As many companies are transitioning to remote work for the first time it is normal to feel overwhelmed. Getting used to the social norms of working from home can be odd for…
Fundraising is Blind
The next, “so bad, you can’t look away” reality show, “Love is Blind,” has taken over the internet (and the Visible team). Somewhat sadly, the Netflix show has been the water cooler chatter for the…
The next, “so bad, you can’t look away” reality show, “Love is Blind,” has taken over the internet (and the Visible team). Somewhat sadly, the Netflix show has been the water cooler chatter for the past week at Visible.
In case you have not seen it yet, the show goes something like this:
“The series follows thirty men and women who will hopefully find love; however, throughout the process, they will never see their partners. For ten days in a speed dating format, the men and women dated each other in different “pods” where they could talk to each other, but never see each other. Whenever they decided, the men were able to propose to the woman they want to get married to. After the proposal, they revealed themselves to their partner, where they were able to see each other for the first time.
Following the couples retreat, the engaged couples moved to the same apartment complex. While at the apartments, they all met their partners’ families and explored their partners’ living conditions. At the altar on the day of the wedding, the engaged couples would either get married, or split up.”
Got it? Good! So why are we walking about a bizarre, dare I say “cringeworthy?,” dating show on the Founders Forward blog? Well, because it is oddly similar to the founder and VC relationship that takes place over a fundraise.
“The Pods” = “Coffee Meetings”
To start the show, participants head in and out of “pods” where they can talk with, but not see, the other participants. Basically, an intense version of speed dating. The start of a fundraise is not all that different. To start a raise, you likely meet or have coffee meetings with a number of different investors. YC estimates that most companies will meet with ~30 investors during this phase.
The goal of a coffee meeting is to drum up investor interest and get to the point where you can pitch a partner or multiple partners. Once you hone in on what investors/firms are interested you’ll be able to tailor your pitch and focus your efforts and time on interested investors.
After the initial rounds of “pod dates,” contestants naturally spend more time with those who they like and have the chance to get to have deeper conversation. Similar to a partner meeting where investors and founders can get to know each other better by reviewing pitch decks, financials, metrics, etc.
“Couples Retreat” = “Due Diligence”
At the end of the “pod dates” participants have the option to get engaged and head on a retreat to Mexico. Once again, this gives them a chance to get to know each other even further and help decide if marriage is the right choice for them. After Mexico, the couples then move in with each other back home and really get to know one another.
After a founder makes it through the partner meetings they move on to due diligence. The first step of diligence is generally meeting with all of the firm’s partners and clearing any additional questions. After the large partner meeting, firms get into the nitty gritty and try to build as much conviction around the investment as possible. During this due diligence stage investors will likely have questions, dig into financials, talk to customers, and more.
“Wedding Day” = “Term Sheet”
If the couples on Love is Blind make it through the couples retreat and living with one another they are faced with their wedding day. “At the altar on the day of the wedding, the engaged couples would either get married, or split up.”
After due diligence, investors are faced with a similar question; will they make an offer? Or pass? If an investor is ready to pull the trigger, they will send a term sheet and you will be on your way. If they decide against investing, you’ll be forced to nurturing them as a potential investor for a later round.
As crazy as the show may sound, remember that picking investors is not all that different. The average VC + founder relationship is 8-10 years; longer than the average marriage in the US. Jumping blindly into a relationship may not always be the best idea as you’ll be stuck with them for a while.
To eliminate the chance of a “blind” deal, start building relationships with potential investors now (and go watch Love is Blind, we won’t judge).