Fundraising lessons from David Rogier of MasterClass

Conventional wisdom says your company should be up and running and have some traction before you raise. But MasterClass co-founder David Rogier says entrepreneurs should try to raise funds before launching.

Before going live, David raised $6.4 million — $1.9 million in a seed round and $4.5 million in a Series A — for what would become MasterClass. To date, the company has raised six funding rounds and secured almost $240 million.

MasterClass’s first investment actually came from Michael Dearing, the founder of VC firm Harrison Metal and one of David’s business school professors. After graduating from Stanford University Graduate School of Business, David started working for Michael at the firm. About a year in, he quit to start his own company.

When David gave his notice, Michael told him he would invest just under $500,000, even though David didn’t have an idea yet.

“I was honored, I was thrilled and I was terrified, all within the span of 10 seconds,” David says. “It was an amazing gift, but I also felt an immense amount of pressure. I knew this was a once-in-a-lifetime chance, and I didn’t want to mess it up.”

He drew a blank for a year, but finally got inspiration from a story his grandmother told him when he was in second grade. In it, she stressed the importance of education, the one thing no one can ever take away from you. Upon remembering that lesson, David knew he wanted to give as many people as possible the opportunity to learn from the best, and MasterClass was born.

In an episode of How I Raised It, David shares some of his secrets to raising capital.

First money, then metrics

Securing funding before you even launch your company definitely isn’t a common practice. But David is adamant that you should attempt it.

“Your metrics out of the gate are never going to be great,” David says. “You need enough funds to have the time to actually improve them.” At the beginning, instead of relying on data, you should sell investors on your vision.

Of course, this is easier said than done. Many investors don’t want to give you a dime until you’ve proven your concept works. To overcome this barrier, David figured out what he could do to help minimize risk for investors.