Written By: Kelly Bryant
It’s Cubs season and baseball is on my mind. I love a Friday afternoon at Wrigley – the taste of cold beer, waiting for the 7th inning stretch and seeing the blue and white uniforms out on the field just feels right. When I see a batter go up to home plate, I can feel myself lean in as the player gets in position and waits for the pitcher to give them his best. Every once in a while, the batter hits a grand slam and the crowd is up on their feet cheering. More often than not, it’s a swing and a miss.
The same is true in fundraising. Here’s 4 mistakes I see founders make when they’re up to bat and how to avoid them.
1. Slow Responses to Follow-Ups
After you hit the ball down right field, you don’t take your time jogging to first base – you run! When an investor follows up after a meeting asking for diligence documents or has a follow up question to your pitch, get back to them by EOD or no more than 24 hours later. If you need additional time, tell them. Ideally, you’ve done correct fundraising preparation and you have your data room and market research game-day ready. Don’t want until the ninth inning to try and make a comeback if you can avoid it.
2. Asking for an NDA
I understand your technology solution is a lot like a baseball team’s secret playbook, but you can’t expect an investor to sign a non-disclosure agreement especially for a first meeting. Putting yourself in their cleats, an investor sees hundreds if not thousands of deals a year. Signing an NDA puts them at risk because there is a high probability they will see a similar business at some point in the future. Additionally, if you sign a term sheet with a VC fund, it’s likely you’ll want them to talk about your business to help close out the round and promote the company. Your NDA will stand in the way of that. For these reasons, it is very rare for a professional investor or VC fund to agree to this.
3. Going Off Script
Your favorite baseball team practices before a game for a reason. Don’t step up to home plate and decide to wing it and try out a new swing. Use the pitch deck that you likely spent weeks putting together. It is there to serve as a guide and keep you focused as you explain your business. Even if you’re in a 2nd or 3rd meeting with a VC fund, it’s likely there are new participants around the table that aren’t familiar with your story and business fundamentals. Take advantage of the materials in front of you and make sure the other party understands what you’re building.
4. Going at it Solo
Even the best all star player is nothing without his teammates and coaches. Fundraising is a lonely sport and it’s tough to go to bat alone. Before you start fundraising, have a solid team around you to make the process easier. A well-experienced lawyer, banking partner, accountant, and fundraising coach (cough, cough – Kerosene!) can truly make or break your batting average. Having these constituents in place prior to raising capital will not only streamline the diligence process, but will also provide a unique perspective and approach to the fundraising process.
Remember – you’ll still have more strikeouts than home runs when it comes to fundraising. These lessons serve as tools to help you navigate the game, but sometimes, a bad inning is inevitable. The next time you’re up to plate, increase your chances of a grand slam by knowing what not to do in order to get one step closer to your next win.
See you at Wrigley!
Kerosene Ventures – Helping Great Founders Raise Capital