This week, co-founder of Fundrise, Ben Miller, wrote a piece for Forbes about how Chinese social media site Renren‘s COO, James Liu, offered up $27 million through the social media platform for professionals, LinkedIn.
Miller shared in the article:
“As any startup founder will tell you, fundraising is a full-time job. It’s grueling, taxing, all-encompassing – the list goes on. Many would compare finding the right investor to finding the proverbial needle in a haystack.
“In 2013, we set down the path to find the right investor for Fundrise’s Series A, visiting all the well-known names in Silicon Valley and around the US. We pounded the pavement, pitching nearly every investor we met, and discussing our business model and future goals so many times we lost count. We called in favors and worked our own professional networks to help connect us to capital at all of the right US-based VCs and angels.
“I thought with the abundance of U.S.-based investors, and through my own personal network, I would find our ideal partner in the states, but I soon realized that I needed to start thinking more globally.”
Noting why he believes fundraising should be a global effort, Ben explained:
“In today’s world, everything is global – whether it’s money, information, or our own networks. The territorial boundaries of years ago have been completely removed as online networks enable us to communicate, negotiate, and make deals around the world, sometimes in a matter of seconds. So if business, information, and commerce are all global, why shouldn’t fundraising be?
“I’d like to say that I thought this way from the very beginning but the reality is that we were initially so focused on finding our core base of investors and real estate developers to build out our U.S. platform that it never occurred to me to look beyond our borders. After all, we were creating a U.S. crowdfunding tool for real estate investments. But the reality was (and is) that our mission and our future could and should have a global reach.”
Also sharing the message that changed everything (from RenRen), Miller stated:
“On October 17, 2013, I got the first glimpse of how beneficial a global investment network might prove to be for us when we received a LinkedIn message from the COO of a company I’d never heard of at the time – Renren.
We are the biggest shareholder in Sofi. Fundrise interests us much and we’d like to figure out ways to work together.
We are in DC in early Dec; can we meet in person?
“I’m what you’d call an average LinkedIn user. As a company, we regularly used the platform to find and source job candidates, vet business partners and search for reporters in our space, but using LinkedIn as a connector to capital? It had never crossed my mind.
“During our initial meeting with Renren, I wasn’t trying to sell them, I was simply approaching this as an informational conversation. I tried to treat every potential investor meeting this way as it helps maintain authenticity in the pitch, ensuring I’d remain candid and honest about the investment opportunity – both the good and the bad.
“When talking with the Renren team, I also focused on how our business model fit into a megatrend within the industry. I’d found that investors responded well to businesses that looked at a longer-term megatrend as it showed their interest in remaining in the industry for the long haul. If you instead focus on micro trends you run the risk of being short-sighted and often end up closing up shop the minute the next wave begins to form.
“Our meeting went fine and we both went our separate ways, part of me assuming we may never meet again. A few weeks later, I got an email from the COO offering us a $27 million investment in Fundrise.
“I will admit that we were hesitant to accept the offer at first. While we obviously wanted the capital to grow our business, we also wanted to make sure we knew they were the right fit.
“So when it came to vetting our investor, we turned to the place that started it all, and worked our LinkedIn and other social networks to seek recommendations, references, and other background information on Renren, their current investments, and their leadership team.
“After conducting our own rather extensive background check, we arranged to go to Beijing to meet the entire team in person and discuss their proposed – rather substantial – investment.
“Meeting major investors in person is critical, especially in today’s global economy where it’s all too easy to defer to technology to have a face-to-face meeting. There are certain cues that you pick up when meeting someone in person. Having that direct interaction helps to strengthen your relationship in a way that email and even video chat can’t replace.
“Our meetings with the Renren team went off without a hitch, ending with a closing dinner of pancake turtle (another story in itself) alongside our new lead investor.”
In regards to the lessons he’s learned about investments, Ben added:
“What seemed to be a random LinkedIn message from someone many miles away turned into a real, impactful investment in the future of our company. To sum it all up, the lesson – in case you haven’t been reading so far – is to never let land, sea or other boundaries limit your reach.
“I’m not suggesting that every startup founder can and will raise money through online networks, rather I am saying it’s a valuable option that should not be overlooked.While our conversations started through LinkedIn, they quite quickly moved to emails and phone calls. And, just like any other funding source, the investment took months and months of hard work to secure.
“However, there is real, tangible value in online networks that wasn’t possible in the former offline world. It is, in fact, why we created investor networks for real estate companies using the Fundrise platform. This connectivity doesn’t take the place of a strong business plan, but it is certainly an incredible platform to help increase your reach.”