Ten Tips to Get Your Fashion Tech Startup Funded
As an influx of fashion tech entrepreneurs enter the fashion tech space, the first question on their minds is how to get funded. At a recent NYC Meetup event during Internet Week New York, Third Wave Fashion hosted a discussion with a mix of seasoned entrepreneurs and VCs offering their best advice to newcomers. FMM rounded up the top ten tips for getting the ball rolling on your first round of funding.
1. Hire a lawyer. As a first time entrepreneur, Buyosphere CEO Tara Hunt learned “one hell of a pile of lessons” by doing it all on her own. One word of advice she gave is to find an awesome lawyer who will be on your side, is familiar with these types of investments and can warn you of bad terms.
2. Don’t be over-funded. Ari Goldberg, CEO of StyleCaster, suggested raising less than a half a million dollars because the cost of a start-up is so nominal relative to what it used to be. With tools like WordPress and all the different technologies that you can leverage, so many aspects are open-sourced. “Throwing money at problems is not the answer,” said Goldberg. “You basically need to pay for creative, a little bit of office space and pizza. The hard part is getting to the point where you actually need funding. The beginning part just takes hard work, tenacity and all those things entrepreneurs need.”
3. Make it personal. “I can’t think of one investment we’ve made through a cold email,” said Will Peng, VC at Raptor Ventures. “The way to get in is through warm intros—that’s the currency of this world. If you can get someone I know and trust to write a warm recommendation for what you’re doing, that’s where I would try to get in.”
4. Know when to say no. If you’re not willing walk away from a deal at anytime, you’ve totally lost your edge on a negotiation, says Tara. “I was that person who was so desperate to take any terms because I just wanted my business to work,” said Hunt. “But I didn’t step back and analyze it. If I could go back in time and tell Tara to slow down and boot strap it for a little while longer, I would.”
5. Realize that no two start-ups are alike. In other words, don’t compare your story to those you read on Mashable. “There’s a lot of advice that may or may not be replicable,” said Charlie O’Donnell, VC at Brooklyn Bridge Ventures. “Just because some stuff happens for some people doesn’t mean it’s what you should do.” Each company carves its own unique path to success.
6. Have a compelling story for investors. Those with a unique story that investors can get behind, these are the companies they want to fund. “No matter how the context of the business changes, your number one job as an entrepreneur is to sell the dream to advertisers, investors and future employees,” said Goldberg. “You really have to be your best publicist.”
7. When you want advice, ask for money; when you want money, ask for advice. “When they want to raise money, the best entrepreneurs are always asking us for advice,” said Peng. “It’s very careful marketing management.”
8. Don’t be afraid to reinvent your product. Don’t pitch the same concept if you can’t prove any traction. Instead, pivot, and follow-up with potential investors. “Show that you’ve fought through the space in a way where you understand why it doesn’t work,” said Peng. “If you do it right, there’s no negative stigma to failing.”
9. Remember you’re always in market. Always have an up-to-date-deck and of course, maintain confidence. “If you can maintain that confidence even in the face of doubt, that’s entrepreneurship and that’s what investors are attracted to,” said Goldberg. “Investors want real professionals that are very savvy and have a real sound strategy in which they go to market.”
10. ABC: Always be closing. “Whenever you meet with an investor, even if it’s casual over a beer or you’re just playing basketball, realize that you’re always pitching,” said Peng.