Daniel Levitt is the co-founder and CEO of Bioz, a search engine for life-sciences experimentation that is used by more than 1 million researchers in 10,000 academic institutions and biopharma companies in 195 countries. Inspired to focus on life-sciences ventures by his father, a Nobel Prize winner in chemistry, Levitt has more than 25 years of experience as a co-founder and CEO. He has established eight startups, including StemRad, which developed a medical device to protect users from radiation and is now developing radiation protection for first responders and astronauts.
I learned from direct experience that raising money is a very difficult thing for some entrepreneurs.
They come up with an idea and go raise money with a prototype or something basic they have developed, feeling they have to ask investors very politely for funding.
I don’t think a lot of entrepreneurs realize that if they don’t walk into a room with investors believing — and acting — like their company is worth $1 billion, they either will not get the money, or if they do raise money, it will be on very unfavorable terms, which will be painful as the company grows.
So many entrepreneurs act as if they're asking, “Can you please help me?” and will accept almost anything they can get.
This is how I was acting in the past. It affected the ability to raise money, and if I did raise funds, it was not on favorable terms, or it was on terms less favorable than I could have gotten.
As I have gone through this with more companies, I definitely have taught myself to respect myself more and appreciate more of what I’m bringing to the table.
When you're fundraising on favorable terms, it should feel like an equal partnership.
When you're fundraising on favorable terms, it should feel like an equal partnership. That’s completely clear if you talk to someone who’s been through some of these accelerators and raised lots of money. This lesson is supported by so many other entrepreneurs I talk to who have also gone through these same experiences.
Investors actually don’t want to give to the person who is asking politely. Investors want entrepreneurs who believe in what they have [created] and are not going to accept just anything. Investors don’t want someone who necessarily is going to say yes to everything. Investors want to [put their money into] things that are hard to get. Investors want to see how someone will run the company and be able to stand up to the competition and large enterprise-level partnerships.
It’s one of those things that I think is hard for entrepreneurs to do, but you really have to go to an investor meeting and act the way I’m describing.
Suddenly you gain a lot of respect.
You can think you’re being very cooperative as an entrepreneur who is asking nicely for funding, but it’s the opposite.
It’s kind of tricky and counterintuitive sometimes. But fundraising is critical because the whole concept of a startup is that it requires a lot of money to grow quickly. Being able to raise money on good terms is so important in allowing the company to succeed.
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Photo courtesy of Bioz