074. Transparency feat. Kat Weaver

VC Minute
Giving up equity is like getting married. You have to be transparent with your partner in a relationship in order for it to be successful.

VC Minute – quick advice to help startup founders fundraise better.

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A lot of founders think that investors want only good answers. Investors know that not everything is perfect in your business, so you don’t have to answer every question with a false positive because investors actually love transparency.

Instead of trying to spin every single answer in that it’s sunshine and rainbows, if you’re transparent about your processes, mistakes, things that you learned, they’re actually going to be able to know where to support you best and where they can even help fill in those gaps because they want to work with someone that’s credible.

It’s a perfect opportunity to get to know more about them and figure out how they can come in as a strategic partner and help fill in those gaps. Because being a startup is super hard. They know that there’s hiccups and the whole point of actually meeting with them is that they’re coming in to help you scale and grow. So they wanna figure out where they can tap in to optimize your level of business.

If you’re not transparent in the due diligence process and something comes up and it scares them and you’ve been trying to hide it, you’re absolutely going to lose that deal. The more you can be open and transparent upfront before these things come out, the more likely you are to close and more quickly.

I was speaking with a founder and he said, we wanna hide the fact that my dad is my co-founder we think it’s gonna scare investors of getting into a family business. And we said, what happens when you get through due diligence and they look at your last names, what do you think is gonna happen? And he had this aha moment of, I guess I don’t really know how long I can hide something like that.  Instead, we’re working on pivoting that to actually be a strength in your relationship versus working with someone random in a startup.

That’s a way to make it a positive, but that also speaks to the level of transparency that you need to have with a fund.

Giving up equity and going into venture. It’s, it’s a marriage, so you have to be transparent with your partner in a relationship in order for it to be successful.  

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