Raising money from startup founders

Startup founders that made an exit or otherwise had some business success, are almost ideal investors for your startup. Especially if they had a company in your domain or have some other relevant experience related to your startup. They sympathize and understand you and what you’re going through, they can mentor you like no one else can, they have real-life connections with investors in your space, and can even help with business development and introductions to major clients or partners. 

They do have one major disadvantage, though. Many of them are not really interested in investing capital. First, because, sadly, having a past exit from a startup doesn’t always mean they made enough money for themselves to become active investors Secondly, founders usually have the itch to keep on founding new companies, and they are often busy promoting their own new startup, with limited availability and resources to invest in others. 

So, reaching out to founders with past exits isn’t a great strategy if you are in a rush to raise money immediately. But if you have a longer time horizon for your next raise, startup founders with past exits or other major success milestones in their resumes can add a ton of value to your startup and to you personally. 

To connect with them, don’t focus on presenting your startup as you would to most angels or VCs. Rather, focus on creating a relationship, build on your commonalities, and seek their mentorship. Many startup founders are more than happy to share their experiences and knowledge with other founders, especially after they’ve achieved a level of success. Build a real personal connection with them, and you will likely get compounding value out of these relationships in the longer term.