In the competitive world of fundraising, there’s a myth that it’s harder to raise money in smaller markets. Most founders think you have to be on the coasts to start your business. After several years of investing and fundraising in a small market, I don’t believe that’s true and here’s why.
This past summer, Techstars Retail completed its first program with Target in Minneapolis. The Twin Cities has admittedly not been known as a hotbed for venture capital — but that is quickly changing. After just a few months, our companies have already collectively raised almost $15 million, with another $5 to $10 million coming soon.
This wasn’t a fluke. We put forth a set of guidelines that our startups followed to gain traction for fundraising in smaller markets. If you want to raise capital in a smaller market, here’s how:
Get Local Support
No matter how small, local support goes a long way. Get to know every investor in your region. Find out who has invested in local companies, what founders are from your town, and what startups have come from your market. If you want bigger investors, you first need to demonstrate that you have local support. It’s great signaling.
Go to the VC
If the closest investors aren't next door, get on a plane and create reasons to go visit. Do your homework and ask for a referral first. Get on a plane, show up, and network. You can’t be passive – you have to be aggressive and go to where the VCs are. Then, when you get those meetings, shine the light on your city.
Join an Accelerator That is Not in Your Geography
Tap into funding sources that would otherwise be unreachable. Bring them to you. This gives you a “shiny-effect” for tapping into your local market once you return. Check out Techstars programs – we now have over 20 accelerators in over 16 cities across the globe, including smaller markets like Austin, Boulder, Kansas City, Atlanta, etc.
Understand Where Your Company Fits
Understand where your company fits into the greater tech ecosystem. Who else is doing the same? How are you different? Where is your opportunity? Where is the engineering talent? What is the cost of living? Know your market better than anyone else. Then, get the data about why your company can and will thrive in your locale.
Create a Great Business with Great People
It sounds cliché but it simply cannot be overstated when it comes to capital. Bad businesses or bad founders will have trouble fundraising. Get your act together and surround yourself with an awesome team. You have to be on top of your game in every way in order to convince others to believe in what you’re doing enough to invest in you.
Don’t let people tell you that you have to move to the coasts in order to build a successful startup. Techstars believes that great entrepreneurs are everywhere and we are building a global ecosystem to support you. Join us!