Raising Money from Exited Startup Founders

Startup founders who made an exit or otherwise had some business success could be the 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. But there is a problem. The problem is that many of them are not really interested in writing investment cheques. First, because, sadly, having a past exit from a startup doesn’t always mean making enough money to become an active investor. Secondly, exited founders often have the itch to continue founding new companies, which means they are busy promoting their own new startup, with limited availability and resources to invest in others. So targeting 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, I recommend that you 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.