Entrepreneur Office Hours - Issue #124
Pre-revenue funding isn't easy, but it's also not impossible
If you’ve been reading my entrepreneurship articles for a while, you know my mantra for successful fundraising is simple: have as much customer traction as you can. Simply put, the more customers and revenue you have, the easier it’ll be for you to prove you’ve got an investable business.
But just because having customers makes raising capital easier, it’s not a necessity. Plenty of companies raise capital pre-revenue (some of my own companies included). To be fair, many of those companies are started by people who’ve already built successful businesses. But, for those of you without a great startup track record, this issue of EOH has a strategy for raising capital pre-revenue.
Unrelated but still important, this issue also has some advice for how to choose your CRM. I realize it’s not as exciting a topic as fundraising, but it sometimes feels just as difficult.
Having traction is helpful for raising VC, but it’s not always necessary because there are other ways to convince investors your company is going to succeed.
If your startup is struggling to get its first customers, you could be targeting too many different types of customers. It might seem counterintuitive, but you might be better off narrowing your focus and trying to appeal to less people.
Office Hours Q&A
My startup has been using Google Sheets to manage our sales process. As we grow, we’re trying to professionalize our operations, and I’m pushing for us to choose a CRM. But I’m struggling to figure out the best CRM.
I know Salesforce is the big one or whatever, but it’s too much for us right now both in terms of cost and complexity. But I also don’t want to commit to something that will be a pain to move away from in the future once we grow.
I think I may have already answered a similar question way back in an old issue of EOH. I’m mentioning this not because I expect everyone to have read everything I write before asking questions, but because I get a surprising number of questions about CRMs (this one being one of many), which tells me it’s a genuine problem for entrepreneurs.
I definitely understand the concern. When I think back to my previous efforts at choosing a CRM, I probably spent more time than I should have debating the relative merits and drawbacks of each one.
Unfortunately, I’m not currently as up-to-date on CRMs as I was a few years ago, so I wouldn’t be comfortable recommending one specific CRM over another. Instead, I’ll offer a general piece of advice that can be applied to finding a CRM and, more than likely, a lot of other software choices as well.
When deciding on a CRM, you should know that the platform you choose isn’t nearly as important as developing a system and process around it to make sure it gets used. This is important because, despite how most software platforms are advertised, none of them are magical, and they can’t create value on their own. Instead, in order to get value from a CRM, it has to be used. As a result, the hardest part about getting a new CRM – or whichever type of SaaS software tool you need to buy – isn’t choosing the “right” one. The hardest part is incorporating whatever you’ve chosen into your company’s workflow.
So long as you choose a CRM that’s stable, been around for a while, and has a decently large user base, you’re going to have a platform that can bring value to your company. Rather than fixating on which is better or worse based off some sort of idealized image of what a CRM should be or how it should be used, focus on finding a CRM that’s going to fit best into how you and your team currently operates. Doing so will help lessen the adoption of whatever new platform you choose.
Once you make your decision, focus on deeply integrating the CRM into your workflow as quickly as possible. Be very strict about using it in the first couple months until you and your team have developed a habit around it. That habit is key because you’re going to get the most value out of a decent platform simply by using it regularly and purposefully.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!