{"id":241,"date":"2025-02-14T22:43:26","date_gmt":"2025-02-14T23:43:26","guid":{"rendered":"http:\/\/www.hudsonpcrepair.com\/?p=241"},"modified":"2025-02-22T16:16:26","modified_gmt":"2025-02-22T16:16:26","slug":"how-to-fundraise-in-the-toughest-market-in-two-decades-i-e-relationship-selling-101","status":"publish","type":"post","link":"http:\/\/www.hudsonpcrepair.com\/index.php\/2025\/02\/14\/how-to-fundraise-in-the-toughest-market-in-two-decades-i-e-relationship-selling-101\/","title":{"rendered":"How To Fundraise in The Toughest Market in Two Decades (i.e., Relationship Selling 101)."},"content":{"rendered":"

Hello and welcome to The GTM Newsletter by GTMnow <\/strong>\u2013 read by 50,000+ to scale their companies and careers. GTMnow shares insight around the go-to-market strategies responsible for explosive company growth. GTMnow highlights the strategies, along with the stories from the top 1% of GTM executives, VCs, and founders behind these strategies and companies.<\/em><\/p>\n

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Last week, we could finally announce our second venture fund: GTMfund II. The news was picked up by TechCrunch<\/a>, BetaKit<\/a>, and many others.
\nOur initial target fund size was $50 million, and despite one of the most challenging fundraising environments for both funds and startups in recent history, we surpassed that goal, closing at $54 million.<\/p>\n

\"\"<\/figure>\n

Raising a fund, securing capital for a startup, or even selling into the enterprise all share a common foundation: relationship-driven sales.<\/p>\n

Given how tough this market is, I figured it would be valuable to break down exactly how we did it.
\nAt its core fundraising or selling comes down to three key priorities:<\/p>\n

    \n
  1. Building your network<\/li>\n
  2. Providing value to that network<\/li>\n
  3. Turning that value into pipeline<\/li>\n<\/ol>\n

    Anyway, let\u2019s get into it.<\/p>\n

    The context<\/strong><\/h2>\n

    The background of Fund I <\/strong><\/h3>\n

    GTMfund\u2019s first fund was a $22 million fund primarily backed by Operator Limited Partners (LPs).<\/p>\n

    \n

    Limited Partners<\/strong>:<\/strong> A partner in a company or venture who receives limited profits from the business and whose liability toward its debts is legally limited to the extent of his or her investment. For the purpose of this breakdown, I\u2019ll use \u201cOperator investor\u201d synonymously.<\/em><\/p>\n<\/blockquote>\n

    Most of these LPs were C-Suite revenue leaders that Max Altschuler (GTMfund GP) and I had known for years so there was already a foundation of trust. You could think of this similar to a \u201cfriends and family round\u201d or \u201cfounder-led selling\u201d because these people already knew, respected and trusted us. While it wasn\u2019t easy, many conversations moved quickly because tthey were primarily evaluating us based on: Our past accomplishments, Max\u2019s angel investing track record, and their personal experiences with us.<\/p>\n

    These 300+ Operator investors became the core of our fund \u2013 our \u201cproduct\u201d. Calling close friends a \u201cproduct\u201d feels strange, but it\u2019s true. What we had built was an ecosystem where knowledge and access flow from our Operator investors to our founders and their respective executive teams. And with all humility, it\u2019s a damn good product.<\/p>\n

    Without their early support, we would not have had the same access to top tier software deals, the right to win competitive investments, and the ability to positively affect the outcomes of our companies once we invested. We are forever indebted to our early Operator investors. No matter how big we get, they will always get first right of refusal for investing in future funds.<\/p>\n

    That said, taking GTMfund to the next level required more capital. In order to raise 50M+, we needed to attract \u201cinstitutional investors.\u201d<\/p>\n

    \n

    Institutional Investor:<\/strong> A large organization, such as a bank, venture FoF, a large family office, pension fund, labor union, or insurance company, that makes substantial investments on the public and private markets. For the purpose of this breakdown, I\u2019ll use \u201cInstitutional investor\u201d synonymously.<\/em><\/p>\n<\/blockquote>\n

    Another way to think of this is that we were moving from selling to SMBs to selling into the Enterprise.<\/p>\n

    The challenge for raising Fund II<\/strong><\/h3>\n

    The problem? We spent our careers as operators, so our network naturally consisted of other operators and some venture capital connections from the companies we had previously been involved with. When it came to raising from larger institutional investors, we were navigating unfamiliar territory. This world can feel like a black box, where people keep their cards and connections very close to their chest.<\/p>\n

    The other major hurdle? You cannot openly market or solicit the fact that you are raising a fund.
    \nHuh? So you\u2019re telling me that I have to sell something that I\u2019m not allowed to tell anybody about unless they specifically show interest first?<\/p>\n

    Max and I have always leaned heavily on marketing and media to drive outsized results. But this time, that tool was off the table.<\/p>\n

    The 7 steps we took to fundraise $50M+<\/strong><\/h2>\n

    Step 1: Clearly identify your strategy and unique differentiator<\/h3>\n

    In the early days between Fund I and Fund II, we explored several different investing strategies. Thanks to our early success, we were fortunate to have access to many different opportunities. But looking back, this actually hurt us.<\/p>\n

    Just like in Enterprise Sales, you often get one shot with your prospect (or in this case, an investor). If you do not have your story or strategy completely buttoned-up,you\u2019re dead in the water.<\/p>\n

    Early on in a startup, it\u2019s okay if the vision isn\u2019t fully fleshed out before bringing on design partners or early customers. But if you\u2019re selling a fund (or an enterprise deal), you\u2019re selling a strategy and a solution that (ideally) the market does not yet have. You need to be crystal clear on what what you are, what you aren\u2019t, and why you need to exist.<\/p>\n

    The big learning: <\/em><\/h4>\n

    It\u2019s one thing to talk about your \u201cdifferentiator,\u201d it\u2019s another to show it.
    \nOne of our differentiators is go-to-market (GTM) support, so we offered that edge to investors in our pipeline. Did they have their own portfolio companies struggling with GTM? Well, let\u2019s go and help them. This was common, and is now supported by data that shows that GTM is the number one worry and priority for founders.<\/p>\n

    \"\"<\/figure>\n

    Another major differentiator?<\/p>\n

    Our built-in distribution through our media company, GTMnow<\/a> (shoutout to our VP of Marketing, Sophie Buonassisi!). Do they want to get their firm more exposure in the startup ecosystem? Awesome, let\u2019s plug them into our media channels.<\/p>\n

    Step 2: Build a hyper-targeted list of potential investors<\/h3>\n

    In other words, you need to define your ICP. Trying to broadly go after \u201cinstitutional investors\u201d is like saying we\u2019re targeting the \u201centerprise market\u201d.<\/p>\n

    \n

    If you\u2019re everything to everyone, you\u2019re nothing to nobody.<\/em><\/p>\n<\/blockquote>\n

    Institutional investors broadly fall into six buckets, which have slightly different objectives from their investment strategy.<\/p>\n

    \"\"<\/p>\n

    Knowing what they want, you then need to have some really honest conversations with your team to understand who you serve best at this point in time.<\/p>\n

    For us, it was UWHNI, Funds of Funds, Venture Firms and Family Offices so that\u2019s where we focused our efforts.<\/p>\n

    The actual list building process was difficult. It\u2019s not as simple as buying a data provider license as many of these investors have a purposely low profile online and, quite frankly, don\u2019t want to be found.<\/p>\n

    Our efforts required good old fashioned: Digging through Google, hounding our network, leveraging ChatGPT, monitoring X (Twitter), setting up Google alerts, and lots of LinkedIn sleuthing.<\/p>\n

    The big learning: <\/em><\/h4>\n

    The best way to identify which investors are actually serious about deploying capital into \u201cfunds like you\u201d is to talk to a lot of other \u201cfunds like you.\u201d Some of the most valuable time I spent was with other Partners at similarly sized VC firms, swapping notes on different LPs. If a LP sounded promising, we would add them to the list or ask for an introduction.<\/p>\n

    I compare this to a Strategic Account Executive at a tech company: They will often connect with other Strategic AEs at non-competing companies with an overlapping ICP. Together, they can trade insights on their target accounts, priorities, and uncover net new opportunities.<\/p>\n

    Step 3: Warm introduction mapping<\/h3>\n

    Ok, so the story and strategy are nailed and a list of high-potential investors is built. Now comes the hard part \u2013 getting in front of them.<\/p>\n

    We tried it all:<\/p>\n