Home Treat Fundraising Like Enterprise Sales (And Glengarry Glen Ross)

Treat Fundraising Like Enterprise Sales (And Glengarry Glen Ross)

Guest author Edith Harbaugh is the CEO and cofounder of LaunchDarkly, a service that helps software teams launch, measure, and control their features.

As I was going through my fundraising for LaunchDarkly, I was surprised by my friends reactions of “Oh, it’s just like Shark Tank; you pitch four VCs on live TV and they make a snap decision.” 

This isn’t true. Seed fundraising isn’t like Shark Tank. It’s much more like enterprise sales.

Survival Of The Fit

Fundraising is about finding a good fit between a company that wants money to grow faster and investors who want to put their money to work with a high return. Enterprise sales is similar—a company is investing in a vendor that will help them achieve high returns for their own business. 

In both cases, there’s a funnel with leads, a champion, a sales process, and a close.

Below is the sales process I used to raise raising $2.6 million, with bonus help from ’90s classic movie Glengarry Glen Ross

Hollywood mythology has the CEO drive down to Sand Hill Road, pitch a partner meeting, and walk out with a check for millions. Actually, the partner meeting is the very last step in the process. 

You start out with all your leads—VCs you think might be interested in buying what you’re selling. But wait, I’m not selling anything! I hear you thinking. Oh, but you are! VCs are buying a chunk of your company in the hopes that you will return their investment by 10x or more. Not every buyer persona matches what you’re selling; you are looking for a VC who understands your market and your vision, and buys into the possibility that you will make them look prescient and rich.

Qualifying Leads

“The leads aren’t weak—you’re weak.”

Pro tip: Know your target market and look for VCs who know your market well. My screen was having investors with experience working in software development.

Make a lead list of everyone you know who fits your ideal lead profile. Define your target market for leads—investors who have a thesis that matches your space and its size. AngelList, CrunchBase and funds’ own websites are very helpful for knowing what investors invest in. For example, if they usually invest in hardware router makers that need a Series D—a big-dollar, late-stage investment—they’re unlikely to invest in your seed-stage home-decorating consumer app. 

Next, make your email pitch with a short blurb of who you are, what you’re doing, and why it’s interesting. The goal of the email pitch is not to have someone drop you a check (only a Sith Lord does that), but to get a meeting with the investor.

Once you’re in the pitch meeting, it’s a two-way street. The investor is assessing whether you have a quality pitch, team, interesting market, and product demo. At the seed stage, the VCs are looking for promise and something that excites them personally. 

As the CEO, you are looking for the right fit to take your company forward. Mike Beebe, a Jedi fundraiser, told me, “You will get the money—you’re assessing if this is the person you want to get money from.” 

I had a pitch meeting where the partner had never heard of Stack Overflow. My own product is a developer tool that helps with getting features to real users faster, and the partner hadn’t heard of one of the most popular developer sites. Not a fit.

Another said they loved me and my story personally, but didn’t understand B2B and would invest if I was doing a B2C company.

The Art Of The Follow-Up

“A guy don’t walk on the lot lest he want to buy.”

Pro tip: Always ask. Always. You don’t know if someone is a yes unless you ask.

The first pitch meeting went well, there’s mutual interest, now what? 

Now comes the follow-up. Tom Drummond, Heavybit managing director, told me that “VCs take 20–30 meetings a week and have hundreds of emails. You need to force your way to be top of mind. Email them, follow up.” 

Once I knew it wasn’t a negative signal to follow up, I used TalentBin founder Peter Kazanjy’s advice:“Touch a lead six times before they’re cold.” After the pitch meeting, send a follow-up. Mine reiterated key points, expanded on anything I felt I hadn’t covered well, and included a customer case study. I asked for next steps. Sometimes the response was “We don’t want to continue.” Sometimes it was “Here’s what we need to move forward,” but at least I knew.

Dave McClure, founding partner at 500 Startups, only invested after I followed up. I’ve known Dave since 2008, when I worked at an Internet of Things startup. He said, “If you ever start a company, I’d invest.” My response was, “I don’t even have an idea, much less a company.” But he said, “The person is more important than the idea.”

When I exhibited at WebSummit Dublin in 2014, I tweeted him to come by the LaunchDarkly booth. He came by, dropped a card, and jetted off. I was disappointed—now I had a company, shouldn’t he have offered to invest? Then I reframed it. He’d taken the time to come see me, and I hadn’t made the ask. 

I emailed him, “Are you ready to make your bet on me?” He responded instantly, saying yes, he was interested, and he’d assumed I wasn’t fundraising because I hadn’t asked him.

Do Due Diligence

“Always be closing.”

Pro tip: Ask a VC to walk you through their due-diligence process. If the VC can’t answer, this is a huge red flag. If they ask for 50 different documents including SEC filings and you’re raising seed, it’s not a good match. If they start to ask for things not in the original plan, ask them why. Usually, it’s cold feet.

Due diligence is often the most confusing phase for entrepreneurs.. As VCs are parting with a significant amount of money, they want to vet you. Angels who are investing $10,000–$50,000 can go on gut, but the more money is at stake, the more vetting will take place.

Every investor has an ever-amorphous idea of what due diligence they need to feel comfortable with you. Some will want to talk to your customers, some will want you to talk to their portfolio companies to see what they think, some will want you to talk to industry experts, some will want to talk to all your old bosses, and some will want to see five years of financial statements, board meeting notes, and your seven-year business plan. Match the amount of vetting with the size of investment, and push back on unusual requests.

If a VC asks you to meet with someone before they’ve invested, treat these meetings as what they are—sales calls. The investor will not invest until due diligence is complete, so do not blow these meetings off or treat them casually. They are not a time to let it all hang out and expose the warts of your business. They are steps in a sales process. Impress the due-diligence people as much as you impressed the original VC. Bring your A-game as to why your company is important and valuable. Due diligence can drag out, mislead, give false hope, and be harmful.

I had an investor who wanted to talk to two customers. He missed both meetings because he was late. When he did eventually show up, he wanted to meet with more customers to “feel convinced.” I didn’t want to burn my customers with a flaky VC who would miss meetings. He never did end up investing.

Another startup CEO had six separate meetings with one VC firm. He didn’t meet with other firms, as in his mind, this firm was about to invest. Startup advisor Sean Byrnes gave him a cold dose of reality: “If after that many meetings they haven’t invested, they won’t. They’re using you to educate themselves on the market.” 

To reframe this in enterprise sales terms, if you’re spending all your time on bad leads, you’re not making good leads work.

The Close

 “Coffee is for closers.”

Pro tip: Always know who your champion is. If you don’t know who it is, you are fighting solo, as no one has an incentive to help you.

You’ve made it through your initial pitch meetings, due diligence, and now it’s time for the final hurdle—the partner meeting. Many think this is the first step, but it is actually the last one. This is the meeting where you pitch to the entire partnership. 

The most important person in the pitch meeting isn’t actually you, but your champion. The champion is the partner who heard your pitch and has the reports back from due diligence. They are trying to get the deal done as they think you’re a killer investment that will make them look good. 

Andy McLoughlin, a venture partner at SoftTech VC, says, “If I’m the champion of an investment deal, I’m even more invested than in vendor selection at an enterprise. The companies I invest in are my product.” 

The champions are there to help you. Use them! They want you to look good, as otherwise they get razzed for backing a loser company. Most firms invest in less than half of companies that pitch the partnership, and it’s not expected everyone will be in favor.

Ask the champion what you should show in the partner meeting. Let the VC run interference on objections. Without a champion, meetings are at best neutral and at worst openly hostile.

In sum, fundraising is hard, but it shouldn’t be a mystery. It’s a sales process, so treat it like that. The goal is that both parties should feel like they’ve found a partner who will help them win.

Screenshot via Glengarry Glen Ross

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Get the biggest tech headlines of the day delivered to your inbox

    By signing up, you agree to our Terms and Privacy Policy. Unsubscribe anytime.

    Tech News

    Explore the latest in tech with our Tech News. We cut through the noise for concise, relevant updates, keeping you informed about the rapidly evolving tech landscape with curated content that separates signal from noise.

    In-Depth Tech Stories

    Explore tech impact in In-Depth Stories. Narrative data journalism offers comprehensive analyses, revealing stories behind data. Understand industry trends for a deeper perspective on tech's intricate relationships with society.

    Expert Reviews

    Empower decisions with Expert Reviews, merging industry expertise and insightful analysis. Delve into tech intricacies, get the best deals, and stay ahead with our trustworthy guide to navigating the ever-changing tech market.