Once you get “into the thick of it” you’re going to be quite time-constrained. You’ll need to do everything quickly — iterate on feedback, follow-up on meetings, solicit introductions. You need a system.
In addition, you’re going through a complicated process for the first time with sophisticated counterparties who do this for a living. You need friends.
Use Google Sheets As Your CRM
Fundraising is fundamentally a sales process. Sales processes need tracking tools.
A spreadsheet is the best tool for the job here because there’s minimal overhead in creating it, you can easily add the fields you need, and see all information at a glance. Use Google Sheets for easy openability and sharability with friendlies.
Rows of the spreadsheet are all of the firms you are talking to (or want to talk to). Columns are relevant details — who you’re going to get intros from, the last time you talked, how far you are in the process (first meeting / second meeting / met multiple partners/ full partner meeting / term sheet).
Find Your Friendlies
Right as we were starting to raise, my co-founder and I were practice-pitching my co-founder’s old CEO and he was giving us loads of incredibly actionable feedback. At the end of the meeting, we were thanking him. His response: “I’m glad this helped. Now, go find five of me.”
Founders who have raised venture funding before — “friendlies” — give great advice. They are shockingly willing to help. Silicon Valley has a “pay it forward” culture.
Friendlies can give you advice on your pitch, connect you to investors, give or find you backchannels on specific VCs, and help you rank interested VCs.
If you have weak relationships with potential friendlies, like an old boss you haven’t talked to in a couple years, start by reaching out and asking for pitch feedback, and go from there.
Keep Your Horses Close Together — If Possible
Fundraising is like a horse race. Your goal is to keep all your horses (VC firms) relatively close together so that they cross the finish line at roughly the same time.
That’s because when you get your first credible offer, you have about two weeks until you accept it or it goes away. So you need to get all the term sheets you care about in a two-week window.
Each firm you’re working with will have its own process. That means your job is to slow down the fast ones and speed up the slow ones; time contacts, outreach and intros accordingly.
Keep in mind that some “horses” are naturally faster than others. You could pitch a “solo capitalist” with a fund and they could make a decision after a meeting or two. It can be risky to slow down your most interested parties. And some firms have unreasonably long processes. You may be forced to drop them, or keep them as a backup.
Know Where You Are In Your Network Traversal
If you’re in one of many niche domains mentioned in Part 1, a successful fundraise in these domains typically looks like a network graph traversal.
At the beginning, when you’re starting, you don’t know anyone and the first people who get excited introduce you to three people, none of whom you know.
In the middle, they offer three intros, one of whom you’ve met, one of whom you’ve heard about, and one of whom you didn’t know about.
Towards the end, you get three intro offers and have met all of them.