TBC: How to Create Urgency and Set Deadlines in Fundraising

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Hey there. Welcome to another episode of the Back Channel. In today's episode, I want to talk about deadlines and creating urgency and making sure that founders better understand the mechanics of setting deadlines and how that might hurt or help them drive a process to a a positive close. Right? So there are tons of pieces of advice that I think founders hear online see on Twitter.

Get sound bites around and none of those short pieces of advice give enough nuance or underlying explanations that help a founder more, uh, more deeply understand how they should apply them to their own situations. And one of those pieces of advice I hear is like, oh, you need to set deadlines. That way you can create urgency for an investor to make a move and actually invest.

Now that short statement. [00:01:00] Can be applied in so many different ways, and I often see founders make the mistake of just applying deadlines super aggressively willy-nilly without understanding when it makes sense to apply deadlines. So I totally agree that creating structure and deadlines to help people work within and give them a sense for when they need to move is very important.

But the key is that these people need to be on the hook. Before you set a deadline. So what I mean by that is sometimes, and this happened very recently, that I talked to a set of very credible founders who said, Hey, you know, we had the opportunity to create a process and we read up and we tried to do all the things that people.

Say that you should do, which is, you know, get the people ready to go. And as you start your process, say, we expect term sheets by this date. And it was three weeks out. And the problem with that is that [00:02:00] the investors might not have seen enough to get excited about what they were about to embark on. So what I would tell everyone when it comes to creating deadlines is you want to ease into it.

And in the very beginning, not set hard and fast deadlines. You can mention, Hey, my first meetings are going all going to be in this two week period of time, which sort of focuses people's efforts around at least when they need to talk to you about or getting back to you around scheduling. But you're not saying, oh, I expect term sheets by this date.

Because if you do that, you might not. You might not turn someone off, like people aren't going to hear, oh my God, I can't believe they set this deadline. I think this person is so rude. I don't wanna invest. It might just be like, oh wow, that's a really fast timeline. Given all the other deals that I'm looking at and portfolio management and stuff, I'm not sure that I'll be able to.

Um, [00:03:00] you know, work within that timeline and out of respect for the founder. I'm just gonna let this one go because that investor hadn't spent enough time with the founder, hadn't spent enough time with the company or the deal to be excited enough to go, ah, okay, that's a deadline that I really need to make.

Okay, let's move.

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So instead We start by easing into the process, making sure we get good quality time with the investors, that they understand what we're working on, and they start to get excited. And as you see the [00:05:00] momentum of a process come together, you can then start leaning into telling people, now that we're done with first meetings, it looks like I want to be able to set this date or get term sheets by this date.

And at that point, you'll have a bit more understanding that people are excited enough about the deal that they're leaning in, where the deadline will actually start playing in your favor. And the thing that I'll tell you as a add-on to this whole thing about deadlines and whatever is a lot of times people are a little bit anxious about setting deadlines, like setting a deadline.

When done appropriately shouldn't be that anxiety inducing. I get it. That deadlines mean you're saying, Hey, we need this by this date, which gives an investor a situation where they either keep going or they pass. It's kind of forcing this upper out. Right? And I would say that two things, one. When you get to that stage of pushing a process a little bit further, [00:06:00] you don't want people to waste time.

You don't want people to waste your time or waste their time. And so if you put little bits of structure that force investors who really weren't ever gonna get there in the first place to bow out, that helps you focus your time and effort in the right places. And the next thing is people are like, ah, is setting a deadline rude?

Will it make people at certain stages actually, uh, turn away because they think I'm being overly aggressive? The other thing I would say is that I actually believe investors appreciate getting a deadline. Investors are often engaging in so many different things, um, different live deals, different first meetings.

Different portfolio fires and none of them have structure to them. They're all kind of flowing into their inbox and when anyone and anyone in their stack of priorities. Gives them a deadline, gives them some structure. It helps them at least create some clarity around some of the work [00:07:00] streams. So you set a deadline for them.

They're like, oh, okay, that's the deadline. Now I can work within that structure, within that deadline, prioritize some of the work, try to get that done. Thank you for setting the deadline. Almost like as long as you're not being overly aggressive and you're plight about it, those deadlines can actually be nice and, uh, refreshing for a bunch of VCs.

Okay, so that's what I think you needed to know about the idea of urgency in setting deadlines. As a recap, remember to not set hard and fast deadlines until you've gotten to a point where you feel like you've hooked a good portion of your process and that they know what there is to see. They know what they like and then start working within the structure.

If you do it too early, you might get them to flake out because they just don't think they have seen enough or they're interested enough to be able to work within your timeline. All right. Hopefully that's been another helpful tidbit from this episode of the Back Channel, and I'll see you next time.

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