VC Minute – quick advice to help startup founders fundraise better
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This is Rich Maloy with SpringTime Ventures, bringing you the VC Minute, quick advice to help startup founders fundraise better. This week, I’m going to cover something that I’ve wanted to do for a while: startup maxims. But first, I can confidently say that our sponsor is a financial game-changer. AVL Growth provides fractional finance and accounting services to companies pivoting from growth to scale. At AVL, they have a mindful growth approach and a proven methodology that are pivotal in making the right moves at the right time. Head to AVLgrowth.com and explore how they can be pivotal to your growth. AVL Growth Partners. Your success. Their expertise.
What spurred me into action on this theme was one of Eric Marcoullier’s Thunderview CEO dinners, and we were talking about the maxim ask for money, get advice, ask for advice, get money.” A founder said, “I’m asking for advice, but I’m still not getting any money.” I didn’t have an answer for him, so I had to reflect on it for a while.
I was thinking a lot about what is really at the heart of the matter. The first line, “Ask for money, get advice,” is really straightforward. I do give advice a lot. I was just on a call with the founder, who was asking for money, it was a pitch after all. And I ended up giving him a lot of advice about the pitch. It needed a lot of work. But then I had to think: when has someone come to me asking for advice and gotten money as a result? That path is less straightforward and is really where the maxim breaks down.
Indulge me here for a moment. I read a wonderful quote from Benjamin Franklin. And I feel like I should be reading this in some old-timey accent, but I will spare you that. Here it is. He who has once done you a kindness will be more ready to do you another than he to whom you have obliged.
The modern interpretation of this is, “If you want to make a friend, ask a favor.” Asking for money is a transaction. Asking for advice is akin to asking for a favor. Someone who has done you a kindness may be more willing to do another kindness, such as make an introduction to another investor. And that, to me, is at the heart of the second half of this maxim. By asking for advice, what you’re actually doing is building a relationship. Seed investing is very much about relationships. Those relationships may turn into investments. They may also turn into introductions that turn into investments. So to the founder who sparked this discussion, focus on relationship building. Ask for advice, and you may build a relationship from it. Continue with that relationship, and it may lead to an investment.
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