Gusto founder Josh Reeves shares principles and tactics for raising venture capital

Josh’s first principle for fundraising is:

“View it like hiring. You’re building a team. You have a team of employees, a team of investors, a team of board members. That’s three distinct teams… To the extent you can, try to think about it as hiring and team building versus just money and price.”

In terms of tactics, Josh recommends getting to know investors when you’re not raising money:

“Ping someone and say you want to share what your business is up to, but say you’re not fundraising right now. It takes the pressure off the conversation - the VC doesn’t have to figure out if they’re going to make an investment. They can just learn about your business.”

Josh also recommends raising your seed round from strategic angels - operators and executives who may be helpful down the road:

“We did our seed round primarily with what I would call ‘strategic angels’ - operators, executives, and companies who had felt this pain point and who frankly I would have paid money to to give us advice. Instead they gave us money… It was just cool to talk to these folks and get their perspective and wisdom. And the fact that they had some skin in the game just aligned incentives even better.”

Another useful tip - if you pitch an investor and they want to invest, ask them if they know anyone who might also want to invest:

“One of the best intros you can get in the financing process is someone pinging someone they know saying, ‘I'm investing, you might be interested.’”

Full video: South Park Commons “The Founding Story of Gusto with Josh Reeves“ (Apr 2024)