ABR – Always Be Raising!

I read the interview that Matt Straz, CEO and Founder of @NamelyHR, gave in Alley Watch http://www.alleywatch.com/2015/07/this-nyc-startup-just-raised-45m-in-record-time/ .

It talks about Namely raising 5 different rounds of capital in the past 12 months.  We at True Ventures were in all 5 of those rounds and we led or co-led three of those rounds.  It is really an anomaly for a company to raise so much money in rapid succession at increasingly higher prices within a 12 month period.  I love Namely and really admire @MattStraz for how he has cultivated this company and achieved such rapid growth.

One of the questions really resonated with me and I have copied it below:

What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?

“Always. Be. Raising. Not letting your startup run out of money is your most important job as a founder, so you need to be constantly in the market meeting with potential investors and telling your story. Most people will say no, so the only way to increase the odds of getting a yes is to keep networking and finding more people to talk to.”

I could not agree more with Matt on this point.

I got to thinking about this interview and thought I would expound on this general topic.  Herewith are my three mantras as it relates to financings:

1. Whether you like it or not, you are always raising money, even when you do not actually close a financing.

2. People like to invest in people they know, like and/or respect.  Let as many investors as you can get to know you and respect you.  Taking on outside investors is a courtship that you do have some control over as long as you plan well in advance.  Most importantly, you need to choose your investor rather than letting the investor choose you.

3. Until you are self sufficient on your underlying business, you must always take into account the inherent financing risk of your business.  Today, in July, 2015, there is very little recognition in the private markets of the fact that financing start ups is extremely risky and money sources can and do exit the scene when they get scared.  Money is plentiful right now — until it isn’t.  There is no 9 month advance notice that you can rely upon of when people get very skittish about investing in illiquid, privately held securities.  So, always have plenty of capital, and don’t spend it believing that the next round, at a higher price, is always just around the corner.

And as for Namely and its most recent round – Congrats!  (just don’t spend it all at once 🙂

cc: @trueventures, @adaugelli