Mastering the Art of Fundraising: Insights from Experts in Santa Barbara’s Startup Ecosystem
In the thrilling world of startups, there are three kinds of founders: good founders who are good fundraisers, bad founders who are good fundraisers, and good founders who are bad fundraisers. Only the first two categories get their dreams funded. These words of wisdom come from Woody Sears, the CEO and Founder of Autio, a recently funded consumer startup, who participated in a captivating panel discussion on startup investing at a recent founder-centric event hosted by the Alliance in Santa Barbara. The takeaway is clear – founders need to be exceptional at fundraising!
The Alliance for SoCal Innovation understands the importance of fundraising for startups. That’s precisely why we organize the “Fundraising in Today’s Market” event series, aimed at helping founders become more adept at securing the capital they need to grow their businesses. To deliver these valuable insights, we turn to local experts, and on October 10th, Santa Barbara’s SB Biergarten played host to a panel of Santa Barbara investors, including Julie Henley McNamara, Managing Partner at Entrada Ventures, and Mike Tucker, Partner at ScOp Venture Capital, who joined Woody Sears from Autio, on the panel. The event was skillfully moderated by Mark diTargiani, SVP at Pacific Western Bank, and it was a resounding success with 45 enthusiastic attendees from the Santa Barbara startup community. Special thanks to Gavin Block at Countsy for supporting this event and enabling attendees to build relationships over food and drinks.
Let’s delve into some key themes and advice shared during this enlightening panel:
Building a Strong Community: The Santa Barbara community was highlighted as being exceptionally supportive and tight-knit, providing an excellent environment for startups to thrive.
The Art of Fundraising: Raising money is an essential but challenging task that requires founders to not only understand the game but also actively network with other founders and funders. Viewing every interaction as an opportunity to learn and ask questions, even in the face of rejection, is invaluable.
Targeted Fundraising: To raise funds successfully, founders should target investors based on their company stage, possess a clear message about problem-solving and differentiation, and demonstrate traction through metrics.
Founder Evaluation: Chemistry and alignment are essential factors when determining a potential long-term founder-investor partnership. Authenticity is highly valued, and investors appreciate honest reporting of metrics, even when they are less than ideal. Due diligence plays a vital role in testing the trust that has been established before entering into a long-term financial relationship.
Advice, Insights, and Wisdom from the Experts:
Julie Henley McNamara, Managing Partner at Entrada Ventures:
- Be authentic and honest during investor meetings.
- Focus on building a healthy business rather than being overly concerned with valuation.
- Foster dialogue and understanding between men and women in the startup ecosystem, which hopefully will lead to a more inclusive community.
- Guide the conversation during investor meetings to ensure key information is conveyed.
- Ask investors about the next steps and understand the “homework” founders must do to progress to the next step.
Mike Tucker, Partner at ScOp Venture Capital
- Encourage founders to raise capital at a fair valuation, considering long-term implications.
- Preserve cash and reduce burn to navigate market uncertainties.
- Focus on building a great business and don’t stress too much about capital.
- Seek out the right type of investor for your business and plan funding milestones accordingly.
Woody Sears, Founder & CEO of Autio
- Speak with founders who have worked with potential investors to gain insights into their experiences.
- Founders need to also be sure to do their due diligence on investors by speaking with portfolio companies.
Additional Nuggets of Wisdom for Founders:
- Network and build relationships with angel investors who may provide early-stage funding.
- Consider the differences in funding expectations and requirements for hardware vs. software startups.
- Be mindful of market forces and adjust fundraising strategies accordingly, while focusing on fundamentals.
- Attend upcoming events, both online and in-person, to connect with investors and industry professionals.
- Seek warm introductions to investors to increase the chances of a positive response.
- Apply to the SoCal Venture Pipeline program for assistance with warm introductions to investors.
The Alliance’s SoCal Venture Pipeline (SVP) powered by Pacific Western Bank connects founders with funders, resulting in raises, growth, and quality job creation. The selective program has supported 65 startups with individual investor introductions; 15 of these startups raised an impressive $63 million in investments thus far. Congratulations to Woody Sears and the Autio team for being one of the SVP companies that secured an investment round. The SVP program would not be a free resource to founders without the support of program sponsors Pacific Western Bank, WSGR, and KPPB, who are all committed to assisting SoCal founders in their journey to success.
In the fast-paced world of startups, it’s clear that mastering the art of fundraising is a non-negotiable skill. With the guidance and wisdom shared by these industry experts, founders in the Santa Barbara community and beyond are better equipped to navigate the complex world of fundraising and turn their entrepreneurial dreams into reality. The journey is challenging, but with the right mindset, support, and strategic approach, the sky’s the limit for these ambitious founders.