Lamine Zarrad on Navigating Series A Fundraising

Introduction

We recently hosted Lamine Zarrad on The Fundraising Debrief coming off Stellarfi’s $15 million Series A. Lamine is an immigrant and ex-Marine who previously founded Joust (acquired by ZenBusiness) and founded Stellarfi after his own experience with bad credit as a young adult. 

The episode is packed with value for aspiring entrepreneurs, whether it’s your first venture or your tenth. We decided to provide a summary here with links to especially insightful video clips to unlock a new way for our community to digest insights from guests on our podcasts. We’ll be doing the same for all of our episodes moving forward!‍

The Need for Stellarfi

With 155 to 175 million Americans having credit scores below 680, the need for Stellarfi is self-evident. But despite their success and this latest round of funding, the journey to product-market fit has not been without its hurdles, of which fundraising is certainly one.

Key Elements Investors Look For

Raising capital can be a daunting task for founders. To increase your chances of success, it's crucial to demonstrate the key elements that investors look for in a startup: an experienced team, product-market fit, revenue, strong branding, and a promising growth rate.

Prioritizing Growth and Brand Development

When raising a round and deciding what to focus on with investors, Lamine suggests prioritizing growth and brand development over efficiency.

Securing reinvestment from existing investors is a positive signal for other investors considering participating. For more on the role signal plays in investment decisions, check out this recent blog post on our strategic partner, Rubik Hub's, website.

Importance of Transparency

Transparency is key in maintaining these relationships. The best way to achieve that is through regular updates on the company's progress, which should be focused on the most constructive and valuable information for the organization, rather than a detailed rundown of the past 30 days. It’s helpful to provide these updates regularly, rather than just in board presentations. 

‍Vetting Potential Investors

Vetting potential investors through references from other investors or founders can provide insight into their behavior. Remember, fundraising is not a marriage; it's more akin to a wartime alliance. When raising money, ensure you have enough evidence to prove your idea is working and will continue to work.

Treating Fundraising Like a Sales Process

Lamine suggests treating the fundraising process like a sales process, moving investors down the funnel and tracking conversion rates through an investor CRM, fundraising CRM, or other capital raising software (more on how Flowlie can help with this here). Create a list of venture capital firms that you want to target, but consider starting with low-pressure conversations. A good way to do this is to look through VC databases or VC email lists and reach out to a few dozen venture capitalists who you wouldn’t mind getting a “no” from.

The Value of Warm Introductions

Warm introductions are key, but they should make logical sense and de-risk the situation for the investor. Not all warm intros are created equal. Seek investors who are excited, fired up, and carry weight in the industry. ‍

Conclusion

We hope you enjoyed this summary, and again, highly recommend checking out the episode for more from an expert founder who has walked the road less traveled many times.