Many startup founders need external funding in order to take their company to the next level. This makes pitching your idea to investors an obvious first step. But amid all the challenges that black startup founders face, this obvious step is often one of the hardest there is.
If you’re thinking about getting funding for your startup, take it from those who have been in your shoes. Here are a few startup funding tips from five top black founders.
Startup Funding Tips
Acknowledge that fundraising will be hard —Camille Hearst (CEO of KIT)
It helps to know that what you’re getting into is no piece of cake. CEO of KIT, a health innovation delivery system, Camille Hearst knows this more than anything.
In her interview with Tech Ladies, Hearst tells aspiring founders to prepare themselves in every area of their lives.
She says, “Fundraising is really, really hard. My main piece of advice is to prepare yourself mentally and emotionally, and…I found a great article on mental toughness for high school girls’ basketball coaches that I actually think applies to fundraising and entrepreneurship as well. The advice in the article is awesome and I found it incredibly encouraging when things were tough.”
While aspiring founders should definitely acknowledge the hard work and failures they’ll expect along the way, it also means not letting those setbacks stop you from accomplishing your goal.
Instead, it’s important to stay prepared and put your best foot forward at every turn. Spend enough time crafting your pitch together with the right materials like a solid business plan and presentation.
Accept that “no” is part of the process —Morgan DeBaun (Founder of Blavity)
In the world of startup funding, expect to hear “no” more than you will “yes.” Morgan DeBaun, founder of top digital media group Blavity, tells black startup founders that getting a no applies to every part of the startup process—especially with investors.
In a panel interview with Jopwell, DeBaun is quoted to have said, “It’s the job of startup founders to take risks, push the envelope, and ask things that don’t yet exist. Getting a ‘no’ from partners, clients, and even from teammates is part of the process. View any type of decline as a learning opportunity. A ‘no’ is just another step to a ‘yes.’ It’s part of the process and something that should be appreciated and respected.”
If you can, get to know why your startup idea was rejected by an investor. Sometimes you’ll get some valuable insights—perhaps about how to improve your pitch or what data you were missing. But other times, all you’ll find out is that investors were just looking for something different.
Sometimes it’s important to see that getting a no is nothing personal. The sooner you see that investors are often interested in specific ideas or have personal preferences, the easier it gets to bounce back and start looking for others who are interested in your idea.
Don’t underestimate what you’ve been through —Christopher Gray (Founder and CEO of Scholly) and Frederick Hutson (Founder of Pigeonly)
On a blog post on Scholly’s website, founder and CEO Christopher Gray’s advice to startup founders is to solve problems that they themselves have encountered.
In the post, he writes about how solving a problem that founders are familiar with can help them create a startup story that can get them in front of investors and customers: “By solving a problem you’ve faced, you will give your startup a story. Your value proposition relates to your own experiences and your pitch will feel natural. This helps your audience—be it investors, customers, or press—better understand you and the problem your product is trying to solve.”
And indeed Gray is a walking testament to his own advice. Prior to founding Scholly, a platform that matches students to scholarships, Gray was a high school junior who wasn’t sure how he would pay his college tuition. After being awarded over a million dollars in scholarship funding, he realized several students were going through the same problem.
Another black entrepreneur also makes an excellent example of using your background as a viable startup idea.
In his interview with Forbes magazine, Pigeonly founder Frederick Hutson expresses the same lesson for startup founders. Hutson’s background prior to becoming a startup founder was spending a few years in prison as an inmate, which ultimately led him to create Pigeonly, a platform that connects inmates with their families.
When asked about his experience looking for investors the first time, he says, “In the very beginning I was hesitant to even talk about my background but the question would always come up, well how do you know?” But he adds, “Look, some people are not going to vibe with you and they’re not going to be able to get on board with what you’re doing—there’s going to be a block because you’ve been in prison and you don’t look like the typical person they invest in.”
Instead, he focused on investors and prospects who were open-minded and looked beyond his background as an inmate—seeing instead why said background was valuable in the work he was doing. Hutson says, “[My background] actually became the reason people invested—because I’d been there, and I know and understand this market better than anybody else.”
Monitor your business expenses very closely —Reham Fagiri (Co-founder and CEO of AptDeco)
If your startup is already up and running but you’re ready to look for funding to scale, something you should be paying a lot of attention to is your expenses.
Rehan Fagiri, co-founder and CEO of buy-and-sell furniture platform AptDeco, knows this from personal experience. In an interview with Her Campus, she shares how her startup’s growth also came with a hefty price tag:
“Focusing the growth of the business was exciting and fun, but it came at the price of monitoring our [company’s] financial health more closely. [Although] our business was reaching amazing heights…I was amassing a huge bill and it dropped like a hammer in one month. Thankfully, it was a lesson we were able to rebound from, and now [we] monitor every dime we spend.”
While expenses don’t often feel like the most important part of the pitch, investors will actually be paying attention. They’ll want to know how much you’re spending or planning to spend, as well as exactly what you’re spending on.
After all, they want to know where their capital is going, so it’s your job to convince them that their investment goes to expenses that yield bigger returns.
By monitoring your company’s current expenses, it becomes easier to identify ways to either cut back or adjust.
For example, if you run a software company, you might find that you’re spending too much trying to get new users for your software instead of retaining current users. Knowing important metrics like your churn rate and retention rates will help you cut back on expenses—or find ways to make your spending yield a higher ROI.
Conclusion
Getting funding for your startup requires a lot of hard work, but know that this is all part of the process. Get inspiration by reading up on other people’s stories to get a real taste of what it’s like to start a fundraising campaign, and learn from their gravest mistakes and greatest wins.