3 pillars of fundraising: product, market, network

Trying to boil down the very difficult experience of fundraising for startup capital to a simple methodology has got little to do with the actual process required, but more to do with trying to capture the approach and mindset needed. This blog is as much an exercise in researching and reflecting upon the systems and beliefs I hold true, as it is a guideline for any person seeking to raise finance or invest in an early stage business.

The startup founders I look up to, whether this is their first or third venture, deal with the growth and scaling up journey with an intensity that inspires others involved in their journey to want to be part of their story no matter what. In early stage, the personality and attributes of the founder and the core founding team and key advisors are always paramount. I am never surprised when experienced investors tell me that their investment thesis revolves solely round the founding team and nothing else.

This post, will thus assume that the aspects of founder-market affinity are present and clear. In the best examples that come to mind, I have observed two aspects to be true of the founding team:

  1. Their startup is the realization and culmination of a very significant and critical body of work that is unique and intrinsic to them personally. Clear examples I have encountered here are: a) building a solution for an incident that has had a material and sometimes tragic effect on their life, like the loss of a loved one. b) A lifetime of research and effort into a key topic of interest or solution to a hard pressing problem – e.g. the basis of a PhD thesis
  2. Their startup is the realization and culmination of a career path and work/life choices, and a coming together of the people, ideas and research that has allowed them to be successful in previous roles, positions and projects. A typical example here is a C-suite executive spinning out a technology based project that his previous employer would not finance internally.

In the best of cases the three pillars of product, market, network require this backdrop in order to reach their full effect. For each of the pillars, I will provide examples of when an individual pillar was most pronounced to illustrate the case in point. However, most founders can pursue an effective and efficient mix of all three elements in their pursuit for growth or funding.


An important side-note here is that the three pillars are not exclusive for fundraising. Bootstrapped startups could easily enjoy benefits from value proposition and subsequent growth by implementing the key aspects involved here.


I hold the belief that a strong value proposition is the only thing that matters for an early stage business. A product for an early stage business needs an audience of early adopters that cannot imagine life being the same since they have found the solution for intense pain they had in the marketplace. A methodology can be implemented to articulate how effectively this is being provided to the power users of this solution. This should manifest in the startup being able to define that his/her startup solution can improve metric X by Y % for that given problem. Simply put, this is the measure of the customer success achieved by the use of this product, and an optimal product will be able to produce encouraging acquisition, retention and referral metrics as well as produce convincing month on month revenue and/or usage metrics.

This is the earliest available evidence of product-market fit (PMF), and this must exist in order for a company to start experiencing real growth and prior to approaching investors for fundraising.

“But I cannot achieve PMF without funds or capital!!!” I hear you cry. At this stage a startup needs to show (not just tell) how implementing its early prototype or MVP has improved through subsequent deliberate learning. Even the most capital intensive DeepTech and Biotech projects can achieve this through evidence from their research papers and early R&D or pilots.

Groupon story

A blog or a simple Google group could have done the trick with the first version, in order to test the market – and that’s what Groupon did. This looks quite straightforward now – but take a step back and ask yourself – If you were starting Groupon, would you first build a scalable product or go after deals/get consumer attention?


Lesson – Test your market before you start building a giant machine. Have hypothesis and validate that with customers.


Growth has no substance without value. Marc Andresseen explains, “when you first start out the only thing that matters is finding a cohort of customers who truly value what you offer” — not just people who could see themselves using it one day. You need to give yourself permission to try things that don’t seem remotely scalable. Narrow your target market to a size where you can meaningfully address customers’ pain points, and methodically expand your reach from there.

The pillar of market is all about the requirement that your startup and its founder needing to be unequivocally perceived as a thought leader or (the more modern) influencer in your space. Your market should, without hesitation, attribute your market with you. Like Walter Disney is to animation, or Jack Bogle is to index funds – strive to match that kind of assimilation in your niche market. A simple test here is to google specific keywords and match these to your market place.

Although they are not my preferred route, attending pitching events, competitions and fairs can both prove to be a useless distraction or a required springboard. There are success and failure stories on both ends of the table. My suggestion is not to rely on any one or handful of events as the be all and end all of your fundraising strategy – you will be over-estimating their impact. Should any one event be a successful door opener, clearly optimise its benefit and maximise the PR follow on from it. Every drop helps fill the jar.

With the dawn of social media and video streaming a new requirement has emerged to be key here. This is the concept of your personal brand – a concept that can be stretched outwards to the whole founding team – but as a minimum the founding partners. This entails a continuous and consistent presence reminding both knowledgeable and casual audiences that reign as leader in this domain. Own the narrative! Make it personal and showcase the highlights of your journey to showcase how you live the spirit of your vision.

A good example that comes to mind here is the Honest Company, fronted by Jessica Alba who personifies the vision, mission and brand identity of her startup.


One of my first blog posts was about “Why human interactions are the center of any fund raising story”. Your primary objective with this process is to find the best person to give you an introduction to a key person for your network; someone who is seen as credible to the recipient. This is because of social proof: you want to get an intro from someone an investor respects and/or has put her money where her mouth is.

According to DocSend, a pitch deck tracking company, it takes [circa] 40 investor meetings to get to 1Mln$ of startup funding.

There are three buckets you should target to earn intros to investors:

  • Investors or influential people who have confidence in you and your abilities (you probably don´t know many)
  • Founders or key employees of startups, in your network, who have received an investment (these make for strong warm introductions).
  • Trusted network contacts with working or personal relationships with investors (consider ex-colleagues, fellow university or MBA students).

Make the time and effort to find a warm intro:

  • Identify the right type of investor and build your list
  • Get as specific as possible, and be as close to fit as possible
  • Organize your list, treat is as a sales process

In order to make it to 40 investor meetings, start by making your list of investors in your network, region or market who would make for great strategic partners for your business. There is no need to list 40, up to 10 will suffice when you are starting out. Each connection you make, especially if they are delighted by your service offering has the likelihood of opening up 3 or more new avenues for you to pursue, thus allowing you to arrive at your target 40 meetings. Further connections could be obtained in the form of attending startup events, pitching competitions and the like. The best return on time at such events is to attend already with a few connections in the bag. These connections will act as ambassadors for your startup and multiply the benefits earned from attending.

A word of caution comes when a strategic contact you have on your list does not express interest in your offering and does not offer to be an ambassador for your situation. Reputation counts immensely in small networks, make sure you always have your best foot forward. If you are still discovering and testing out your optimal pitching approach, do it with low impact, low value connections. Never ask for connections from someone who turns you down – it just simply makes no sense. Also, if a strategic contact (high impact, high value), who has the profile of investor is not willing to invest but is OK with making a few introductions, tread with caution – as the question of why that contact is not investing will inevitably be brought up.


NFX is a venture firm that is all about the network effect. Follow them to maximise your learning on this subject.


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