We recently had the pleasure of interviewing Daniel Eberhard, CEO of Koho—a fee-free mobile banking app that provides an alternative to traditional banking. An early-stage company in public beta, the company has already reached huge investment milestones that have garnered the attention of major players in the investment space and in the media.

We asked Daniel to share some of his key insights and learnings that took him and the Koho team to their recent one million dollar investment milestone. In this interview, Daniel talks about both the qualitative and quantitative metrics to be aware of when raising funds for a startup, and the importance of tailoring your approach to your audience—whether that be your customers or your investors.

FrontFundr: Being a startup that needs to be very cognizant of every dollar spent, what would you say are the must-haves when it comes to investing in customer acquisition?

Daniel: You have to start with deliberate action. So the must-have would be a really clear segmentation plan and hypotheses around why that’s your segment. A really clear understanding of whom you’re going after and why you think your value proposition will resonate with them is the first piece to have in place.

The second key is a methodology to test. Even though we haven’t yet launched, we’ve looked at seven or eight different channels and we’ve been quantitative in our approach to those channels because at the end of the day, what you have as a startup, is the ability to be agile and to try a lot of different tactics at a rapid pace.

FrontFundr: In a recent LinkedIn article you published, you said: “Every bit of risk left on the table is a reason an investor can say no or drive down your valuation (as they should).” What tips do you have for other entrepreneurs—how can they mitigate the risk of driving down their valuation?

Daniel: Something that often surprises me is how little people actually know about their investors in advance of investing. Getting to know your investors can be as simple as asking questions like: “tell me about your investment portfolio” and “what about those investments excites you?”

Investors invest for a lot of different reasons. Some are emotional, some are very quantitative in their approach, and some are really qualitative. Asking them these very direct questions is always the first thing I do in the meeting, and it helps me frame everything I say after that.

FrontFundr: Have you turned down investor capital, and how did you know it was the right decision? When should entrepreneurs walk away?

Daniel: We turned down money on this most recent round, actually. It’s important that you have clear alignment through your investors, through your board, through your team. Some investors want a quick exit, and they’re not going to be a positive influence on the company if that’s not what you want too. Being really clear about what you want will not only help you in terms of your alignment, but it shows that you’ve thought through your vision of what your company will look like 12, 24 and 36 months from now.

FrontFundr: What percentage of your time is spent building relationships versus putting your head down and working on the day-to-day business?

Daniel: It depends what stage we’re at in the investment life cycle. When we were thinking about getting investment, all the metrics we were collecting, all the head down work we were doing, was done with respect to getting the metrics that were required to raise money. So they’re really two sides to the same coin in the sense that the work you’re doing at that stage—if your critical path flows through investment—should help you in your goal of raising funds.

FrontFundr: Accessing capital from accredited investors is the number one challenge for entrepreneurs. Do you have any recommendations for accessing these hard-to-reach people?

Daniel: There’s nothing too groundbreaking here, but you need to get in with a warm introduction, ideally from somebody that that investor respects. You also need a good reason for that person to make the connection for you—similar investments in their portfolio, a personal connection, or whatever it happens to be. There needs to be a deliberate process with respect to finding the people that are relevant to your investment.

FrontFundr: What are some key tactics you have in place to help you achieve your investment goals?

Daniel: I actually keep an investor watch list going for Series A round. I email them once a month and ask what KPIs they’re looking to see, and it’s really interesting to see how broad the results are. Some people have engagement metrics, which is a relationship between your daily average users versus your monthly average users. Other people have profitability; others have a growth and acquisition approach. It depends on the investor and on the vertical.

FrontFundr: Many entrepreneurs start their new ventures using their own savings, and friends and family. How did you start with Koho? 

Daniel: I used my savings and I also partnered with Stanley Park Ventures, which allowed me to disperse some of the upfront costs. With my previous venture, I raised through friends and family, and was recently interviewed for the Financial Post and shared my thoughts on the benefits.  Friends and family can be a great way to start, especially if you don’t yet have a proven concept.

FrontFundr: What's one piece of advice you would give to an entrepreneur looking to raise capital for the first time? 

Daniel: Start the conversations with investors as early as possible and don't pitch until you're ready. The goal of early investor meetings is just to learn, not raise money, so structure the conversation accordingly. Get familiar with them, build a relationship and keep driving for honest criticism of your business. Find out what scares them most about your business and then set out to solve that problem. 

FrontFundr: In three words or less, describe the core approach that has driven your success thus far? 

Daniel: Ignore the status quo (I need four). 

For early-stage companies whose critical path flows through investment—and most do—it’s important to build early relationships within the investor community. Whether a business is listed in Prospect Lounge for potential future investment, or is listed as a live deal in Pitch Place, FrontFundr creates these critical introductions for businesses. We help early-stage companies build traction with investors and the public and establish key relationships, all before you even begin your raise. To get started with a listing in Prospect Lounge, contact Ross Mackay.