Before Doug Humphrey raised his first successful round of funding for the managed hosting startup he cofounded in 1992, Digex, he spent two weeks pitching investors in Boston.
The reason? Any startup based in Maryland should practice a failing pitch in territory from where it won’t be receiving funding.
And the way to polish a lackluster pitch? “You need two guys to watch the people watching you, figuring out what’s working and not working,” Humphrey said at the first-ever Exec TechBreakfast on Wednesday. Shots of Scotch help as well: each day after pitching, Humphrey and his two compatriots would retire to their Boston hotel room, down a bit of Scotch, and then set to work on recalibrating Digex’s pitch.
Eventually, Digex raised a first round of $6 million with $2 million contributed by each venture capital firm, including Grotech Ventures, one of the firms distributing a portion of the $84 million InvestMaryland pot.
But, really, there are three rules to bear in mind, said Humphrey:
- Know your minimum: The minimum amount of investment your startup needs in the round of funding its raising.
- Raise your optimum: This is the money your startup needs to not only survive, but also perform well while doing so. As Vince Talbert said at January’s Startup Grind: once your startup has momentum in the form of customer adoption or revenue growth, get the funding you need to increase your startup’s scale and reach.
- Don’t take the maximum: Taking more money than necessary only dilutes your stake in your company.
Knowledge is power!
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