Raising VC in Silicon Valley as a female POC

As the world grows increasingly digital, the craving for face-to-face connections is surging. Squad, an invite-only community and app, is trying to fill the need for offline connections by curating tight-knit events for Gen Z and Millennials.

“It mimics building relationships in real life,” says founder and CEO Isa Watson.

It’s an idea that investors are already backing: Squad closed a $3.5 million seed round and plans to raise its Series A in early 2020, but the road to securing that round was anything but easy. During a conversation on the How I Raised It podcast, Watson shared the ups and downs of her unique path to fundraising.

Establish credibility for a few years before fundraising

She started by putting some of the earliest capital into the business herself with support from her family. She then worked her way through more than 200 meetings in Silicon Valley to build up her credibility as a founder — a step that she can’t stress enough — before Squad even started its official seed round.

“Despite the fact that I went to MIT, despite the fact that I managed a billion-dollar product at JPMorgan Chase and even built a huge digital product, I was still a Silicon Valley outsider,” Watson says.

People sometimes have the perception that being an alumni at a top U.S. university will mean they can go to Silicon Valley and just be “in,” Watson explains, but that’s not quite how it works.

“It takes a lot of work and a lot of credibility building,” she says. “That’s what I was doing for a few years before we actually did our official seed round. By the time I did it, it was like my reputation preceded me and there was enough familiarity with me.”

Don’t do the cold outreach thing — warm introductions only

Despite taking more than 200 meetings in her efforts to crack Silicon Valley, Watson never took a cold meeting.

“Cold outreach is a tactic that I see a lot of founders using,” she says, “whereas I would argue that the more effective introduction comes from someone who knows someone.”

Leveraging the connections she built was critical in connecting Watson to her eventual funders. “They’re all referring you to the next three people to talk to,” Watson says. “It becomes like tree branches and then a network that’s growing in a multiplicative fashion.”

One of Squad’s earliest investors was Steven Aldrich, who at the time was working as chief product officer at GoDaddy . Both Aldrich and Watson grew up in North Carolina, and Steven’s father shared hometown roots with her, which helped her make the initial connection.

“It was about consistently making connections like that,” she says. “Steven introduced me to three people, and then those three other people introduced me to two people. And that’s essentially how I got the ball rolling.”

Not all meetings need to be about meeting for coffees or lunches, either — Watson took plenty of calls while expanding her network, as well. But the important step was making those connections, which was “a really hard hustle and grind, head down,” for the first two years.

Be really specific when asking for advice

When meeting people in Silicon Valley or expanding her network of prospective funders, Watson didn’t tease future funding rounds or send off vague meeting requests.

In trying to build out her network, she first researched a couple of key things: who did she need to know in order to build a really strong product, and who did she need to know in order to have solid distribution or growth marketing? Once she identified those folks, she would reach out to them individually and ask them for specific advice in their area of expertise.

“People always say, ‘When you want money, ask for advice. If you want advice, ask for money,’” Watson says. “Being super-explicit in the ask and explaining how you’ll spend their time and their brain space is super important.” No one has time for a generic request like, “Hey, can I pick your brain?”

When you’ve connected with someone, you should always ask them for recommendations for experts in specific areas — like growth marketing, product, etc. If they volunteer a few names, ask if you can send an email that they could forward on to introduce you to those individuals.

Following the introductions, it’s important to remember that it’s not just a “one and done,” as she says. Once you’ve met with someone through an introduction, follow up: let them know how the meetings went and thank them again.

“It’s like really, really intense relationship management, and it’s something that people with the highest EQ do best,” says Watson. “I would identify my needs, make specific asks … and then I would make sure to explicitly ask if they did not offer for three other intros for people that could be helpful, that would be excited about what we’re doing.”

Secret weapon: your fundraising quarterback

When she realized it was time to start raising money for Squad, her first move was to identify her “quarterback for fundraising” — in this case, Charles Hudson from Precursor Ventures. It’s helpful, according to Watson, to not have “too many cooks in the kitchen,” or else you’ll end up with far too many opinions that don’t align.

Hudson had already invested a small amount of money in Squad at the time, but he quickly became the person Watson went to for feedback on her pitches. He counseled her on other aspects of running a process.

“One thing Charles tells me is that, with fundraising, you’re likely only going to be successful if that’s your core focus at that time,” Watson says. “It’s not something you can do passively.”

So Hudson and Watson sat down and came up with a list of 35 target venture capitalists. He introduced her to five who she didn’t expect to be a good fit. They first went with the ones they didn’t expect would be a perfect match so she could gather feedback and see if Squad was actually ready to raise capital.

Of those first five meetings, one or two “were complete dings” and turned Squad down outright — but Watson made it to partner meetings in the three other meetings, a sign that VCs were seriously considering Squad.

Based on that feedback, Hudson introduced Watson to 10 more VCs — and shortly after, she met Michael Dearing at Harrison Metal, who led Squad’s seed round.

Choose your seed funders carefully

After Dearing offered up a term sheet of $3 million, Watson quickly had offers from other VCs.

“It’s funny because it took me deliberately being in the market for fundraising for like two and a half months to get that ‘yes’ from Michael. Before that, I had no cash really committed,” she says. “And then after just a few days of letting people know I had a term sheet for $3 million, I had like $6 million on a table. VCs are such followers.”

With that many offers on the table following Dearing’s lead, Watson was in the enviable position of needing to pick who she’d let into the seed round. So how did she choose?

“The first thing is value add,” Watson says. She asked herself: “did I feel like I had the right assortment of value? I maybe want someone in there who’s really strong on product; I may want someone who’s really strong at growth, strong at marketing.”

Her second criteria for making the decision was a less resume-focused. Simply put, she went with her gut.

“One thing that founders really, really underestimate is — is this person a good human being? I went with the people that I had felt most comfortable with, the people who I felt I could trust based on my interactions with them, and who were just supportive along the way.”