Ignorance vs Iteration in Fundraising

I had a conversation with a gentleman this past week about his company which was looking to raise a $6M seed round.

He mentioned they had been in the market for a raise for ~6 months and had spoken with 30-40 VC’s.

I asked him what the feedback was he was hearing from them.

He mentioned 95% of them were telling him the exact same thing for why they weren’t interested.

Despite this, he didn’t understand why they were passing and was telling me he just needed to find someone who was “the right fit”.

We passed on this deal immediately.

This is an example of founder ignorance in the fundraising process.

For most of us, our company is our precious crown jewel.

When other people don’t understand it or show interest in it, that can be a big blow to our pride and ego.

But when 95% of the market is saying the exact same thing. the odds are that there might be some truth to it.

As an advisory firm, we are only as good as the company’s our clients are building. That’s why we’re so selective with the deals we take on.

This is why we always say the first few weeks / months of your raise should be FLEXIBLE.

• Be open to feedback

• Don’t let your pride get hurt when someone isn’t interested

• Dig into WHY people aren’t interested and what would change their interest

I want to share a brief story for one of the current deals we’re live on right now.

We have a 2M pre-seed round we’ve been live on for a few weeks (earlier than we normally take on).

Great product, great team, but revenue traction is lacking.

The first few calls we had set up for this founder went just “alright”.

• They “understood” the market but weren’t too excited in it

• Lack of revenue was a problem for them

• Little to no domain expertise

After hearing this from our client, we went back to the drawing board and re-thought our strategy for who this was a fit for.

This was the message he sent to us yesterday (obviously censored for privacy)

This is the iteration part of our process in full force.

• Take existing feedback from initial calls - how is it resonating? is there demand?

• Make iterations on pieces of feedback - is call quality improving?

• Once we get positive feedback - use this as the new benchmark + build around this as the new ecosystem

If you’re not getting the demand you’re looking for on your deal, ask yourself why.

Happy to answer any fundraising questions anyone might have on here.

Thanks for reading.

Ryan
BCG

As always:

If you’re raising $2-100M from seed - series C and are looking for an advisory group to help on your raise, give this document a read.