VC Minute: Your Fundraising Competition

By March 29, 2021March 31st, 2021Startups

Let’s talk about your fundraising competition. 

I’m not talking about your direct competitors in your industry. I’m talking about the half a dozen or so other startups I have in my diligence process at the same time as you. When it comes to securing a commitment, that may also be your competition. 

You’re not necessarily going to lose out on an investment just because a VC has a lot in their pipeline. But like you, we only have 24 hours in the day and only so many hours that we can spend working, so we want to always be sure we’re working on the funding rounds that are the highest priority for us. In other words, we’re constantly ranking companies internally to reprioritize and refocus our efforts. 

If you’re getting the SHITS from an investor it may be that they have a backlog of diligence and you’re somewhere in the middle of the stack. The danger is that the longer you stay in the middle of the pack, the more likely you are to move down or possibly never hear back. 

You benefit from staying top-of-mind with your potential investors. You can do this by sharing updates. Updates about your round, for example, that you got a commitment from another firm. Or sharing wins such as, you just landed a new client or that new hire came on full-time.

Keep the communication flowing. If enough has changed since you last spoke, offer to set a 15-minute update call. And don’t be afraid to ask questions about where that fund is in their diligence process on you. 

Keep your investor process moving forward because when it stalls, it dies.

Listen to the whole episode here:
Startup of the Year Podcast Episode #0051 – Tim Draper Tells Stories From His Life As A Venture Capitalist – Startup of the Year Podcast

On this episode of the Startup of the Year Podcast, we listen to Frank Gruber’s interview with Tim Draper at the Startup of the Year Summit in the fall of 2020. Tim is a top global venture capitalist, founder of Draper Associates, DFJ and the Draper Venture Network, a global network of venture capital funds.

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