The early-stage fundraising playbook—here's how to raise your first few rounds. | Nathan Beckord, Host of How I Raised It

Nathan has interviewed 100s of founders on how they raised their first few rounds. In this interview, we go through some of the most compelling stories he's heard. We go through step-by-step what you should do to raise a round, how to get meetings, how to tell stories, and every other piece of the fundraising puzzle.

If you're planning to raise a round anytime this year-- check this episode out.

Why you should listen:

• Why you need to look for believers in the early days.
• Why you need to meet way more investors than you might want to.
• How to create momentum for your round.
• Why spending more time planning will mean spending less time raising. 

Keywords
fundraising, startup, venture capital, investor relations, fundraising process, founder stories, capital raising, startup funding, investor introductions, fundraising strategies

Chapters

• 1:56 The Exceptional Fundraising Stories
• 4:31 Biggest Learnings
• 6:00 Storytelling vs Fundability
• 11:22 Getting In Front of Investors
• 16:33 Best Type of Intros
• 21:13 An Unknown Answers is a Waste of Time
• 26:10 Building Relationships vs Heads Down Until Time to Raise

Transcript

Pablo Srugo (00:00):

Well, Nathan, welcome to the show, man. 

Nathan Beckford (00:01):

Thanks for having me. Appreciate it.

Pablo Srugo (00:03):

So you run a podcast called “How I Raised it”. You've spoken to ,hundreds I would think now, of founders who've raised and so you've probably seen it all, you've probably heard all the stories. Obviously I'm on the other side as a VC, kind of seeing people raise rounds, but you always get a lot more nuance when somebody shares the story of how they did it, what worked, what didn't work. Obviously when people are actually pitching me, they put on their best face, everything's great, everything's working, <laugh> which makes sense, which is what I would do. But you get to see all of it. And so what I thought we would do today is kind of more of a tactical episode on just fundraising, right? And really go through not the 101’s , not the basic things everybody knows, how to get more intros. Everybody knows, talk to a lot of investors, create a great story. I mean these are high level things that everybody gets. And yet I can tell you firsthand, you know there are excellent fundraisers and there are average ones and there are bad ones and sometimes they're great operators. So whether people know the high level 101’s or not, it's not like everybody's operating at a hundred percent.

intro  (01:10):

“That's product market fit, product market fit, product market fit. I call that the product market fit question, product market fit, product market fit, product market fit product market fit. I mean the name of the show is product market fit.”

Pablo Srugo (01:21):

Think back to the last few months, the last few years as you've been running the startup, how many different founders have helped you out. The reality is founders help each other out. That's just who founders are. They pay it forward. So help a founder out, take literally five seconds, take your phone outta your pocket and hit five stars. 

You know, it'll be interesting like, given that you've heard so many stories, maybe you start there with some specifics– are there any stories you remember and we'll tangent off from this, but any specific fundraise stories that you remember hearing through your podcast that you still kind of think about because something about it was, you know, exceptional?

Nathan Beckford (01:56):

That's such a hard question. I've done almost 300 of 'em now, so 300 unique stories, right? And, and it's kind of interesting for me 'cause I had spent almost a decade and a half raising capital for startups and some venture funds. I worked in investment banking. My whole career had been raising capital and I started doing this podcast. I thought I knew everything. I thought I knew it all. And I started doing this podcast and I learned so much, especially the first, call it 12 months of doing the podcast of how companies raised capital, right? I learned a ton there. There are many stories that leap out. You know, some stories, people get funded by being clever, some by having a great background. And they're just naturally fundable because of their whole career. One of our customers and a podcast guest called Brad Porter of Collaborative Robotics.

Nathan Beckford (02:53):

He has like the ultimate career path where he worked at a couple big startups, then went on to run Amazon's robots program. He built like 600 robots. Then he goes out and starts his own robotics company and he had no trouble raising capital, right? Others are more, you know, stories of scrappy founders who have to get really creative <laugh> and hustle like crazy to find investors. And then a few others there's one Isabel Kenyon I believe her name was, that ran such a tight process that it was really fascinating. Like it was just surgical, right? The way she had lined up investors had an extremely tight time timeline, timeframe, was able to get everyone moving, and had very specific things. I'll give one example. It was a scientific type of business and she had a team of scientific advisors that she made available to investors who were interested, but she gave the investors a very unique window or specific window. Like, I'm gonna let you talk to my technical advisory board on these three dates if you're pretty serious about putting down a term sheet. Here are three dates, these are available. And, she just ran it like a boss, right? That was kind of one I remember being pretty exciting. You know, I could go on and on because like I said, I've had 300 of these on the show and a lot of really unique ones. But yeah, I'll pause there. 

Pablo Srugo (04:18):

And if you had to boil it down, like you mentioned, you know, that over especially the first year, you learned so much even though you were someone that was already doing this. So again, like beyond the kind of 101’s, what would be some of the biggest learnings for you? 

Nathan Beckford (04:31):

It’s gonna be a bit of a contradictory statement. There is kind of a right way and a wrong way. A lot of wrong ways to raise capital. There are some right ways and there's a lot of common patterns of the successfully funded startup on the show, right? There's obviously a bias or, or you know, selection issue here and that everyone on the show was successful in raising capital. So we don't interview a lot of people who failed at it. What was kind of interesting though, there are a couple different right ways, but then there are actually a lot of really unique ways people raise money. Everything from, you know, working the angel networks syndicates, right? Like going out and pitching at a lot of different angel groups and people took that approach. Others were very, very focused on building a big outbound cold email machine and just pumping through lots of names. Like I was kinda surprised how many sort of unique ways of raising capital we learned about and and heard about. 

Pablo Srugo (05:37):

So you've seen like hundreds of kind of successful fundraisers, like how much of, you know, the, the success of fundraise has to do with how you run the actual fundraise, the process, how many conversations you have, how you tell the story and all that optimization versus just the fact they're fundable. Like just the fact that you're a great founder or just the fact that you have kind of crazy traction, you know what I mean? Like how, how do you see that split? 

Nathan Beckford (06:00):

Yeah, that's a great question. I'd say making up numbers here, but probably 30% of the successfully funded folks had just such an awesome background and track record. Like they had worked, you know, as number five at a scaling growth company before, and now they're going off and doing their own. So in those cases, it was all about who the founders were and that's why investors were backing them. But the other 70% were, you know, people who had come up with scrappy things. And I'm thinking of one off the top of my head. I think it was called Swimply, like give you an example for this. It's Airbnb for backyard pools, right? <Laugh> and the founder had come from an orthodox Jewish community and he was supposed to become either a rabbi or a lawyer, right? That was his path, his family, but he wanted to be an entrepreneur and set. So completely wrong background, but you know, he was out there hustling and getting people to pledge their backyard pools. Then he created this market for it and was able to get out there and raise capital for that. So 70% comes down to the chutzpah to continue with that idea. And just the scrappiness of the founders. The other 30% was founder pedigree. If I had to like put some rough numbers around that.

Pablo Srugo (07:20):

But in terms of the process itself, I guess the way I look at it is the process itself. Like we talk a lot about, let's say, you know, going out and building a spreadsheet of investors that might be a fit. Finding ways to get a warm intro, running a tight processm telling a good story, like all these things. And I guess my point, I was just curious if you agree, because you've seen so many of these that's like the 20%, like all of that is the 20%, the 80% is what's the team? even if you run a great process but you don't have a strong team or you don't have any sort of traction or your value prop- like the actual thing, the actual business, you know what I mean? You're not gonna get anywhere. And then vice versa, true as well. Like some people don't do any of this stuff, they don't run a type process, they don't, you know, reach out to dozens of investors. But yeah, like you look at who the founders are as an example or what they've built the attraction they have and it's like, well you don't need to really do anything, you're just gonna fundraise because it's just this, the reality itself is so exceptional. So I'm just curious if you think that way as well.

Nathan Beckford (08:18):

I'd say so. I'd almost flip that around a little bit, but I think you're on the right, you know, you're totally correct. There has to be something fundable, right? Either the business is doing something really interesting and has great traction metrics and a big market, or the founders have such an exceptional pedigree, like the collaborative robotics guy I mentioned that there has to be something fundable there. And then on top of that, you know, most of these folks layered on a pretty good process. They ran fundraising the right way, they didn't kind of slap shot it and you know, kind of go off on an erratic approach to it. They were pretty disciplined in identifying the right investors, getting in, in touch with them, getting the intros, keeping the, the whole thing moving, getting momentum for the deal, updating people and really generating that momentum. So I think you can possibly raise money if you have something fundable and don't run a really good process. But the converse is not true, right? if you don't have something fundable, you can't just run a great process and raise capital. Although, you know, there's probably exceptions to that rule too. 

Pablo Srugo (09:27):

I think–  just on a tangent, I think that's totally true. Like I think you, and especially the early rounds, like you're looking for believers and oftentimes I find founders who resist the idea of speaking to a lot of investors are missing that point. Like again, I think there's some areas that are so hot or some pedigree founders like, repeat founders that have had material success that are just gonna get funded because everybody wants that, right? Everybody wants to buy. But for like 95% of even the fundable startups, like a lot of people just aren't gonna get it. In fact, most people probably aren't gonna get it 'cause they don't get the industry, they don't get the value prop, you know, maybe it’s like timing, whatever it is, there's some million different things that could be happening. It is a little bit, it's a game of numbers because of that. It's actually maybe less of a convincing exercise than a discovery exercise as you put it.

Nathan Beckford (10:16):

I like that. That's another way to frame or phrase the same thing, right? It's more of a discovery exercise versus convincing. I like that a lot. I think kind of related to that is you gotta find the right people who are looking for your type of deal, your industry, your stage, your geography in some cases, your other criteria they're looking for. But it's also a numbers game, right? You gotta talk to a lot of people, especially at the early stages. I usually counsel the founders like on our platform to, you know, have at least a hundred, probably more like two or, or even 300 target investors. And then, you know, starting with that point and then even spending some more time and qualifying them, looking at what they're investing in, make sure they don't have a competitor, all that, all that good stuff.

Pablo Srugo (10:59):

And then how do you get in front of them? Like, so you have this list of let's say 150, like that that part's not– I mean with angels -, maybe I'll ask that even if you're doing an angel round, like what have you found in terms of getting in front? 'cause VCs have websites, angels typically don't these days. Like where are you seeing founders either meeting or like sourcing enough angels to have enough of these conversations?,

Nathan Beckford (11:22):

Well, at the risk of being, you know, self-promotional, obviously we have a database of that. We've got about 130,000 angels in the founder suite. I'd say number two, looking at LinkedIn, you go in and type the words angel investor into the search bar on LinkedIn. It's like over a hundred thousand results. And then, you know, narrow that down by, maybe your geography and second degree connections, things like that, right? And you know, usually when you do that exercise, you'll come up with a list of maybe 2000 or so angels on LinkedIn and then go in and look at their profiles and again, qualify them. Look for clues that they do your deal. So LinkedIn's pretty good depending on where you live. You know, angel groups can be good right here in the Bay Area. I mean we have, there's probably a dozen different angel groups.

Nathan Beckford (12:08):

There's Life Science Angels, right? There's all these different different angel groups. Now that's a whole different process 'cause you usually have to apply and get someone to vet you and vouch for you and it can take a while, but still you can hit, you know, 60 angels in a room or on a Zoom call by working angel groups and angel networks. Sometimes also looking at similar companies going in, plugging 'em into Crunchbase, seeing who funded them. You'll identify some names. Also keeping an eye on I call the industry, you know, trade, trade blogs strictly VC and and PE hub and those types of things. Seeing who's funding companies in your general space.

Pablo Srugo (12:54):

I find momentum is, it's really half the battle. Like it maybe even more so. And I was talking to, we had a founder recently who just raised…. crazy. You would love this story. He raised his seed round from General Catalyst in six days. Wow. Okay. And his series a $17 million series A from A16 in 14 days. He's a first time founder, has real traction over a million in revenue now. Didn't when he'd raised the seed round. But it was a lot of the momentum that he leveraged to get these things done that really made the round kind of go so fast. I find sometimes founders are hesitant to do this. Two things. One is that sometimes founders don't wanna spend the time fundraising. They're like fundraising. Like I just don't want it to be such a time suck. So they kind of do it on the side and, and in reality you take longer doing that, it actually takes a lot longer 'cause you never really get momentum.

Pablo Srugo (13:51):

Like momentum is what gets you a round in a week, a round in two weeks. Any investor that feels they have time isn't writing a check in a week or two, they're gonna take their time because time is optionality. So why wouldn't they? So like you have to put them on their heels and you can only do that by packing things and you can only pack things if you really go all in. And the second thing is, I think there's something like that feels, I don't know, inorganic or something like that about specifically trying to drive FOMO, trying to drive momentum versus just, you know, meeting investors telling their story and, and hoping somebody like sees it, gets it and wants to fund it. But here's the thing, when it comes to the early stage, especially seed or pre-seed, nobody knows. Like nobody knows who's gonna be the big hit.

Pablo Srugo (14:34):

People have different conviction levels, but there's no real way to know. And so all the signaling becomes so important and you as a founder, like you've gotta have every single edge. So I think having, finding ways to pack your calendar so that you can have momentum and you can have those signals and you know, if I talk to you today and like you could see it, how could I see it? Like, oh, you know, I try to book the meeting. first thing. Like somebody says, oh, do you wanna meet? And I'm like, yeah, cool. How about in two weeks? Like, oh, you know, we're talking to 10 investors this week. It’d be good if we talked earlier. Okay, cool, fine. So let's talk earlier then. If I try to move the meeting for whatever reason, oh, I can't 'cause I have another investor meeting.

Pablo Srugo (15:11):

Okay, cool. If I'm trying to book the next, the follow up meeting, same thing. Like I can tell the calendar's kind of packed and then you start to see it in real like terms because you know, how many people are in the data room or how many terms sheets do you end up getting? Or how quickly is your round filling up? At least in terms of like follow on, like all these things start to happen. And again, like if you have no interest, it doesn't matter. But if you're somewhat interested, this is a thing that's gonna make you move fast as a VC.

Nathan Beckford (15:35):

Totally. I loved hearing it from the VC side because I'm always telling founders this concept and they don't always get it right. You know, but that's one of my quotes I tell founders all the time is like, investors can smell momentum, right? You know, they can also smell if the deal does not have momentum or, or they can smell if it's gotten stale. So you want to go in smelling like momentum <laugh>.

Pablo Srugo (16:01):

And then what about-  the other thing that that gets talked about a lot is, so, okay, so let's say you've got-  so you find, I, you know, typically you try to find as many kinds of connections, mentors as you can. Maybe just a question on that, like what do you find are the best source of those intros? And I understand if you're new to the game, you're a first time founder, you don't have a network it's gonna be hard to get intros and in some cases you're gonna have to go in cold, unfortunately. But like to the extent that you can get intros, what are the best sources of intros to VCs or angel investors?

Nathan Beckford (16:33):

Sure. There's a hierarchy of intros. First is someone that's made that investor money in the past, right? The investor's gonna take those intros all day long. I used this little story when I was raising our seed round for the founder suite. My kid was in preschool at the time and we had a dad's group and one of the, one of the dads was a founder of a business that he had sold to Yahoo for like $240 million, something like that. He made a lot of people a lot of money and he offered to make a couple intros for me. A guy named is Todd Sacerdoti and every intro he made, the investor responded within three seconds. I'm not joking, right? It was the, it was the fastest response you've ever seen. And it was like- but I only had a few of those, right?

Nathan Beckford (17:25):

I had two people that had that sort of level. So it's kind of, all right, your best best intro is someone that's made the money. Maybe second best is someone they've done deals with in the past, you know trade deals. Maybe it's an angel that's fed some deals to a VC or, or vice versa, whatever. Third best is I would say someone that the investor has invested in, right? a founder. And this is my little fun backdoor hack. I don't know if it's such a secret hack anymore. It used to be kind of below the radar, but you know, reaching out to some founders, if I've identified you as an investor, I really want to get to know 'cause of your background, your track record, whatever.

Pablo Srugo (18:10):

And then what about you know, another common piece of advice, I was curious about your thoughts on it or what you've seen here is kind of like you, as you go out and you reach out to these investors, you kind of stack rank them. And one thing I've heard, and again, like different people think different things, but like kind of this idea of: you go after the ones that you actually don't think you really want, you go after, first you practice and then the ones you really want, you go at the end with when you have momentum and  you've got your reps in. Have you seen that play out that way? 

Nathan Beckford (18:41):

All the time. All the time. I even tell founders to do that. it's a little bit like- it takes me back to getting a job out of college. You gotta get some interview practice in before you get your interview with the dream job you want. So yeah, go in, get some practice pitches in with your third tier, maybe even second tier and work your way to number one because you know, those first few pitches are probably gonna be a little rough. You just might not anticipate some of the questions they're gonna ask. Maybe you don't have it quite, your flow isn't quite there yet, right? I mean your first ,call it five, just five to 10 pitches might be pretty rough. So I wouldn't waste them on your dream investor <laugh>. And also it's also good too, you know, not only just getting your pitch reps in, but if some of those third tier, second tier investors are interested and they're moving down the process, then it's always great to go.

Nathan Beckford (19:45):

And when you're meeting your first tier investors, like, we have three firms circling. They're all talking about putting down term sheets. We're in term discussions with them. No term sheets on the table yet, but we're in term discussions with a couple firms already. But you are my number one. Like, I say that, you know, hand on heart. So if this is interesting to you, I'd love to–  that puts a little bit of pressure on, on your tier one to take some action if they're interested, right? So I think that's healthy for, for founders.

Pablo Srugo (20:19):

And then maybe one of the last questions,, you know, you go through these pitches, some people are gonna tell you no maybe being on the call, they'll tell you no over email. That's easy enough, you know a few might actually even say yes, especially if they're followers will be like, yeah, actually I'm in, just let me know. And then you have like the real kinda meat of it, which is the ones in the middle that are somewhere between a no or yes. You just don't really know if they are wasting your time? Are they just like too shy to say no or like keeping that optionality or, or the like potential yes’s, like again, what are, what are some, what are some specific things you've seen founders do at that part of the, of the, the investment, you know, process to turn those like unknowns into something? Ideally yes’s, but like even a no, frankly in my opinion is sometimes better than an unknown because an unknown just kind of is a waste of time.

Nathan Beckford (21:13):

Yeah, a hundred percent. this is a great question 'cause it's really getting into the nuances of fundraising. You know, I'd say it goes back to that statement we talked about earlier about fundraising is a search for believers, right? That's what you really wanna spend your time finding. You wanna spend most of your time finding the believers. Then this other big category you're describing are kind of the people in between. I wouldn't waste a lot of time. it's so hard as a founder 'cause you want to convince people. you wanna turn them, you wanna flip them into your court. But I would resist that urge. I would spend more time searching for the believers, but I would keep those, those middle category folks, the sort of, you know, wishy, wishy-washy folks, non-committal. I keep 'em on your investor update distribution list. We didn't talk about this, but some of the founders that have done really well on our show are really religious and methodical about sending a monthly update about the business every, every month they block it off on their calendar.

Pablo Srugo (22:18):

What have you seen them do actually 'cause that, that's interesting. I have mixed feelings about it. But, I've also been on the receiving end of some good ones. So what, what have you seen come outta that?

Nathan Beckford (22:27):

It's that Mark Suster quote from years ago of “investors invest in lines, not dots, right?” It's just keeping investors updated. It's marketing 101, right? You're staying top of mind with investors. How do I stay in your brain, Pablo, when I'm raising money? You're one of my target investors. Sending you an update with interesting, exciting progress every month. Like you, so you can see this, maybe you only spend five seconds skimming it. Maybe, you know, you're barely looking at it all. But if you're seeing this company is actually making some interesting progress and getting some good deals, it's just going to create a little positive association in your brain. Also, anything else I can do to supplement that, right? If we can get some press coverage and TechCrunch or something else, you're like, oh, and you can just send me that update two days ago.

Nathan Beckford (23:17):

That was kind of interesting. Now here he is, you know, speaking at some TechCrunch event or something like that or some, you know, announcement there. Oh look, another one of my contacts just ping me offering to introduce Nathan. Right? You know, it's like how many touch points can you create around each investor? And investor updates can be a nice one if you do it well. And it doesn't have to be long. It's like company summary key wins, KPIs you know, maybe a little summary of what's gonna come up next month, new deals, new products, whatever. It can be really short and short is good. But that's why, you know, keeping, so back to the original question of what you do with this sort of non-committal folks, keeping them on your investor update list. So they are seeing the progress.

Nathan Beckford (24:06):

And of course those investor updates should also contain a little bit of news about the fundraise, right? So if you get some term sheets or if you land a lead investor, obviously put that in there and, and you know, I have seen people kind of tip those non-committal, especially when you get like maybe a solid lead investor. 'cause Sometimes people are just risk averse. They don't want to be the first ones into the woods, but they're happy to go into the woods when someone else is, you know, shopping the path with the machete <laugh>.

Pablo Srugo (24:39):

Yeah, that's right. I mean, everybody wants to be in a perfect world, the last money in. Why not? you had more time to think you had more information. So it's kind of- It's ideal from an investor perspective and your job in a way as a founder is to remove that option, right? It's to make people feel like they can't wait for that perfect time. it's a bit of a now or never feeling. And when you have those feelings, people just tend to act quick. Let me ask you another question. I know I said the other one was the last one, but there's two camps of thought I've seen, one is building relationships and another one is kind of heads down until you raise and then your head down again.

Pablo Srugo (25:23):

And so one of them is like, okay, and, and this is usually more for- let's say series A, right? So you raise a C round and some founders will say, okay, like I'm gonna raise my A in 12 to 18 months. So you know, you get some inbound interest often at those stages from investors. You also might do your own outbound type of work of finding 5, 10, 15 VC types that you think would be good. And then some founders are like, okay, I'm gonna go and build relationships with them. So I'll meet them, I'll talk 'em once a quarter or whatever it is and give 'em an update. And others are like, no, I'm just gonna not talk to anybody. Any investor that comes to me, I'll just be like not raising or I won't even answer. And then when the time comes to fundraise, I'm gonna run the tightest process ever. What have you seen work better or when is one the right choice versus the other?

Nathan Beckford (26:10):

Yeah, it's - I love these questions 'cause it's one of these… there's not really a right answer, one or the other, you know, they're two different strategies. My preference and the things I have seen work pretty well. I think - I do like the concept of flipping the switch. We're either fundraising or not, right? We're either on or not because you, you need to really devote, you know, 12 hours a day for usually a couple months. I mean you've had someone that mentioned, you know, 14 days, right? But that's really, really rare. 

Pablo Srugo (26:43):

That's an outlier. A hundred percent,

Nathan Beckford (26:44):

A hundred percent outlier. So I like the concept of either on or not. But in between rounds, and this is something I tell our customers all the time, you might be getting some inbound stuff, you know, fishing around, sniffing around you might see investors at an event conference read about 'em on, on tech crunch or strictly VC. like oh, that guy Pablo sounds really interesting. What I would do is kind of passively collect these investors, even the inbound ones that say they want to get to know you. Like, hey, we're not taking meetings right now, but I'd love to. I'm gonna add you to my CRM if you're cool with that. I'm gonna add you to my CRM, I'm gonna add you to my company update distribution list so you can kind of keep up with the story. And so you're just kind of gently dripping and nurturing, you know, dripping emails, dripping updates and nurturing these folks in between rounds.

Nathan Beckford (27:40):

That's my favorite way to do it. 'cause that doesn't take much time, you know? and again, these updates you should be sending them anyway 'cause you've raised some money presumably. So you should be sending updates to the people who already funded you. So it's really just a function of adding a few more names to your list. And then in those updates, I actually like to say a little bit about when you do plan to raise your next round, right? So as you're getting closer to it, if you're gonna be raising, you know, in Q2 of 2025 maybe in March, February-march, you start to put in there, Hey, we're gonna, we're getting ready to raise our round in Q2 starting, you know, in April. Let me know if you want early access to our pitch materials, things like that. So just a gentle nurture in between rounds and then of course April Ros around game on, you know, you pull the switch and go full in. That's my favorite approach.

Pablo Srugo (28:38):

Perfect. Well, perfect, perfect time to end it. Nathan, thanks for jumping on the show, man. It's been great

Nathan Beckford (28:43):

Fun to have- <laughs>. Fun to be here. Thank you for having me here. <Laugh> I appreciate it. I could talk about this stuff all day long, so I really, really enjoy it. Thank you.

Pablo Srugo (28:54):

You remember the first person who told you about Bitcoin? the first person who told you about Uber? You want to be that person because being first is cool. So be a cool person and tell your founder friends, set it to them on WhatsApp. Put it in a WhatsApp group, put it on a Slack channel. Let people know about the show. Let people know about this episode. Don't let somebody else beat you to the punch and share it with your founder friends first, remember what Ricky, Bobby said. If you ain't first, you're last.