Overnight fundraise? More than meets the eye

One Saturday morning, I sat by the swimming pool with my laptop while my elder daughter was in a swim lesson, and cranked out a long internal email expressing why we had to mobilize – quickly – on an important deal. Then, on a Monday afternoon, we approved as a team and issued a term sheet.?

The media narrative has been swallowed by stories of monster deals happening almost overnight. My story would fit – only the Saturday morning was February 5th, and the Monday afternoon was June 14th.?

The first sentence of my email read: “The world has changed…to where we don’t have the luxury of weeks to decide. I woke up this morning to a text that Company X’s round was done by XXX at $4M ARR and $1.6B post-money. Where it puts me is there are a handful of opportunities I would like to run down vs. the other way around.”

Until I lived this deal process, I had never tilted so far toward being proactive. My trained behavior from my early years working in venture capital in 2014 was to wait for a fundraising “process” to kick off before starting critical thinking and diligence. Today, if you wait for the process to kick-off, you are too late. My hunch based on observation is that some firms today are structured to mobilize in hours due to structure and decision-making norms, whereas others have decoupled the fundraise process from the process of building conviction, achieving the same effect.?

For as long as capital remains abundant in the venture capital ecosystem, it will remain a founder’s market. This means multiple term sheets and the founder’s discretion on which to take. Founders can tell firms to jump and we’ll continue to ask, how high?

In a way, nothing has changed. The process has merely been reordered. But in the reshuffle, the onus has been placed on the investor to decide ahead of time which companies to prioritize, well ahead of a known outcome. Founders, understandably, want to know which investors are ride-or-die and to the founder’s benefit, that process of determination is no longer limited to a weekend or multi-day process.??