Do More Faster India, 2nd Edition

Chapter 63If You Want Money, Ask for Advice

Nicole Glaros

Nicole has been with Techstars since its earliest days and is currently Chief Investment Strategy Officer.

Techstars founders who are adept at actively engaging mentors and investors early in the program (and consequentially before fundraising) have more success raising external capital later compared to founders who struggle to solicit and embrace mentorship.

I have wondered why this is, and I believe that the following adage holds true:

When you want advice, ask for money. When you want money, ask for advice.

I believe there are three reasons this adage holds true and it explains why some founders are able to raise money more easily than others

Investors say no more than they say yes. An investor is constantly being bombarded by requests for capital. It’s fundamental to his job. Statistics vary, but it wouldn’t be unusual for an investor to say yes less than 1% of the time. Given that there are only two answers to the question “Will you invest?,” they become adept at quickly discovering weaknesses and saying no. When approached, they are wearing their investor hat and their senses instinctively home in on the negatives of the company. Most investors don’t want to turn you away empty-handed, though, so they will offer advice for overcoming any weaknesses.

Risk mitigation. Getting investors and mentors involved early in your company before you start raising capital provides them a way to track your progress and learn ...