Your Process Playbook Can Make—or Break—Your Fundraising
Hey there founders, storytellers, and leaders.
In this edition of The Storyteller’s Playbook, let’s get real: I see a lot of founders making this one big mistake over and over again. They have a really bad process playbook..or none at all. Read on for the Deep Dive on why a bad one can kill you—and how to make yours good.
This week, the resources include David Sacks’ take on the need for capital efficiency as the market continues down, a Crunchbase piece exploring this summer’s massive wave of layoffs in pandemic tech startups, and highlighting a great founder thread on how they raised $30 million without any "ins" to investors at the start.
I spent most of this week out in Utah at a transformational training. This is one of the best things I've ever done and am still amazed at what I took away from this training. I'll be sharing a great deal of what I uncovered. One major thing that I was reminded of is how storytelling is art and business building is game-like. It's fun.
Each of us is fortunate to be able to chase our dream and play in this world. Many people never have this opportunity and loving the process will take you and me far. On that note...
Dave Chappelle released a new special and it's a masterpiece. He's the greatest storyteller alive.
I’m glad you’re here. I want you to win and win big.
Let's dive in.
DEEP DIVE: A Bad Process Playbook Will Kill Your Fundraising
Y’all (the Texan in me coming out) really loved this video I posted on LinkedIn last week about one of the biggest mistakes founders make in raising venture capital.
So many founders totally miss the target because they have a terrible process playbook.
That's if they have one at all. It's mind-blowing to me how many founders walk into a fundraising round without any strategy, process, or playbook.
You wouldn't get in your car and start driving without directions to your destination. You wouldn't try to build your product without a strategy and process. You wouldn't try to run a marathon without a process.
Once your past the pre-seed stage, your process creates your results. It’s that simple.
Why do I say past the pre-seed stage? Because pre-seed is the wild west. Many raises at that stage are based 100% on relationships, friends, family, and colleagues. It's also a stage I don't do much work with at this point and I want to share what I know works.
This is for fundraising at the seed and beyond stages.
These are three key things to keep top of mind as you create that process:
- Know how to run first meetings efficiently.
- Stack your meetings into a 2-3 week period.
- Understand the power dynamics between investors and founders, as well as the current market.
And when I say “power dynamics,” don’t get me wrong—it’s NOT that there’s some power differential favoring investors. It’s an equal, symbiotic relationship between you and the investors you’re talking to.
One of the most important concepts to remember is what my friend and former VC, Gian Seehra calls founder-investor fit. It's a long term relationship and this is why I hope you remember the next line more than anything else in this newsletter.
Don't sell yourself, BE yourself.
Now let's quickly break down what a good first meeting looks like.
Research the investor and find a way to open the conversation by demonstrating expertise, enthusiasm, and engagement.
Then ask them questions to learn more about how they like to invest, what they look for, and where they are at in their current fund.
Once that's done the flow should be this...
Founder Origin Story into Startup Vision Story into a few questions and answers.
Then if it's gone well get next steps and don't be afraid to ask if what you've shared aligns with what they are looking for.
You want a hell yes or a hell no. Lukewarm just keeps you on the hook and it won't lead anywhere.
With that in mind, timeframes are expanding out and taking longer than they did at the start of the year. This means founders have less ability to drive their timeline forward. However, that doesn’t mean you should just take a back seat and assume that you have no control. That’s a terrible mindset to go into the relationship with. Instead, focus on the benefit of that reciprocal power dynamic and leverage it to your benefit.
This is why stacking your meetings using what another friend and former VC, Jason Yeh calls calendar density.
That stacking creates momentum, hype, and most importantly...FOMO.
Remember that investors need YOU as much as you need them.
They have capital they need to deploy in order to make more money, and you have an idea that needs capital and can make them money. All you have to do is convince them that you’re the right founder to partner with.
Your communication strategy needs to back this up. You need to have that confidence to tell investors, “I’m a desirable target, and you should want to work with me.” That’s where the storytelling comes in. Telling the story with the right tone, structure, and framing makes all the difference.
There's a reason tier 1 VCs reach out to have me train their portfolio companies. They know that the fund through rate of their investments is a key metric to track. If the companies can get future funding, they increase the likelihood of reaching an exit to make the VC money.
If you can nail your story and pitch it well, you’ll have investors knocking at your door regardless of what the market is doing. Seriously...I'm watching it happen with founders I work with every day right now.
The market is tough but it's 100% possible to raise.
RESOURCES for Founders and Storytellers
This recent blog post from David Sacks gives founders guidance on how to think about capital efficiency as the economic crisis deepens. He warns that founders should be prepared for investors to be even more scrutinous about burn and margins during downturns, and those startups whose burn is too high will struggle to fundraise.
Q2 tech layoffs are increasing as key pandemic companies realize their accelerated growth may be unsustainable in a post-Covid market. Even “pandemic winners,” such as Peloton, are among those making major cuts company-wide in an effort to boost financials ahead of Q3.
Here's a great tweet thread from a founder that shows what some grit and resourcefulness can do in the fundraising process. Amy Nelson didn't have any "ins" to investors but she found a way to make things happen and raise $30 million. It's an in depth look at finding warm intros, building relationships, and persistence.
It's been awesome to share my take on fundraising and storytelling with you the past few weeks. Thanks for being here as we get The Storyteller’s Playbook off the ground. to be your go-to for fundraising, storytelling, and founder guidance. Please don't be afraid to let me know what you want to hear about—shoot me a reply anytime.
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