VC Minute – quick advice to help startup founders fundraise better.
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Another fundraising red flag is the “dribs and drabs round.” That is, funding coming in sporadically.
For example, if you closed half a million six weeks ago and then had it wired right away. And then closed another 250,000 a week after that, signed and wired. And then another 125,000 signed and wired just a week ago. And you’re still out raising. You’re six weeks in and you haven’t even hit a million dollars, and you’re already burning that capital that came in six weeks ago. .
This is a terrible scenario for you and your investors.
Remember the VC Treadmill? Your job is to get enough capital to get from Here to There and level up on the treadmill.
With a dribs and drabs round, you don’t know if you’ll have enough capital to make those key hires or fully execute your growth plan. So your growth suffers.
And you’ve lost out on your best fundraising asset: FOMO. Rather than pooling your capital commitments, you’ve spread them out and actually disincentivized additional investors from coming in.
Fundraising in dribs and drabs is the worst of both worlds. Keep your rounds tight, and focused, and bring everybody into the pool at once.
Hey, speaking of pool parties, I’m going to give a shout out here to Jason Yeh and The Funded podcast. I came across Jason’s work and his podcast is amazing. We caught up last week, we have so much in common; he also is out there helping founders fundraise better.
The Funded podcast interviews founders to learn how they raised rounds, investors to learn how they think about funding, and even has a short form advice section like the VC Minute. He’s offering a free fundraising course the week of August 16th. It’s a three-day program. Check out the show notes and go sign up for his event and his newsletter. It’s rock solid fundraising advice.
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