There have never been more options for startups seeking funding: Take AngelList, for example, which connects startups directly to investors, or MaRS’ Social Venture Exchange, which helps companies with a social mission find sustainable financing. There's also crowdfunding sites like Kickstarter and Indiegogo, which have changed the landscape by harnessing the power of the crowd.
These platforms give entrepreneurs newfound reach and publicity opportunities. But making a name for your startup isn’t just about which platform you choose. Building a strong network – founded on genuine relationships – is a must for startup raising money at any stage. Whether it’s through angels or directly from a VC, investors don’t blindly hand out money; they need to get to know you first.
Successful entrepreneurs often have strong networking skills. They understand that there are two components to building a real network: First, casting a wide net, no matter how hard it is or how much time it takes. Second, building relationships for where you want to get to, not just where you are now.
Casting a wide net requires good old hustle and perseverance. It’s about figuring out the space you’re in, doing the research and going to every event. It’s reaching out to every catalyst, evangelist and community animator to figure out which connections hold the most value. This approach comes with a lot of meetings that will feel like a waste of time. But with time you will build a network of at least a few people who will help you out, either directly or by opening new doors for you over time.
The second tactic is not all that different than the first, but it’s a bit more focused and strategic: It requires you to think through who and what you might need at the next phase and beyond for your venture. The key being that you don’t want to start from scratch when you finally get to that phase.
If you’re self-funding your startup, or raising capital through family and friends, you want to have a network of angels and seed stage investors at the ready. The goal is to get that network to know you, and more important, to witness your growth first-hand. To an investor, this is the most powerful form of due diligence and that seed round raise will be all that much easier. The same goes for subsequent rounds.
The logic seems obvious, but there’s no way to avoid the work. No platform or tool will remove the need to build relationships and trust amongst any group. This applies to angel investors, VCs and to alternatives like friends, family or the crowd.
Chris Eben is an investor, entrepreneur and startup community evangelist. He’s a partner at Toronto-based digital studio The Working Group, a Startup Weekend organizer and facilitator, and father to two little girls. You can find him on Twitter @ceben. Email chris.