Running A Fundraising Process

A concept that’s come up often lately in conversation revolves around “running a process” in fundraising. Even though I’m a small number on the cap table for any company I work with, my #1 goal is to help the team evaluate existential risk, which usually comes down to funding risk. Eventually, some get to the point where they’re ready to go for the next investment round. It’s an exciting time, but the change in game dynamics from seed to institution is so drastic, I see lots of founders getting tripped up, wasting precious time, enduring extra mental taxes, and most tragically — losing control.

The CEO position is about control. The most successful founders I’ve seen (with respect to being efficient at fundraising from bigger institutions) run a process. They have a game plan tied to a calendar. It’s like Bill Belichick who coaches the New England Patriots. They have a start date, and an end date. They over-communicate their timelines to prospective investors (in a friendly way). They’ve already socialized things before the process even begins. They send subtle reminders. And, they’re unafraid to cut off a discussion if diligence takes too long or investors are hovering around but not digging in. Their entire body language, email language, and overall communication style oozes “I am in control.”

The cost of not creating and executing a process can be brutal. What should take a few weeks could take months — or worse, end in a bridge situation with existing investors. It’s hard to regain any deal momentum (should one be lucky to have it in the first place). It can sow doubt and worry among current team members, e.g. “Hey, do you think ___ can actually raise the next round?” It can even dampen future discussions if the company has to go back to a firm where the process wasn’t there or fell apart. Investors are implicitly looking to invest big money into who they perceive to be leaders — leaders with a plan. There’s no playbook, so the trick is to create one’s own playbook.

I’m not theorizing here. I’ve seen this happen a bunch now. There’s a pattern. This is likely one thing (not the only thing) that starts to separate the haves from the have-nots. Plan accordingly.