Always be the driver, not the passenger

November is peak fundraising season as many startups aim to close rounds before Thanksgiving.

One of the most important aspects of maintaining momentum during a raise is to never get pushed out of the driver's seat. Otherwise you lose control of the process and are at the investor’s mercy unless you do a big push to get it back.

Let me explain.

Fundraising is similar to enterprise sales. Just as experienced sales teams stay in control during a long, complex, and opaque closing process, founders can do the same during fundraising.

I won’t get into how to best run an enterprise sales process. Rather, I want to highlight a simple framework that goes a long way during a raise:

𝐀𝐥𝐰𝐚𝐲𝐬 𝐛𝐞 𝐭𝐡𝐞 𝐝𝐫𝐢𝐯𝐞𝐫, 𝐧𝐨𝐭 𝐭𝐡𝐞 𝐩𝐚𝐬𝐬𝐞𝐧𝐠𝐞𝐫:

To remain in the driver’s seat (i.e. in control of the process), set clear next steps with triggers for follow-up actions that you can control during every interaction.

Let me give you an example.

Most VC calls will end with:

• Send me a deck and I will get back to you.
• Please give me access to your data room and we’ll take it from there.
• Let me chat with my partners and then get back to you.

These are NOT clear next steps where you remain in control of the process - if you leave it at any of the above, you move from the driver to the passenger seat immediately.

Staying in the driver’s seat is hard, but there are two simple things you can do to increase your chances:

1. Understand where investors have questions and proactively address them
   • “Where do you have the biggest open questions as I want to make sure I properly address them in my follow-up?”
   • “What are you looking to answer with this request - to ensure I answer it properly?”
   • “Based on our conversation, I’m assuming you have most questions around [specific concerns] - is this correct?”

Side note: Many fear proactively calling out areas of concern. I disagree - proactively addressing potential areas of concern (versus waiting until they are voiced) instills confidence and allows you to better tailor your follow-up.

2. Manage the timeline
   • “I’ll send it to you tonight - within what timeframe can I expect a response? Or assume you’re not interested if I don’t hear back by then?”
   • You can proactively try to schedule a follow-up call too - but that can be hard as many VCs will push back until they’ve reviewed the materials.

Side note: Hidden in the first statement is the importance of turnaround time which is SUPER important during a fundraising process. Most VCs (or at least we at focal) care a lot about speed. Including for turnaround times. Set clear expectations and turn things around quickly - it goes a very long way (see here).

Now, throughout a raise, it isn't always super straightforward re how you can trigger a clear follow-up to stay in control in any and all situations.

The best you can do is to make sure to pay attention and keep in mind that you want to remain in the driver's seat. If you do so, I’m sure you can come up with something.

If you lose control, three tactics to regain it include:

• (Re-) introduce urgency to encourage quicker decision-making. Though you have to be careful as this can be a double-edged sword. If you increase urgency and let deadlines pass, you lose both momentum and credibility. Thus, don’t push for timelines that are (too) aggressive / if you don’t have full certainty that e.g. a Term Sheet will happen by date x. This can e.g. work well:

“We’re starting to get pulled into partner meetings by a few firms, and things are moving along well. Shall we schedule a follow-up call to address your outstanding open questions? I want to make sure you have everything you need to make a decision.”

• High impact progress updates. As much as you can, update investors every 1-2 weeks with meaningful progress updates throughout a raise. This increases the perceived velocity of your business. E.g.

“We closed xx customers in the past week / we shipped feature x / we reached y milestone this past week, etc. - do you have time for a deep dive e.g. on Tuesday between 2-4pm ET?”

• Providing actual, relevant, and insightful thought leadership. Often, VCs will challenge you on your differentiation and unique insight (especially during early raises). A well-written blog post addressing this can go a long way, as you're doing the work for the investors and can control the narrative (you’d be surprised by how poorly investors tell your story internally if you don’t enable them to do it well). That said, keep in mind that writing a well written and impactful blog post takes time. I see it happen too often that founders rush this and release it prematurely for it to miss its goal of increasing momentum.

All of this said - it’s a tough market out there and fundraising is a grind and a full-time job. And remaining in the driver's seat throughout takes extra work.

Thus, I cannot stress enough how important it is to be super well prepared going into the raise (which is very time consuming) and to make sure you have enough bandwidth and energy throughout to remain in the driver's seat.