The Strategic Fundraising Tactics the Co-founder of Birchbox Used to Raise $86 Million 

Before a founder begins her fundraising process, one of the most important questions she must consider is: How long will this money last? For most entrepreneurs, 18 months is the grace period upon which they can focus solely on building their business. Once upon a time, Birchbox C.E.O. and co-founder Katia Beauchamp felt similarly. Now, a decade in, she has a different perspective and encourages entrepreneurs to reframe the psychology of fundraising. 

“Fundraising is not a roadblock to working on your company’s strategy. It is a fundamental part of your strategy,” she says. “The most important thing you can do is recognize that fundraising is going to be a core part of how you realize your vision. Shift your mindset, because the way you choose to finance your business requires as much strategic thinking as building the business itself.” 

In her Project Entrepreneur class, Beauchamp draws on her experience raising more than $86 million to create a roadmap to help founders discern the right capital, build relationships with investors, and navigate each phase of their journeys, from their first meeting through securing the best terms. Below, she shares  the tactics she wishes she’d known when raising her first round. 


Part I: Funding Your Business Strategically 

*View in Beauchamp’s class video from 5:31–13:14

Education on the variety of capital sources is foundational when creating a strategic-financing plan. Beauchamp details four sources—venture capital, angel investors, venture debt, and traditional debt—and encourages founders to learn about the unique role each may play in a founder’s approach. 

“It’s 100 percent reasonable that you might be looking at investors in every bucket. They aren’t mutually exclusive,” she says. “If you are eligible for all the buckets, I’d encourage you to pursue them for one reason: You will get smarter about how these different buckets work. Whether you choose one or two for your first round, it’s valuable to educate yourself and start building relationships.” 

Identify the Right Capital for Your Goals
The preliminary step to distinguishing the right capital is gaining clarity on your long-term vision. According to Beauchamp, the first question to ask is,  “What size business do you want to build?”  answer will be intertwined with other indicative factors, such as your appetite for risk, total market opportunity, and whether your business model requires capital. “Appetite for risk is aligned with size of business because there’s more risk involved in taking a bigger swing,” Beauchamp says. “Total market opportunity ties back to your assumptions on how big your business can be and the percent of penetration you can get in five to 10 years.” 

With these insights in mind, consider how the following types of investors may support your strategy: 

  • Venture capital is a subset of private equity where investors back companies with the potential to become billion-dollar, industry-shaping businesses. “VCs are focused on high-risk, high-reward transactions. They’re looking for a big win; just like when you gamble, they are putting bets on different numbers to see which will pay out. They’re comfortable looking at businesses that are still ideas and more likely to fund ones that may be focused on a network effect ahead of revenue because they understand the value of that.”  
  • Angel investors invest their personal capital in a company, with a general range of between $25,000 and $75,000. “They work best and quickest when you have very warm leads. There are a lot of individual investors, and it can be hard to call together this group if you don’t have them.” Beauchamp and her co-founder Hayley Barna initially sought angel investors but needed to change course, despite having warm leads. “It was really hard for anybody to be the first one in as an angel,” she reflects. “Everyone kept saying ‘Yes’ to another meeting, and at some point, it became a lot of time. For us, it was challenging to stick with this path versus consider the V.C. route; they had more money and were placing many bets, so it wasn’t such a high-consideration moment.”
  • Traditional debt is money you borrow to fund your business that you pay back over time, such as loans and credit cards. Your company may be eligible for debt financing if you have inventory or someone to offer you a personal guarantee. It requires operating history, even if brief, to ensure repayment. “Traditional debt can expand your working capital meaningfully and allow you to grow your business whilst retaining full ownership,” Beauchamp adds.
  • Venture debt is a hybrid between equity and traditional debt that can help founders preserve ownership. It often involves large sums, such as $10 million and over, that and is  raised alongside a traditional equity investment. Founders offer a portion of equity for it and pay interest over time (the interest rate is typically high as the debt is equity-backed versus asset-backed). Venture debt is particularly valuable for businesses that require significant capital. Rather than raising $20 million of equity, you might consider raising $10 million of equity and $10 million of debt to secure the funds you need with half the dilution, Beauchamp explains. “V.C.s love it, too, because it’s more capital and dry powder for your business that they don’t have to give.”

Address Your Capital Needs Holistically
Funding your business often seems like a linear path: Many start with friends and family, raise from a small group of angels, and then pursue subsequent V.C. rounds. Beauchamp advises (and is an example) that’s not always the case. A decade later, she says approaching capital sources more holistically, particularly debt financing, is a key learning. “The strategy of how you finance your business—how much of it you want to give away for capital versus leveraging debt to avoid giving up so much—is really important.” Consider her earned insight to contextualize your own funding needs: Finance growth from equity or company operations. Utilize debt to finance inventory or assets you can borrow against. 


Part II: Sourcing Your List of Targets 

*View in Beauchamp’s class video from 13:15–17:45

The next step to launching your investor search is to create a list of target partners. Beauchamp suggests identifying between 30 and 50 partners, and organizing them by categories, such as type of investor and industry focus. Industry is particularly important as related to likelihood of investment, such as whether they invest in consumer or B2B businesses. Early research is critical to managing your time throughout the process. 

“Be in the right room versus every room.” 

Fundraising is a numbers game and Beauchamp emphasizes creating a large list to maximize the possibility of investment. “You need to try as many different roads as possible. I spoke to 100 people before anyone even kind of said ‘yes.’ It doesn’t mean anything about you. It’s just the reality.” 

Here are a few tips to jumpstarting your list:

  • Ask founders for advice. Seek out  founders who have  similar (but not competitive) business models about their fundraising experience. Which investors did they meet? “They likely spoke to 40 to 50 people who they similarly tracked in an Excel sheet,” Beauchamp says. “If they can send that to you, that’s the dream.” It’s also wise to ask an advisor to share investor lists and recommendations. “You can see the whole consortium and how everyone plays together, which can be an effective way to assemble a large list.” 
  • Keep your eye on the press. Business publications help you regularly take the  pulse of your industry, the key investors in your space, and the type of deals they do. A single article can highlight between three to 10  firms, including those that invest together, which often generates competition around who will lead the deal.
  • Tune into V.C. Twitter. Project Entrepreneur cohort founder Jennifer Brisman, founder of VOW, suggests following investors on Twitter. “They commonly share lists of firms that are actively investing, as well as their recent deals, blog posts, and perspective. Follow the individuals they do, as well as their own followers, to generate even more valuable inputs.
  • Subscribe to an investor’s content. Most investors produce content like blogs and podcasts that highlight their viewpoint and can equip you with questions for your early conversations. 


Part III: Establishing Your Credibility With Investors 

*View in Beauchamp’s class video from 17:48–31:48

Fundraising is often referred to as a sales process. And what is the most foundational part of selling? Creating a willing audience, Beauchamp says. “The first step of being good at selling is figuring out how to get someone to hear you. How can you get someone to listen and take your vision seriously? Being heard is as much about your words as someone looking around and saying, ‘You know, I can see how that could come to fruition.’” 

An entrepreneur’s journey to establishing her credibility must be intentional and, Beauchamp advises, include two to three months of planning for a capital raise. The fundamentals of building relationships with investors, she adds begins with your first email. “Plan to build these relationships and pitches over months, not hours.” 

Craft Personalized Introductions
Your first email to an investor seeds your relationship but it also must be succinct enough to capture and keep their attention. Utilize these guiding questions from Beauchamp to craft both warm introductions and cold emails. 

For warm introductions, ask: How can I equip this person with the information to make the most effective introduction? She advises thinking through the whole email. “The value of a warm introduction is someone establishing your credibility for you. Help them say the exact thing you need them to say.” Provide them with these three key components: 

  • Simple statements about how they know you to help establish your credibility 
  • A brief paragraph with your elevator pitch to include in the email 
  • A one-pager offering a deeper look at your business (this is optional but Beauchamp says has proved successful for her in the past ) 

For cold emails, ask: How can I stop a busy person and respectfully engage them in an idea? Focus on these three elements: 

  • A short but compelling subject line. Beauchamp’s was: “Reimagining the beauty industry online” 
  • A personal note sharing the specific reason you are interested in speaking with them 
  • A very simple request, such as 10 minutes of advice  

The most important part? Keep it brief, down to the number of scrolls on an iPhone. 

Maximize Your Response With These Two Principles
The primary goal of your early outreach is to get your idea in front of an investor and schedule a brief conversation. Keep Beauchamp’s tips in mind to increase your chance of piquing their interest. 

  • Illustrate the opportunity. “Focus your insight on the market opportunity because that’s what’s going to make someone decide whether they want to hear more.”
  • Ask for advice, not money. “Asking someone for advice is so much more powerful than asking for money.The thing that is really critical here is: how can you help somebody want to help you? How can you help them feel like you care about their individual perspective? Then, very importantly, how can you make an ask that they can’t say ‘no’ to?” 

Plan your outreach
Your pitch will improve with practice and it’s critical to structure your outreach accordingly. Begin with firms you are less interested in before reaching out to your top choices. “Don’t send notes to all 50 people at the same time.Start with a few to see if your positioning worked and if you got a high response rate. If not, [then] try different angles.” 

Beauchamp and Barna reframed their messaging until they landed on a one-line email description that helped investors understand what Birchbox could be: “It’s fruit of the month meets Sephora meets Allure magazine.” 


Part IV: Leading the Fundraising Process 

*View in Beauchamp’s class video from 31:49–40:48

From your first conversation through each touchpoint of your raise, credibility is the throughline of Beauchamp’s philosophy. She believes that, as a founder, it’s vital to lead the process to demonstrate your operating acumen. 

“Investors are looking at how you’re running the show—their first foray into seeing how you operate is how you’re managing them,” she says. “The way you manage your fundraising process is a critical part of establishing yourself as an operator in business. ” 

Build the Relationship First
The goal of your first meeting should be building a rapport, not pitching your business. You can expand on the insight you shared with your solution, but still, keep it brief. After all, this is likely your first conversation. 

“Entrepreneurs are often given the advice to give their elevator pitch, which is basically saying the first time you meet someone, you’re forcing them to decide whether they want to marry you. It’s a very unrealistic way of making this happen,” Beauchamp says. “We understand that we have to build relationships in other areas of our lives. Building relationships doesn’t usually start with saying, ‘Let’s get this thing done,’ right? It starts with a slower build where you’re getting to know each other.”

Your most imperative job at this point is to find authentic ways to connect with an investor. “Do your homework ahead of the meeting and show that you’re actually interested in this person, how they’ve built their career, and the investments they’ve made,” she adds. “Asking what made them compelling gives you data about them individually and how they think about investments and founders.” 

Genuine curiosity isn’t solely to learn about the investor but to demonstrate that you’re assessing whether you envision having a long-term partnership. “It is so important they can see you’re not just looking for anyone. You’re really considering who the right partner is for your business.” 

Create Your Gameplan
Founders pave their journey with investors by creating a plan with milestones they will hit during the fundraising process. Beauchamp advises detailing them in advance so you can share a succinct approach with investors. 

“For example, if you’re a pre-market company you may say, ‘Here’s what I’m doing in month one: I’ll be at this stage of product development and design, investigating domestic and overseas manufacturing, and understanding the different scale of opportunities. Four weeks after that, here’s where I’ll be …’ Then, you’ll meet with them the following month to share your progress.” 

Be realistic about your milestones. The purpose of this plan is to demonstrate traction and that you’re ready to scale the business. “The thing I cannot stress enough here is that you are in full control of this. Do not take anyone else’s playbook,” Beauchamp says. “Don’t stack the deck against yourself with unrealistic numbers, milestones, or timelines. You need to be able to deliver.” 

“Design a game you can win.” 

Dictate Your Timeline
As you share your plan, you’ll outline when you’d like to meet with investors to update them on performance, be that weekly, bi-monthly, or monthly. “It’s an indication of how you’re going to operate your business and shows that you know how to set, check in on, and communicate milestones,” Beauchamp says. “You’re owning it the full way.” There may be circumstances when you haven’t hit your goals. In this case, let investors know early and when you plan to have the information. 

Report Your Results
Performance updates are a window into your leadership, as they reflect how founders navigate the inevitable ups and downs. Beauchamp shares two critical insights to help guide these conversations.  

  1. Face the results head on, even when they are negative. “Show that you understand them and how they’re pushing you to think. Your expectation as an entrepreneur is that you’re going to hit bumps in the road. So you’re sharing it and showing that you know how to keep going and put one foot in front of the other.” 
  2. Update investors on performance but don’t invite them into the throes of operating. “You’re trying to show them the output after having thought through everything. You’re not taking them on the journey of the stress and strife that happens in between.”

Repeat Your Vision
Repetition is one of the most important parts of fundraising, both for your own practice and for the investor who is sponsoring your process. A sure sign that meetings are going well is when an investor starts using your language to describe your vision. “It feels like they’re on your team,” Beauchamp says. “This is really important because when it comes to pitching the partnership having someone do it alongside you changes the potential outcome in a very material way.”

How can you make that happen? “Repeating your insight doesn’t necessarily mean repeating the exact same words. You want to try it from different angles to see which they adopt. What are the words they carry forward? Let that inform your engagement.”

Lastly, an Essential Tip for Successful Meetings
Strive to have balanced conversations. “Studies show that whoever did the majority of talking in a meeting believes the meeting went better,” Beauchamp says. Don’t fall into this trap during your meetings with investors. hen you’re building your relationship and asking for advice,  aim for a 70/30 dynamic with the emphasis on the investor. Then, as you deliver on your milestones and formal pitch, that ratio might adjust to 60/40, where you will reflect the higher percentage. 


Part V: Managing Your Pipeline

*View in Beauchamp’s class video from 40:49–46:37

The goal of the meetings suggested above is to be invited back to pitch the partnership. With that in mind, Beauchamp offers these essential tips to steer the second stage of the process. 

Generate Scarcity
A sense of competition is an effective way to propel your funding process, both in terms of setting up your partner meetings and leading them to close. “The way to do it tactically is simple,” Beauchamp says. “You just tell investors that someone is moving faster than them. You might say, ‘I have a partner meeting set up with this other firm. When can I get it set up with you?’” 

Own the Process
The way to run an efficient capital raise is to ensure you are meeting with investors who have a real potential to invest in your company. “You need to be the one who is driving this process and asking: Is this something you’re interested in investing in? If yes, then, what is it going to take for you to decide that yes? Ask direct questions so you can manage your time effectively.

Despite your best efforts, you may still find yourself in the grey area or stuck in a process that’s stalled. Beauchamp’s advice? “Momentum begets momentum. The only thing I’ve seen work is that you keep going. Keep showing that you’re delivering on your milestones.” 

Equally important: to be cognizant that a lack of offers may be a broader sign for your company. “It’s important that you’re reaching an outcome,” she adds. “This a process that ends when you’re either working too close or realize you’re not finding outside capital, which helps you reorient or consider a different way of building your business.” 

Time Your Offers
The results of your pipeline management efforts materialize as you near the end of your fundraise. Ideally, you want to be entertaining several offers, which you can plan for by managing investors on the same timeline so you receive them simultaneously. “It’s really important that you try to avoid having one offer at the end of the day,” Beauchamp says. “There’s power in numbers—[and] you want to have multiple to understand if you have negotiating power.” 

Secure the Best Terms
When it comes to closing your investment, Beauchamp emphasizes a single principle: Get the best deal. V.C.s in particular have many value-add services for entrepreneurs, which may heighten how they sell their firm and, more importantly, discount the terms they offer. This is a red flag when you’re evaluating investors. “Don’t be persuaded by the marketing piece that can come at the end,” Beauchamp says. “This is business. You need to get great terms whenever you can.”

“If you are in a position where you have a competitive deal, the best thing you can do for yourself in a company is take the best terms. The best terms are going to give you the best opportunity to have more control in the process.” 

Ownership and control are the focal points to assess in your term sheets. They’re generally standard at the seed stage, but it’s crucial to have them evaluated by your lawyer, as well. It’s worth noting that entrepreneurs commonly give up between 1530% for their first round (with an overall average of 2025%). Some also raise pre-seed rounds where they give up 10%, and allocate the additional 10 15% for their seed round, reaching the 25% mark in two raises instead of one. 

As you embark on your fundraising journey, Beauchamp’s roadmap can help you navigate the process. Her parting wisdom: “The thing I want to emphasize is this is not rocket science. You can do this. It just takes practice. Be kind to yourself about that. Shift your mindset and give this the same time and energy you give to your business ideas. Use that discipline to make this a strategy in the same way you’ve done for your company. Approaching financing as a mini business plan within your business is how you get good at fundraising.” 


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