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How My Company Won Over VCs, and Where It Actually Got Us The three most important lessons we learned from a fundraising round.

By Fran Quilty Edited by Jessica Thomas

Opinions expressed by Entrepreneur contributors are their own.

The path for any startup to successfully move up to the next level invariably means securing VC funding. That's a given, but what does it really mean in practice for your business, and what can you gain — aside from cold, hard investment dollars — from talking to VCs as you strive to grow?

For my company, Conjura — an ecommerce data analytics platform based out of Dublin — the process of seeking VC capital not only delivered investment to grow, but also taught us some valuable lessons: lessons about how to handle VCs, but also — and perhaps more importantly — lessons about our own business that have helped us reframe where we are going.

Related: How to Sell Your Story Through Your Pitch Deck

Here's what we learned.

Lesson 1: Understanding flaws

Pitching to VCs very rapidly exposes any shortcomings, flaws or weaknesses both in your pitch and in your business. You'll learn about the VC view of the world and your sector in the process.

VCs have the gift of objectivity, so they can spot flaws in your business or business plan that you might have missed. They also have vast experience of seeing the inner workings of many other businesses and can often draw on this to expose your flaws.

The key lesson is to take this on board and use it to better understand what you do and how to do it better. It can also help you shape your VC pitch for subsequent meetings. So, as any entrepreneur knows, start with your non-preferred VCs to hone your plan and be ready for these questions.

However, the VCs aren't always right. In our case, our business model attracted the ire of one VC firm, which quite rightly compared it to another tech company it had worked with in another sector that failed. The circumstances and market, however, were very different, and we were able to demonstrate this. However, it was helpful to be made to think about this problem, and it certainly honed our approach for subsequent meetings with other VCs.

Related: The Importance of Synergistic Capital for Early-Stage Companies

Lesson 2: Not all VCs are equal

Building on lesson one, the more VCs you deal with in any funding round, the more it becomes apparent that they are not all equal, and that some are going to be more attuned to your needs than others.

For example: Of those that we approached, we found that some were run by very tech-savvy people who understood the world in which we operate — ecommerce data. Others, often more established in the market, were not bleeding-edge tech fans, and their ranges of experience weren't in tune with where we were going.

For instance, one VC offered up a subject matter expert who came from a large corporation and whose vision centered around how businesses of that size operate: It simply didn't fit at all with how our company works today, nor where it was likely to go in future.

Better is when the VC not only has experience with companies of a similar size and vision as yours, but they also share your enthusiasm for your sector or product set.

Related: How to Get Funding: The Dos and Don'ts of Raising Capital From Investors

Lesson 3: Learn from the questions they ask

Perhaps the single most important lesson is what you can learn about your business from the conversations you have with VCs. They can point you in directions that you haven't considered, as they see your business through a very different lens than you and have many other conversations with similar companies to draw on.

In our case, some of the VCs managed to uncover whole new channels to market our products, two of which have since become immensely valuable to us.

We were also asked about the products and services in the wider ecommerce market that we might displace and, propelled to think about this, uncovered not only new sales channels but also whole new propositions for our products. We've rapidly and successfully started to exploit these new options, as well.

Related: How to Know Which Investors to Let Into Your Inner Circle

Other lessons

Although these three lessons are key to getting more out of your search than just capital, there are several other things to remember. First, much like being a fledgling actor, you have to get used to rejection and not be disheartened by it. You will be turned down by more VCs than those that take you on, and they might not always be flattering in their assessment. But this is part and parcel of the process, and all of it should be a learning experience.

Secondly, although you can lap up all the insight they give you based on all the other companies they have spoken to, beware that they will be sharing what they learned about you and your sector with others too. Not necessarily in a bad way, but bear it in mind when considering how candid you want to be.

Thirdly, once you have secured funding from one or more VCs, others who rejected you might decide that you actually are interesting after all and will be back in touch looking to help you with your next round.

This neatly brings us to the final thing to remember: Apply all the lessons you learned to round two, and things will be even more successful.

How did it go for Conjura? We attracted €15 million in funding co-led by Act Venture Capital and MiddleGame Ventures, with participation from Tribal VC. But more, we learned an awful lot about our business and continue to apply the learnings.

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Fran Quilty

CEO and Co-founder of Conjura

Fran Quilty is a former Accenture data analyst, now a serial entrepreneur who has been part of the creation of three complementary businesses serving the ecommerce sector over the past four years.

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