How to Raise Money in a Recession
Better Lucky Than Smart. All. Day. Long.
After 30 years in the market, I know I was lucky. I was lucky when I entered markets multiple times:
1995 becoming a tech analyst as the internet took off,
2000 joining a hedge fund where we could make money off down markets, when tech declined 80%, or
even starting my investing straight out of a recession
So I prefer to be lucky over smart. But the BEST?
Be Lucky AND Smart!
We raised over $5M.
We started demos for investors when Russia invaded Ukraine. We raised as the private and public markets went into bear territory.
Be lucky:
Connections: As a team we all have friends who like to invest in private companies. Our rolodex was diversified. My first startup I was the only one with investor friends, and they preferred public investments.
Timing: What we are building, compliance infrastructure, aka working on the hard stuff, is what the market is interested in now, with increased regulatory scrutiny in private markets and crypto markets.
Introductions: People came to us, then introduced us to their friends. The quality blew us away. Each intro increased our opportunity set. You start with your network, but intros can 10X your own capacity.
Be smart:
Cash is King. Typical raises you get indications and then ask for inbound wires. We took in wires as we raised. We gave up the ability to let in a large player late in the raise, but protected our flanks as the markets declined.
Build: My first startup raised off a deck. With satschel, we had a demo before the raise, then kept building throughout the raise, so as markets pulled back, our story kept getting stronger.
Expand: As people freak out about the economy and markets, this is an opportunity to efficiently focus on growing, expanding and winning share over those who freeze like deer in headlights.