Swimming with sharks

Swimming with sharks

Where to find investors   

Where to find investors   


Season 1 | Episode 6

Think getting investment is like Shark Tank? Think again. After experiencing failed pitches, interfering investors and pressure to scale, scale, scale, a new generation of entrepreneurs is ditching venture capital and pursuing crowdfunding.

From $2.4m investment rounds to seeking out loan sharks, our entrepreneurs reflect on their diverse experiences when it comes to securing cash to kickstart their growth.

So, should you hold out for an angel investor or bootstrap your business all the way to the bank?

Listen now


How do you go about finding investors for your business?

From the Wolf of Wall Street to Shark Tank, the default portrayal of investors is as merciless apex predators. But then there are less-daunting crowdfunding platforms such as Kickstarter. To anybody new to the game, it’s confusing, to say the least.

But it’s those businesses – the startups – who are the most likely to need the assistance from those investors. The question is: how do you find these investors, and get them on board?


The whens and the whys

What drives a business to look for investors? For ArtLifting, a platform for artists that have traditionally been underrepresented in the contemporary art market, the time had come to scale the business. “Originally we bootstrapped from $4,000 of our savings to six figure revenue,” says Liz Powers, co-founder and Chief Happiness Spreader. “I then went out and pitched investors, to be able to scale our impact nationally.”

Rahim Diallo, on the other hand, needed investment input to get his Ginjan Bros. business off the ground. With everyone constantly looking for the next flavor sensation, bringing a delicious West African ginger drink to the streets of New York would seem like a straightforward business move. But the reality was shuffling capital from personal accounts and running overdrafts to the max to pay bills. “If you don't get access to capital,” laughs Rahim, “you're done. It's really that simple.”

The entrepreneurs


Rahim Diallo


David Patrick


Dana Donofree


Liz Powers

Finding the right investors

This isn’t to say that a business should leap at the first investor who makes an offer. “I think any founder is looking not just for cash,” says Liz, “but also strategic investors who can help do intros, and connect you to the right people. We were in a great position where we were able to get investors that could not only provide much-needed money to pay salaries and grow the team, but also get us intros to c-levels at big corporations.”

That’s often easier on paper than in reality. “My investment path was incredibly difficult,” says Dana Donofree, “and it took me a long time before I found the right investors. And I wasn't expecting that.” The owner of AnaOno, a Philadelphia-based business that makes lingerie for mastectomy patients, was keen to attract socially aware investors whose interests would align with her business’s values. This was made trickier by her preconceived notions of the investing world. “What I learned from investment, I learned from Shark Tank, and it's very, very raw. It's not the way the investment world works.”


Swimming with the sharks…

Ah yes, Shark Tank. It’s a name synonymous with investing. Dana faced a chicken-and-egg situation: “I really think that a detriment of my pitch to Shark Tank was that I had not launched yet, and I did not have any revenues coming in.” But Dana’s experiences with the show were largely positive. “It forced me into all of these tactics and skills that everybody tells you to do, like making a business plan – I had never done one before.”

David Patrick, the founder skateboard wheel business, Shark Wheel – no relation – also took positives away from his brush with the show. “I knew we were going to get it. People with a square wheel: how could they not?” But despite the stress involved (“You see a psychiatrist before and after you do it, just to make sure you're okay.”), he and his partner won the panel over. “We've got a great deal with three of them, just a complete love fest.”


…and sounding out the crowd

With years of entrepreneurship under his belt, David has also dealt extensively with conventional investors too. Most recently, he’s been seeing the potential offered by equity crowdfunding – in other words, the likes of Kickstarter. “Out of everything that I've done, it’s the best of them all. There are people that are willing to go, this is not my life savings. This is a little tiny bit of money. The guy sounds good on the video – I'll give him a whirl.”

It was the lifeline that Rahim’s business needed. “We cobbled together a little bit of money from people we met over the first two years – $10,000 here, $50,000 here – that's what led us to decide to do an equity crowdfunding campaign.” This was only made possible by the USA’s JOBS act: “It used to be that you couldn't privately raise capital from folks you don't know; you could only do so from wealthy individuals, so-called accredited investors.”

“The people that give you money want their money back. And they'll find a way to get their money back.”

Crowdfunding is undoubtedly an easier approach than trying to get into the diary of a c-suite decision-maker, who expects a business plan and a set of projections. “You don't have to have a product,” says David. “You just have to have an idea. And enough people will either believe in you or not, and that's as good a shot as you're ever going to get.” Rahim agrees. “It very much saved us up to where we are now.”


Navigating the challenges

Investing is a risky business – for all parties. As Dana says, “Investment can help you, but it can also hurt you. The people that give you money want their money back. And they'll find a way to get their money back. And you start to lose control over that outside of building a successful business.” She hasn’t lost control – yet. “I look at it as gaining expertise and not necessarily losing control.” Her active investor base consists of past professionals: “They become your advocates, They get you into rooms that you wouldn't have gotten into on your own.”

After raising $2.4 million, Liz’s problem would initially seem to be, what do you do with all that money? However, a major concern was that involving investors could risk the social enterprise aspect of her business. “I was very hesitant to even pitch for investors. What if they say only 1% of the profit goes to our artist, versus our business model, that's 55% of the profit?” Without any prior experience in business, let alone investing, Liz was fortunate to find investors who were aligned with ArtLifting’s mission. “They have a representative on the board, so in board meetings, you decide the strategy. They really trust me and trust the team to be able to grow the company and iterate as we see fit.”

Rahim has been less lucky and has found himself dealing with an all-too-familiar challenge. “If we were a couple of white kids that went to NYU or Harvard, touting all the health benefits of ginger…but the minute you say it's a traditional African drink, God knows what people are conjuring up in their minds.” It’s been a painful and recurrent problem and one that’s compounded by the fact that the bias isn’t always overt. “People don't think refusing to fund someone or refusing to go into business with someone because of whatever prejudice they may have, based on their skin color – they don't think of that as being racism. It doesn't even cross their minds.”


Words of wisdom

In terms of lessons learned, the recurring themes seem to be casting your nets wide and being inventive. Rahim found that taking a literally competitive approach was a booster. “We started to get into competitions, as many competitions as we could get into. Be it in small competitions locally, or something like the FedEx (Small Business) Grant (Contest), which we won. That saved us for a year.”

Also important is the fact that whilst money is a major factor, it’s not the only criterion for choosing your investors. Dana returns to her point about learning from your investors: “As you build this network and bring these people into your circle, they've made all the mistakes. With them in your court, you can avoid some of them.”

Of course, sometimes, hard cash doesn’t just talk, it yells. “We have different kinds of investors,” says David. “Some of them came in with just large sums of money – they weren't offering any other expertise. And we sold them a piece of the company for lots of money.”

Finally, Liz’s advice circles back to the very beginning of this article. “I'd really encourage people, when possible, to bootstrap at the beginning. There are other ways to build your business outside of taking in angels or VCs or other investment firms to structure and develop your business. Don't go for money if you don't need the money. It will shape and change the prospect and the future of your business.”

Listen to the episode

More episodes


Only as good as its people: How to
hold onto your employees

Are employee perks like gourmet lunches and weekly massages beyond your shoestring startup budget? Turns out there are plenty of other cheap ways to nurture a faithful team.


Frenemies: How to take on
your competitors

We're always told competition is a good thing. It makes our electronics cheaper, our food tastier and our sports teams better. But is it always as positive as it sounds?