Written By: Kelly Bryant
It’s officially 2023 and that means it’s time to start acting on your fundraising plan!
As a Founder, you’ve got a lot to think about: determining your timeline, building a data room, compiling your target list of investors… the list goes on. It can be easy to overcomplicate these fundraising fundamentals, but my sound piece of advice for you this year is to always KISS…
KISS or Keep It Stupid Simple is a design principle that’s been around for decades. However, I was recently reminded of its brilliance while I was listening to an episode of the 20VC on ‘How to Fundraise Like a Pro’. In the context of fundraising, keeping things simple can have huge benefits and turn a less-than-ideal raise into a profound milestone for your company.
Although there are many areas of fundraising that could apply, I’m diving into 3 aspects of your strategy you definitely shouldn’t over complicate.
1.Setting Your Raise Amount
If you’ve done accurate financial forecasting (emphasis on accurate!) for the next 18-24 months, the answer to this question should be pretty simple. Never give a VC a raise “range” or attempt to set the valuation for them. VCs are professional investors and know that there is a massive difference between $3M and $5M and their subsequent implied valuations. Once you have your number, outline what milestones you’ll hit with the capital and how you’ll allocate resources to make that happen. Overcomplicating this step can sometimes be the difference between getting a 1st meeting with a fund or fast and hard ‘no’.
2. Building Your Business Plan
Ahh, the pitch deck. Everyone’s favorite document! Again, less is more here. You’ve got 10-12 slides to play with and 10 minutes to get the investors attention. Keep your messaging, presentation and flow so simple that a 6th grade understands what you’re building.
3. Multiple Term Sheets
It is a terrific thing when a Founder has multiple parties interested in their stock. It drives value and allows more wiggle room in negotiations. That said, I see many Founders turn this process into a circus. They start to reduce their communication speeds during the final stretch of diligence, or suddenly “forget” how to turn down a VC graciously (reputation is everything!). If your dream partner is offering you a deal with a difference in price that’s 5% worse than your best offer, don’t over complicate things. Go with your gut and choose the better partner knowing you’ll be better off in the long run.
As I’m sure you’re sensing, fundraising right is all about preparation and access. While it’s a critical part of your company’s success and should be taken seriously, fundraising doesn’t have to be rocket science and your strategy is often quite clear once you decide to Keep It Stupid Simple.
As always, if you want to chat through your fundraising strategy shoot us an email at info@kerosene.vc
Kerosene Ventures – Helping Great Founders Raise Capital