VC Minute – quick advice to help startup founders fundraise better
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You have all this growth and you raise a Series A in 2021 at
In the middle of the frenzy. That fundraise was very different. I pinged ten investors, did nine pitches in three days, and got five term sheets. Each and every one of them was increasingly closer to a hundred X our run rate at the time, which is an enormous value. It was, I'll be honest, fun. It was nice. It was exciting. It was delusional. It was irresponsible, it was all sorts of those things, but it was kind of a, emotional oasis. The bank account was basically at zero dollars when we raised the seed round.
I remember sitting in a restaurant with my team, everyone was cheering, everybody was super happy, I was hyperventilating. The restaurants had just opened, there wasn't anyone there, I went out to the lobby, I looked up a yoga video on YouTube. If you know me at all, I don't do yoga, I was panicking. I was filled with anxiety. It was almost as if we now had fiduciary responsibility to all these other investors. And yeah, maybe I was overblowing just how much that was, but it was like, it's not just me now. I have other people's money here.
I got to know some of your LPs. I knew they were individuals. Some of the other people invested. Some of the schools I had gone to were LPs in those other funds. I know it's just a tiny, tiny drop in the bucket, but I had this overwhelming feeling of, oh man, I gotta do something with this cash. When we started to deploy that money, we grew from seven employees to 20 some. It was just crazy. We were just adding people, building stuff, selling. We went from one deal a quarter to one deal a month to one deal a week. There was this excitement.
When we raised a Series A, it was like a crowning pinnacle of validation. You did it. Everything you did was right. You're a genius, look at all these smart people that are calling you a genius with their term sheets and their money, everyone wants to invest, you didn't have to work at all at it.
To me, the delusional part that was not real, that was extremely sharp in my mind was, think about how hard it was to raise your Series Seed, which relatively, it wasn't actually that hard, to how easy it is to raise your Series A. That isn't the market, that isn't, you know, Crazy Valuations. That's you! You did all these things, you hired the right people, you built the right product, you sold the right, everything you did was right.
And it was a long steady burn of realizing that those decisions were wrong. We hired a VP of Sales that was really interested in the investor that invested in our Series A. We hired a bunch of people that just looked at Bessemer Venture Partners investing in us, and without understanding the mission, or us, or who we were, they just wanted to work for us.
Hiring became easier, but it was actually a curse. The people that we hired in the seed round, we had to fight for. We had to say, this is what we're building, we're trying to change the way that we change materials and energy into valuable components. The people that really believed in that, they stuck around when things got worse, and when the market crashed. The people that joined just because of the name, they largely went away.
Lessons that I don't think I could have predicted in the moment that other people told me about that I heard on some podcast myself at some point in time, but that's how the Series A went. I don't regret it at all. Bessemer is, named after the Bessemer process that was created by Henry Bessemer. It kicked off the first industrial revolution, it reduced the price of steel so that we could have all this stuff, the railroads and skyscrapers.
That's what we're doing right now, we're trying to reduce the cost of making stuff so we can have more cool things. And Andrew Carnegie's money went into this and everybody else's, but they didn't name it Carnegie Venture Partners, they named it Bessemer because they cared about the science and the technology, oh man. There was a story there.
The Series A felt like poetry. It didn't feel like finance. And I think there, underlying that, there's some delusional problems with how I was managing the company at the time. If there is a word, about how that felt, it felt like a fable, or a fairy tale, or a poem, and it felt less like a well thought out, metered decision.
Now, I don't regret the partners that we picked, I don't regret the decision we made. I do regret the way in which I made the decision. I think that's when I started learning that you can make great decisions that turn out to be the wrong decision, and you can make poor decisions that turn out to be the right decision. And that is a nuance that took me some time and pain and suffering to learn too.
About FulcrumFulcrum applies modern technology to manufacturing processes, helping makers focus on their craft and grow their businesses. The innovation of American manufacturers is critical to a better world, and Fulcrum aims to revitalize the industry with automation software.
About AVL Growth Partners
AVL Growth Partners, founded in 2009, is the leading fractional Finance and Accounting firm supporting organizations in pivoting from growth to scale. AVL brings an experienced team of CFOs, Controllers, and Accountants to your organization, delivering transparent, strategic actions for short and long-term success. Transform your financial approach affordably with AVL, supporting companies coast to coast – get to know AVL Growth Partners at avlgrowth.com. (Sponsored)
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