerk merits speaking out. Sexual harassment is as rampant in Silicon Valley as in most every industry. If you meet with a jerk who turns out to be a predator, you should not be expected to keep it to yourself. Visit Bias and Discrimination in Fundraising for resources.
Build What You Want to Be a Part Of
Networking is one word for building a community of people who share your values. If the network you want to enter is flawed, unfair, or focused on things you don’t believe in, other people out there can help you build the network you want to be a part of.
Networks should always be about support. The best networks of founders and investors embrace risk and even failure. No matter who you are, where you come from, or where you want to be, there are people who can help you. That doesn’t mean everyone will help you. In fact, it means that there are some who will take advantage of you and take advantage of the existing system. That’s where your hard work comes in of filtering out those people and acting with the kind of practiced faith that will help you find your community, and build something special with them.
Find Your Filter
Part of your responsibility in building the network you want to be a part of is figuring out what you want, what you’ll tolerate, and what you won’t allow. Here are some questions you can ask to start figuring those things out:
What do you need a network to do? What are its functions, what do you expect from it, and what kind of support are you looking for?
Do you need a network for money? Advice? Do you need a network to help you better understand an industry? Do you need to sell to a group of people? Is the network transactional?
Do you have something specific you want to focus on building? Maybe you’re trying to grow your sales or design team, or you need tactical support on how to strategically approach a market. Maybe you need help with managing stress and learning how to lead ethically.
Do you face a specific challenge? Perhaps you are hoping to get advice from people who have faced it before.
What qualities do you most value in people? Is it loyalty? Is it kindness? Is it an ability to challenge your core beliefs and practices? If you meet someone who does not possess qualities that are most important to you, they do not need to be part of your network.
Your filter is probably not going to be exactly right at first. It’ll take time to figure out.
Know What You Can Bring
Even if you’re new to the field, you can’t expect to have a network serve you without bringing anything to it at all. If you have a lot of experience, offer that. If you have none, think about what skills or qualities you have that can help other people thrive. Maybe you’re a great listener, or you’re willing to help other founders practice their pitches or talk about strategy. Everyone has something to offer—dig deep and figure out what you can give.