TBC: 5 Controversial Fundraising Ideas

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Welcome to the back channel today. I want to talk about a few somewhat controversial ideas I have around fundraising, and I think will be really helpful for you all to hear and push you to be a better fundraiser.

So. The first thing I'll start out with is about decks, decks, and slides. This is somewhat controversial because there are some big brands out there that really push an idea of a specific template, a specific order, a specific number of slides. I've seen the Sequoia template for BestEx docksin has a recommended number of slides plus exact sections and orders.

I, on the other hand, don't believe in templates. [00:01:00] I kind of believe that every story is slightly different in what you're actually trying to do in building a deck and story. Is follow the path that your story needs in order to be told in the most concise and compelling way. I think that templates actually. Hold you back when it comes to creativity, it can actually make you. Um, build out a much more vanilla and somewhat harder to understand story.

So instead, I like to say that. As long as you hit on four main themes. You can kind of go in any direction as long as the flow continues, as long as you continue to get people to want to hear. The next slide, the next point that you were going to make. Those four points that I think you should make sure that you cover, but can be. In any order, they can also be one slide.

They can be multiple slides. They could be combined onto a single slide. It just depends on what story you tell, but those four points are the problem and opportunity. So make sure that we understand [00:02:00] what the problem we're opportunity is. We have to understand what your solution is and in particular, your unique insight driven solution.

Why can you solve it? Why is that special? We have to talk about the potential impact as in, could this be huge? Remember, as we're raising money, especially from venture capitalists, we have to be able to fit into a return profile that fits their business model, which usually means a massive, massive opportunity and massive, massive. potential for impact. And lastly, we have to understand why this team could actually get it done.

Team is so important in startups and in turn very important investment decisions. So make sure you cover what your team is, why your team special, why your team is specifically set up to do this company. Well, Now, of course, there are other important and valuable components that will naturally flow into a deck. But I find that if you focus on those four, you're going to do the best job that you [00:03:00] can have.

Uh, communicating are really tight story. Uh, and then the other thing that I'll add on with decks and stories is that remember. That you don't need to be 1000% comprehensive as in touch on every single point. In fact. If you go too long and too deep in a deck and story and be too comprehensive. You run the risk of actually confusing someone and, and getting them to miss the main point.

If you get to the main point that gets them to lean in, gets in to be interested and gets them to be excited enough to say, Hey, I actually need to know X or know why. It's not a bad thing. You've actually caught them in a point where they want to learn more. And that will allow you to get to another meeting, another engagement and other opportunity to send them more information.

So that's my first. Somewhat controversial idea. Um, no templates. I don't like templates. Second. Embrace the riskiness of your idea. This is somewhat controversial for founders because it can feel very [00:04:00] uncomfortable. By going really hard and really extreme.

You are almost by definition, inviting people to disagree with you, to not like your idea. But we would rather you do that be very specific and bold rather than trying to dilute your message to make sure you don't turn off. Some people. And make sure you catch some people who are interested in this and then catch other people that are interested in that. when you dilute your message and try to make it more acceptable for more people, essentially. Defending against riskiness. You are. You really, really diluting the message. And into a way that a lot of investors just won't get excited by.

They might not be absolutely turned off by it. But they might not be excited about it. And with great risk comes. Great return again, venture capitalists need to see a path towards a huge opportunity. And usually somewhat copacetic ideas, things that are right down the middle. It might be good [00:05:00] businesses, But more often than not those businesses. I won't get to the scale and landscape changing outcomes that a venture capitalist needs to see.

So embrace the riskiness in idea, go whole hog into something that's exciting. And don't worry about the fact that a lot of people won't like the idea.

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[00:06:00] Third. Somewhat similar and related to point to. You really should be seeking out rejection. Of course you don't want a company that no one will invest in. But you don't want to use fear of rejection as a north star for how you should behave in a fundraise. You really should be trying to get to a clear nose so that you can move on and stop wasting your time.

Also a pass now. Doesn't mean a pass forever. So don't be too scared of the rejection. My general advice is actually something that is even more scary. For founders, which is, as you get into a process of fundraising, not only should you not hide from rejection, but in a lot of case, you should use and mentality of upper out in a process.

So if a venture capitalist is waffling, you would rather push them to pass. Then let them [00:07:00] waffle, let them waste your time. If you push them in and they pass, they likely weren't going to get there anyways. But if you push them and they stay with you and you did the right thing, you got them to lean in a little bit more and focus their energy around. Figuring out if this is a deal for them to seek out rejection.

Fourth. Avoid. Tearing your approach to investors that you talk to. This is very common advice. And a lot of people won't agree with me, but the common advice is that as you're going out to pitch. You should pitch your tier three investors first. Then. After you're done with that and figure out what you need to iterate around, then go to tier two. After you're working through that, then you get to tier one and by tier one, You'll have gotten your pitch together.

Your story will be a little bit straighter and you'll be able to do the best job that you can with these premium investors of yours. Now. There are a number of reasons. I don't like this [00:08:00] approach. The first is what makes a firm, a tier one versus a tier two. Versus a tier three. Now there might be league tables that rank. A16z And Graylock and benchmark really high.

And sure those are good, but there are also investors that might just be really special and really great for you. that you don't really know about until you start talking to them, start understanding why they might be excited by your space. You might be excited by what they bring to the table and things that you don't know that maybe in the back of your head made them tier threes for.

You could actually make them tier ones. So. What makes the tiering system, you don't really know. And then maybe more importantly by sectioning off tiers You kind of dilute the pressure of a full process by doing a few first and waiting, and then doing another few and then doing the last few, I would much rather you get your practice reps in your iteration, your feedback long before you actually start [00:09:00] talking to investors, talk to other founders, find friends to give you feedback, maybe VCs, that aren't really a good fit for you because of stage or otherwise to give you that sort of feedback, to get to a great version of your story. I do that all before you actually kick off your process. Then actually set out to get to calendar density. And. Follow the lead of the investors. Follow the lead in terms of when they're going to be able to schedule and don't tear it out. I really don't like the idea of, uh, diffusing your pressure through this tiering system.

So. avoid that. Go get your feedback in early, uh, and get to calendar density.

And then lastly, This is less of a controversy and more, just something that founders avoid or they don't think to do. Uh, and so this piece of advice is that preparation is the key to success. There's a lot of misconceptions that may be. You know, you catch lightening in bottle, you talked to one investor and they invest. Um, so you don't need to prepare that [00:10:00] success can happen overnight. But more often than not. Um, I will see the best fundraisers be fundraises, where a lot of effort was put into preparing for them, and that drove their success.

And these aren't founders who came out of nowhere that didn't have. Uh, network. And so they needed to do more work in order to get done that that might be the narrative that's going through your head. But no, these are founders who come from pristine backgrounds. Amazing amazing networks experience that would make people think that they could actually get this done. Uh, these founders know that by preparing ahead of time, they are optimizing their opportunity. Uh, they're advancing their chance of success. I remember talking to Bobby Pinero, the founder and CEO of equals who. Went to Stanford university. was a very early employee at Intercom, new, some of the top founders and investors in the world.

And yet when he went out to prep for his [00:11:00] series, a. He took months and months and months to do so. He went out far in advance of when he thought, his cash out, it was going to be, he really dedicated a lot of time to preparing for a great fundraising. So preparation is key to success. Don't avoid the work of preparing.

Don't think that you can catch lightning in a bottle or that overnight successes are a thing to plan for. Okay. So those are five controversial ideas. I think we use the word controversial to maybe. I get some clickbaiting us out of this, but these are five ideas that I think should get you thinking about how you conduct your fundraise. And really drive you to be a better fundraiser overall.

All right. That's this episode of the back channel. I hope we'll see you again here. Very, very soon. See ya.

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