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Asymmetries in Fundraising

63 pointsby akharrisalmost 4 years ago

4 comments

corepoweralmost 4 years ago
Insightful article. In raising our preseed, seed, and then Series A all within a year and a half - our biggest takeaway was you need to play the game and learn how to tilt everything toward your favor as a founder.<p>Namely - place time pressure on investors; don&#x27;t give any one investor info that you haven&#x27;t shared with others; run processes in parallel; and generally have the mindset that it&#x27;s a privilege for <i>them</i> to invest in <i>you</i> as much as it is for you to work with them.<p>Whenever investors asked us for more detailed info than we had on hand, we simply told them that the process was very fast moving + no one else had asked + we could answer specific qs for them as needed over the phone - all 100% statements - but very different from the scared mindset of &quot;oh no I need to pull this info for them asap&quot;<p>Would love to chat with you more Aaron; do you offer consultative services?
Ozzie_osmanalmost 4 years ago
There are similar asymmetries in other two-sided matching processes, like hiring or dating. The exact asymmetries may differ, but the high-level framing of asymmetries existing and being something you can either use to your advantage or not holds true.<p>In general, in any of those processes, I try to balance the symmetry as much as I can, whether I have the advantage or not. I think that just leads to more meaningful longer term matches.
keithwhoralmost 4 years ago
I think this is a good article.<p>I also think generalized fundraising advice mostly sucks. You&#x27;re looking for a believer in you and your company. That&#x27;s it. If you&#x27;re lucky enough to find many believers in parallel you can use that to your advantage - this is where you can leverage asymmetries - but I think that&#x27;s the exception to the rule, not the rule itself.<p>I treat fundraising like playing Final Fantasy VI. There are many paths towards defeating Kefka and many possible teams you can assemble. But the game isn&#x27;t open-ended; most characters are NPCs, and there&#x27;s a pre-defined single win state (defeat Kefka, build a big business) and loss state (you teams runs out of HP, your company folds). Finding investors is like recruiting Terra, Sabin, Mog, you name it.<p>In FFVI, you can typically tell who the PCs (Player Characters) are by distinctive sprite features and behaviors. NPCs walk around in circles. PCs engage dynamically, offer to help you, appear in short bursts, then disappear mysteriously for long stretches of time, only to return when you need them most. You may not recruit them when you first find them. You may forget about them entirely. You may miss them on your current playthrough. But it&#x27;s obvious who they are.<p>Raising capital is kinda like that. You can figure out who the NPC investors are pretty easily - especially if you&#x27;ve spoken to a lot of investors. They might re-engage a lot but they obviously follow a script. They&#x27;re not passionate about you or your business. They might have a large following or any number of PC characteristics, but the &quot;tell&quot;, the equivalent to a unique sprite, is how they mesh and interact with you as a person. Note that some NPCs in FFVI and other games are <i>scripted</i> to bloviate and tell you how amazing you are. So simply telling you nice things is not an indicator of a PC. Actions speak much, much louder than words.<p>I&#x27;d say that fundraising is mostly about learning to discern NPCs from PCs and not wasting your time on the NPCs that don&#x27;t move the story forward. And having the stamina to stick to it and acknowledge the PCs <i>do</i> exist and are out there. That&#x27;s all there is to it. It takes a long time to find PCs and not all are accessible immediately, but I have the sense that when you find them you kinda just know who they are.<p>My advice to founders is when you find people you want to work with, just let them know and be kind. Be pushy. But be kind. The NPCs will get caught in a script, in a loop, they&#x27;ll just keep doing and saying the same things over and over. They don&#x27;t really know they&#x27;re the NPCs in your business yet, because they&#x27;re PCs in many other businesses. You&#x27;ll figure it out sooner than they will. The PCs in your business will actively adapt to you, your business, your fundraise even if they don&#x27;t join today. There&#x27;ll be a fun backstory. You&#x27;ll watch it happen organically.<p>Then again - this is generalized fundraising advice, so it also must kinda suck. Make of it what you&#x27;d like.
jfimalmost 4 years ago
Out of curiosity, how would the asymmetry be resolved? If founders have less fundraising experience, is there such a thing as founder school where they can rehearse pitches or do mock fundraising to be ready when the stakes are higher?
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