This morning I was recapping with the TechStars founders about their first 2 weeks and preparing them for what to expect in the next 11 weeks and beyond. One question raised is how to deal with raising funding. In addition to some other advice I offered, I made a strange analogy:
A key part of getting financing is managing your reputation: gaining traction and momentum in the technology and venture community is like....becoming the popular kid at school.
In high school, I learned (the hard way) that if Jane tells Cindy that Tommy is "hot," it influences Cindy's view of Tommy and after this occurs a few times....guess what.... Tommy becomes the most popular (i.e. hottest) kid in the class. This high school process of "who is the hottest" is pretty similar to what occurs amongst investors with startup companies.
In addition to developing a great product that customers want to use, having a business plan, and being able to pitch well etc., it is equally important to generate strong buzz about your company among the venture and technology community. Sometimes an off-handed remark at a cocktail party from one angel to another saying "have you seen what XYZ company has been up to? It looks cool (i.e. hot) to me" is all you need to get your company some traction with investors.