The Venture Financing Wisdom of Taylor Swift
Everybody knows the Valley holds the key to all things seed financing. So, prepping for this article, that’s just where I headed to consult an expert – in this case, Ms. Taylor Swift. My daughter and I recently had the (guilty) pleasure of sitting down with Ms. Swift at Levi’s Stadium in San Jose for an intimate discussion about how founders should approach raising seed venture, and she had this one crucial piece of advice: it’s a love story, baby.
In a nutshell, seed financing is all about the heart (the real kind, not the hand kind). Its stuff is the emotional connection between curious people and the fascinating project that’s captured a founder’s attention. With that, choose your audience, tools and communications with great care. It’s one thing to recognize that “hearts” comes before “minds” and “wallets”. It’s another thing altogether to get your and your investors’ hearts beating as one.
How to get started and get it done, according to Taylor?
First, get to know the target of your affections. Seed rounds are made up of a couple of big checks (the “brawn”), and a bunch of little checks. The little checks come from smart people (the “brains”) and people (the “bros”) who have a track record of investing alongside the others. Work the co-founders in your social circle to make lists of targets in each category. Work the social media and other tools available to you. Get to know each candidate’s background: his or her education, prior jobs or investments, interests, likes, dislikes, pet peeves…ok, maybe not that last part. LinkedIn is a great tool for this homework. Tinder, less so.
Second, there’s a rhythm to the romance. Of course, the first date is key. A friendly intro is best, but definitely don’t be afraid to reach out with a solid opening line. These are curious people, remember. If you’ve done your homework and offer up a credible reason (ideally, a flattering one) why they might have some perspective to offer your project, your coffee conversion rates even among senior tech folks will be pretty good. Once set, leave the pitch deck and the term sheet at home (or, at least, leave them on the hard drive deep in your computer bag) – don’t kill the romance by premature talk of moving in together. Ditch the business plan. Yes, ditch it. Rather, engage, engage, engage. This can take a while – a few months at the least. Focus on the laboratory you are building, your thesis about the coming months’ potential, and the team you are assembling to tackle this incredibly complex and neglected problem. Invite the investor into laboratory. Ask for his or her advice, put it into action, provide updates, feedback, eventually casual texts or phone calls with pressing (even if softball) issues. Promise something, then overdeliver. Then do it again. Share all of your good news. Show a little vulnerability, admit uncertainties. Get stuff wrong, iterate, improve.
Third, know the right moment to lean in for that first kiss. If you’ve laid the proper groundwork, you might have the good fortune of juggling your multiple brawny suitors like the main character in a Jane Eyre novel. If not, you might have to gently nudge. Here is how that goes: “So Jake, I might be fundraising, or whatever, either way. Should I set aside some room for you, or not, or whatever. Just saying that this incredibly low valuation won’t be around for long, we’re going to absolutely have to raise that in a couple of months given the traffic we’re getting. If I get commitments for $500,000, can I count you in for $50,000? Yes, great, terrific, awesome…my lawyer will be touch with the docs.” Repeat if necessary. 10 times if you have to. If you’ve done your job in building emotional engagement, it will seem totally natural when investors reach for the dinner check on that seventh date.
After that, just your average, startup fairy tale: millions made, startup kids born, begin again. Romance first, and you’ll get your rewards. The venture financing wisdom of Taylor Swift.
Now Taylor…about those cats…