I'm sure you've heard this over and over again, but it still holds true that most successful fundraising stories are based on three pillars – the right network, the right team, and the right idea. 

In our case, it was no different (sorry to disappoint). 

Nevertheless, there are plenty of startups that tick all the boxes yet still struggle to attract financing. Were we just lucky? Not really. Here's how and why we succeeded in raising VC funding and what you can learn.

Fundraising means playing the long game

One of the most important assets in the fundraising process is your network. Experience – and data – show that investors are more open to pitches from founders who've been referred to them by someone they know and trust.

There are many ways to proactively build your network. Some founders use social media, such as Twitter or LinkedIn. Others connect via email. I, on the other hand, have always preferred meeting people face-to-face – in meetups, conferences, and startup networking events.

At the end of the day, it doesn't matter how you build your network as long as you do it ahead of time. That is, not when you're already desperately looking for money but when you start considering the possibility of fundraising. Or, like in my case, when you only have an inkling that you might want to be a founder someday.

I met my lead investor at the startup conference TechChill in Riga when I found myself at a networking event with several investors (the perks of small-scale events, eh?). At that time, I was working for a different startup in revenue operations and the idea for Trace.Space wasn't even born yet. So, we spoke about sales intricacies and challenges, and I offered to run a workshop for his portfolio companies. He liked the idea. 

That workshop never materialised. But when I started to look for investments, this conversation played an important role – he remembered me as a confident person who knows his stuff. After an additional recommendation from another investor who I had known for a long time, the ball started rolling.

Investors don't invest in ideas

When I met my investor, I didn't have an idea to sell. So, I sold myself. But even if I had had an idea, I would still have done the same. Because investors don't invest in ideas – ideas are worthless without a team that can execute them. 

“Taking a startup from idea to exit is a very difficult and usually long process,” writes Forbes contributor Abdo Riani. “It means that as a startup investor, you don’t need someone to come with the right idea, rather you need someone who can manage this process and reshape their idea as they receive feedback from the market.”

As a result, the investors' decision mainly depends on how capable the founding team is, for example, whether they have the necessary skills and “chemistry” or how effectively these people work together. 

Besides, it's crucial that there is a team – ideally, two or three co-founders with different, mutually complementary skills. Because to build and develop a business, a variety of skills are required, and rarely does one person have them all. Investors understand this as well, thus, aside from a few exceptional scenarios, solo founders have a hard time when it comes to fundraising.

Our team consists of three co-founders: the technical guy with in-depth industry knowledge, the sales guy, and the bizops guy (that's me). This set of skills allows us not only to understand our market and build a solution to its challenges but will also help ensure the first traction. Additionally, our CEO and I also had a proven track record – we had successful experience building scalable go-to-market solutions. These were major selling points.

Solve unsexy problems that others neglect

Your network is crucial. Your team – even more. But obviously, you need an idea and a good market, too. Besides, that must be the kind of idea that makes investors want to jump in before there's anything to show.

The idea for Trace.Space was born at the end of 2022. In February 2023, we closed our $1.5M funding round. Our investors didn't want to wait for us to build a minimum viable product (MVP) because they were convinced that our idea was worth supporting – and here's why.

Trace.Space builds software for engineers designing and building complex products, from cars to industrial machinery. There are tools for managing such engineering projects, but the last significant product was built in the 2000s. Since then, much has changed, and new technologies have emerged, including AI.

Now, introducing a new solution to the market is not so simple, as there are tons of requirements such tools need to meet. Besides, what engineers work on with these tools is invisible to the public and is often quite boring.

Complex and boring – you'd rarely see an entrepreneur's eyes light up hearing such a word combo. Ours did. And so did our investors, who said: “If the problem were simple, it would have already been solved. If it weren't boring, there would be many willing to solve it.”

Lesson learned?

The secret to raising $1.5M with an idea is not such a secret after all – the success lies in building a strong network before needing funding, selling yourself as a capable founder, and having a strong, diverse founding team. On top of that – signing up to tackle unsexy problems that others neglect.