Funding

How should you approach it?

Raising funds is often a time-consuming task for founders. It can become a major distraction that may harm the early success of your venture. If you spend most of your time polishing your deck, trying to grab investors' attention, or negotiating term sheets, you're not dedicating that time to building your business. Ask yourself: Do I really need to pursue traditional startup funding? Can I delay it? Is there an alternative way to secure external financing without relying on angel investors or venture capital firms? The answer to the last question is: possibly.

If you have the option, it's best to delay venture capital financing until later. Another chapter will explain why. However, if your business-to-business venture requires external financing to get started, present your vision and ideally a prototype to those who will benefit most: your potential customers and partners.

If you're developing a product for a specific industry, a target customer might invest to influence the product and gain a competitive edge. Similarly, if you're creating a marketplace, a supply partner might see investment as a chance to be the first to benefit from your sales channel. This approach can help cover your running costs while maintaining control over your venture and strategy. More importantly, it allows you to focus all your energy on building your team and business.

In 2015, venture capital investment and funding rounds were all the rage. The travel press covered an increasing number of successful capital raises. US investors were becoming more comfortable investing in Europe. Berlin was gaining popularity as a startup hub. Seed and Series A rounds were growing, thanks to new venture capital firms focused on early-stage financing.

In this environment, I became convinced that venture capital was the only way forward. I began contacting VC firms almost immediately. As I'll explain later, flyiin required substantial early funding due to the nature of the venture. Unsurprisingly, our success rate with these firms was almost zero. We had no prototype—only a pitch deck with a lofty promise. None of the original founders had track records in building successful tech companies. It was a hard sell.

One financing avenue I didn't adequately explore in the early years was airlines, despite them being the primary beneficiaries of our Air Travel Marketplace model. This approach could have had a greater impact and ultimately allowed us to achieve our original grand vision.

Eventually—two and a half years after incorporating the company—we attracted a family office and a hedge fund that recognized the significant opportunity for disruption in our vision. However, this was purely luck, which ultimately led to an unfortunate ending, as described in previous chapters.

It took another 18 months to finally raise our first official round, with over 10 angel investors united in an investment pool. This financing, which came at a considerable cost to us founders, funded the development of our Airline DirectConnect Platform in 2019–2020. I'll discuss this further in the next section dedicated to fundraising.

Key Takeaway #12

Don't feel compelled to jump on the well-publicized, venture capital-driven funding bandwagon if it's not necessary. Fundraising efforts can be a major distraction and often overrated. Instead, consider alternative financing options that will allow you to focus on your business while securing the necessary funds.