Cold-Fundraising Alternatives for More Efficient Capital

I’ve realized that cold-fundraising, which many founders do, is one of the most inefficient and illogical ways to pursue capital.

By cold, I mean doing it with little or no existing connections that will make it easy; having to go and meet or email these people in hopes that you will get hundreds of thousands or millions of dollars within months from them and their relationships.

This is plain silly.

The best alternatives

The best alternatives are:

• Consulting work.
• Marketing.

I’ll break down why both are better alternatives.

Consulting work

This is a better alternative because you:

1. Get money to self-fund and be happy.
   1. You can make hundreds of thousands of dollars a month if you are ruthless about increasing prices and saying no to clients who are not ideal.
2. Learn:
   1. Sales.
   2. Pricing.
   3. Your craft.
3. Can control your time.
4. If you’re consulting in technology, you can simultaneously build connections with people you work with.
   1. These connections will trust you, having seen your work, and have a much better chance of converting to:
      1. Future fundraising partners. The conversion here will be incomparably higher than what you get from a cold meeting.
      2. Future talent and co-founders.

The problem with consulting is:

• It’s seen as unsexy compared to being a founder.
• Many people get stuck in it because they don’t bring a founder mentality to it. If you treat it like a job, it becomes one. If you treat it like a stepping stone, it becomes more fun and more sexy.

Marketing

I believe that when it comes to startups, nothing beats go-to-market.

Nothing beats leads.

Nothing beats having people who will pay you.

As I previously wrote, I think fundraising is a poor growth strategy.

If you have go-to-market. Proven go-to-market. You have control.

Sure, there are many products that require a lot of upfront capital to get started. Hardware, pharma, rockets, etc. All these products get funded with warm connections.

You could engineer a big viral marketing campaign for one of the above capital-intensive products and get go-to-market through that. You see this done all the time on crowdfunding platforms. However, again, this establishes go-to-market as the driving force for the fundraise.

Don’t waste your life

I go to technology and business events here in NYC every single day.

And I meet a lot of founders who are spinning their wheels, grinding away their precious lifeforce and time, trying to fundraise cold.

This makes me sad.

Leverage small wins to get to big wins and bigger wins.

That’s how most of the great business people before you have done it.

Life is short.

Don’t waste it on the wrong decisions.