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Fundraising Strategy Summary

Before I go into any details, I want to give a sense of the overall structure of the fundraising strategy described in the Fundraising Lore.

There are three distinct phases:

  • Phase I: Preparation - the goal of this phase is to set yourself up for success in the next phase, which is fundraising. Above all that means recruiting champions that can help create momentum later. I recommend spending about 3 months on the following 5 key tasks:

    1. Developing effective fundraising materials
    2. Creating a qualified investor list
    3. Networking with VC-backed entrepreneurs
    4. Preparing the company for the fundraise
    5. Understanding the fundraising market
  • Phase II: Fundraising - this is where you start talking with investors with the goal of emerging with a signed term sheet, which is a brief document that outlines the agreed financing terms. This is the actual hard part of fundraising. The most important overall objective is to hit the ground running and spin up high momentum, which is key to closing a round. It is likely you will have a lot of conversations that don’t lead to a term sheet. Tune those out and keep going. Finding a believer is a numbers game. I recommend spending about 3 months on this phase and splitting it into 3 distinct parts:

    1. Not raising yet - to qualify investors
    2. The switch - when you have enough momentum
    3. Closing in 2 weeks - maximize competition to get best possible term sheet
  • Phase II: Closing - this is the process of going from a signed term sheet to money in the bank. Don’t forget: the round is not done until money is actually in the bank. That usually takes about 2-3 months and includes the following key tasks:

    1. Building out the syndicate
    2. Completing due diligence
    3. Finalizing legal documents
    4. Getting money in the bank

All in all, a well executed fundraise takes about 9 months from beginning to end. Note that this is the actual time spent rather than the timetable according to the PR announcing the round after the fact. Such articles often say some version of “we called a couple of investors on Friday and had the money in the bank on Monday.” I have personally witnessed cases, where this has happened, but those are the exceptions rather than the rule. If you are one of the exceptions, you don’t need the Fundraising Lore. For everyone else, a structured, disciplined, strategic approach with realistic expectations and timelines is the better way to go.