Networking for Startup Founders

An excerpt from the Holloway Guide to Raising Venture Capital
Andy Sparks
▪︎ 23 minutes read time

Editor's Note: This is an excerpt from the Guide to Raising Venture Capital. Networking and mentorship can feel like a black box for those looking to raise venture capital. This excerpt assembles and reconciles what’s been written by experts on the subject.

When starting a company and raising venture capital, it is imperative to grow and maintain a group of individuals who can make introductions, listen to your ideas, and help you navigate the complicated world of startups. You need a network of people to guide you through the process. The following advice will help you accomplish some of the more difficult tasks ahead, and give you the tools to succeed in your startup and in fundraising.

What is networking?

Definition Networking is the art of building mutually beneficial relationships, usually with the goals of developing ideas and furthering one’s career. A network can be an established group of people or organizations that an individual seeks to become a part of, or it can be something an individual builds. A network might be based on similar experiences its members have in common, or their similar backgrounds; they might face the same challenges, or possess similar attitudes or affinities.

When most people think of networking, they think of awkward meetups, guys in terrible suits gathering business cards at a badly lit conference, and LinkedIn. Yes, it can be these things. But network is another word for community. It’s all about relationships. Whether you’re trying to start a relationship with an investor, a sales lead, a potential mentor, or a peer you can bounce ideas off of, think of networking like a friend introducing you to their other friends. To build the network that will help you start, grow, and launch your company successfully, you just need to make a single connection.

What makes a great networker?

Some people are naturally good at making connections and building trust. Some were lucky enough to have had a family member, teacher, or boss who introduced them to networks of influential people early in their career. But most great networkers are great because they’ve practiced. Learning how to get the right meeting with the right person is absolutely a skill, and if it turns you off or scares you now, know that you can improve the more you try and fail and try again.

Founders in Silicon Valley—the capital of venture capital and the center of the startup ecosystem—rely on networking, and it’s hard to overstate the importance of building relationships for those who want to create a successful business. This is true for venture capitalists as well. It’s a place where, according to venture capitalist Brianne Kimmel, “a cold email and a coffee can totally change your life.” The complicated topic merits an entire Guide, and we hope to provide that one day, but for now we offer a few points every entrepreneur should take to heart about the nature of networking—especially when it comes to raising venture capital.

New entrants to Silicon Valley may be surprised to find that many people go out of their way to help each other—especially new founders—without expectation of getting anything in return. A well-known camaraderie exists between individuals who have made the radical decision to forgo a lot of the trimmings of a “normal” life; many founders try to pay back the help they’ve gotten along the way by helping others. Venture capitalists also act as mentors to entrepreneurs, and strategy meetings over beers are not uncommon. To many, the power of the network is one of the most welcome and unique characteristics of the startup world.

One thing to be aware of is a general split between what John Doerr (investor in Amazon, Google, Intuit, and more) calls missionaries and mercenaries. Some entrepreneurs, VCs, and employees are missionaries. They do their work because they believe in it.

In 2013, author Adam Grant published the book, Give and Take: Why Helping Others Drives Our Success, in which he shares research and anecdotes that dispel the myth that one has to be ruthless to be successful. One of his principal examples is venture capitalist David Hornik, considered to be the first “VC blogger.” In the mid-2000s, Hornik began sharing tips on how to raise venture capital online. Some other investors at his firm thought his decision to publish this knowledge online was akin to sharing trade secrets. People like Hornik—the missionaries—are who you want to look for, whether as in-person mentors, authors of blogs, podcast hosts, or any other medium for wisdom on how to successfully raise venture capital.

On the other hand, there are the mercenaries. People who take from others and take advantage of others, who are not mission-driven. Some of these people are just a waste of your time; others are dangerous. The rest of this section should help you develop a filter to build relationships with the people who will encourage, support, and challenge you, and hopefully avoid those who will, knowingly or unknowingly, do harm.

The long game

Founders have to put in work. That work can take years. You may be reading this and realize you have a long way ahead of you. If you’re just getting started on your great idea, it might be three or four years before you raise your first meaningful VC round.

Some people, by nature of privilege, will be able to make all of this look easy. Others are navigating a minefield of bias and discrimination. Remember that when it comes to venture capital, everyone on the inside was once, to one degree or another, on the outside, and anyone who wants to be meaningfully involved in the world of innovative businesses needs to play the long game. No one is entitled to a network of investors. Many professional relationships are the fruit of years of research and labor. Entrepreneurs must be relentless, and you will learn to see obstacles as invitations. (Did you know that Amazon was originally called Relentless? In fact, still redirects to Amazon.)

Some of this starts way before you’re actually ready to raise a round. Some of it is about direct action on your part, some is about reading and listening, learning by osmosis. There is no silver bullet. You need to be a very patient sponge.

If you’re careful, courteous, and move slowly, you will build a powerful network of investors, some of whom just might invest in the company you’re working on right now. Others might invest in your next company, or become mentors, allies, advocates, or friends. Any one of the investors you connect with now could be in your life for the next 20 years or more. The strategies in this section will not only help you raise venture capital, but help you build relationships that will last.

Networking as it relates to venture capital is particularly important for a few reasons. Once they’ve invested, an investor and a founder will build a relationship for years, sometimes a decade or more. Building trust and a relationship before an investment is made is part of the VC ethos. VCs want to see that entrepreneurs have the grit and the drive to network their way to customers, into the best candidate pools, and into later-stage investors. Venture capital is a people business, and VCs take the networks they’ve built very seriously.

Relationships take time to build. Most people don’t get married after one date. Thus, good relationships are “lines, not dots,” as Mark Suster wrote on his blog, Both Sides of the Table. This is a crucial idea that you’ll hear referenced a lot, so we highly suggest reading the whole post.

While you are building your relationship, you want to be able to show an investor how you have progressed, your upward trajectory. But what progress means can vary. Like it or not, every coffee meeting you setup with a VC is effectively a pitch meeting. There aren’t truly casual coffee meetings; a VC will be evaluating whether you and your business are making good progress at every dot along the line.

Building relationships is a particular challenge in raising venture capital because the ecosystem is in constant flux. Investors who invest at one stage or sector one year can invest at completely different stages and in different sectors the next. During some periods, venture capital has been easier to raise than others. New investors and types of capital are always coming on the scene.

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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.

Early steps

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.

The Ben Franklin effect was mentioned in one of the most long-standing works on networking, How to Win Friends and Influence People, by Dale Carnegie, but it was Meg Jay in The Defining Decade: Why Your Twenties Matter—and How to Make the Most of Them Now, who applied the theory to mentorship and networking most practically. Take this excerpt:

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 entrepreneurs 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*

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. (You'll find more resources for dealing with bias and discrimination in fundraising in the full Guide.)

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? 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, like a sales team or a design team? Do you need tactical support on how to strategically approach a market? Psychologically on how to manage the stress and how to lead ethically?

  • Do you face a specific challenge and are hoping to get advice from people who have faced it before?

  • Answer these questions and think about the qualities 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.

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