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How to Raise Your First Round of Financing

Asheesh Advani offers three tips for raising cash with a second round in mind.

This story appears in the March 2009 issue of Entrepreneur. Subscribe »

I received an education about during the last recession. I was raising money for my startup by stringing together a series of small investments from , friends and relatives. It was a tough slog, but I eventually assembled a group of investors and a board of directors.

Not long after, an investor offered to make a sizable . But the he offered was lower than that paid by previous investors. I only had three months of cash in the bank and was desperate to accept, but the board turned down the offer. Despite my protests, I was back to the drawing board with 90 days to find an investor willing to pay a higher price. I eventually did find one, but only after two more years of stringing together small investments at incrementally higher share prices from angels, friends and relatives.

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