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Don’t overcomplicate fundraising
One of the biggest problems that I come across when it comes to fundraising is founders overcomplicating the process. Many founders who have never run a fundraising process either have zero processes to their fundraising (and often fail quickly), or they massively overcomplicate the process by worrying about every small detail.
Let’s talk about some of the bigger problems that come from overcomplicating and what some examples of overcomplication are in practice…
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Overdiluting investor pool - When you first start fundraising cast a broad net. Obviously, if you are a US-based SaaS company, don’t reach out to a Germany-focused hardware investor, but you don’t also need to waste your time looking through each VCs website, Twitter posts, etc, to figure out if you are a perfect fit. Find 10-50 VCs that are “perfect” and spend some more time creating customized messaging/pitches/outreach to them but also just get your deck out there to any VC that broadly fits what you are doing. Even if they aren’t a match many can provide you with introductions to other investors who are!
Cementing a valuation - You shouldn’t start fundraising without having a valuation to share with investors but you shouldn’t be 100% stuck on your valuation until you have a signed term sheet. Too many founders commit themselves to a goal/number and don’t leave room for negotiation, this often leads to them giving up control (instead of money) or losing deals.
Overscheduling - Deadlines are important in fundraising, but some founders overdo it. I’ve seen founders who only reply to fundraising emails one day a week and focus on the company the other six days. This is an absurd way to run your fundraise. I’ve seen others who try to send out all their outreach emails in one day and then schedule all meetings in the same week. It’s much more efficient to have your outreach go out over 2-4 weeks and then take meetings over 2-4 weeks. It gives you time to breath and allows you to improve and iterate over that time as you get feedback from investors.
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