IMPORTANT: Make sure you read all the way to the bottom for some important information about raising money and how I can help you.
Since 2011 I’ve pitched about 150 VCs, including most of the household names and some you’ve never heard of. I’ve been up and down Sandhill Road in Silicon Valley. I’ve pitched while having lunch on University Avenue in Palo Alto. And I’ve frozen my ass off in the middle of a few east coast winter pitches as well.
Every 40(ish) times we heard “no”, we also heard 1 “yes”, which was enough to raise $125M over 4 rounds at my previous company, Bigcommerce.
We built a great board, met a lot of amazing people and truth be told, I loved every minute of it. When I reflect on what I liked the most, it was that:
- We raised money from investors we genuinely liked
- We only accepted term sheets from investors with heavy, heavy previous operating experience (including Steve Case, the founder of AOL)
- If we couldn’t understand the term sheet without a lawyer, we didn’t proceed to negotiations or contract
- We found investors who were location-agnostic. We were originally founded in Sydney, Australia and have since moved to Austin, Texas and San Francisco, but back in 2011 we didn’t want the land down under to be seen as a negative thing to any potential investors.
- We found investors who would (and did) back the CEO every time
- We found investors who loved to drink and eat nice sashimi as much as we did (OK, I kid, I kid — a bit)
So here’s a list I put together based on my experience with our investors. They make up the “good investors” list. The second list, “bad investors”, is full of things I witnessed during our pitches and negotiations with other investors who we walked away from. Again, some household names and some you’ve never heard of.
Good investors will:
- Support you when you miss your number for the quarter
- Back you no matter what, because you’re the founder
- Reserve capital to re-up in future funding rounds
- Say it to your face, even if it’s hard for you to hear
- Support a pivot or change of strategy if it makes sense
- Give advice only when you ask for it
- Have years of operating experience
- Treat you the same pre and post closing
- Agree to fair and equitable change-of-control provisions for your team
- Be happy with 1x, non-participating
- Have simple, vanilla term sheets and contracts
Bad investors will:
- Scream at you for missing your number for the quarter
- Try to replace you if they don’t agree with your strategy
- Waive their pro-rata rights and spread their capital thinly
- Talk smack behind your back to their partners
- Argue that a change in strategy is a mistake, just to argue
- Always give you advice, no matter what
- Have zero operating experience and come from a finance background
- Be nice pre-closing and an asshole post-closing
- Outright reject any decent change-of-control provisions for your team
- Want 2x participating at a minimum (“hey, we’re taking a risk!”)
- Confuse you with lengthy term sheets and contracts full of lawyer-speak
If you’re in the middle of pitching and any investors seem like bad investors, then turn around and get the heck out of their board room.
Today more than ever, capital is cheap — and it’s everywhere. Investors are like partners in that you pretty much end up married to them for 5–10 years.
If you don’t like them now, imagine what it’ll be like a few years down the track. Not only will you resent the company you created, you’ll also resent yourself for making such a bad decision bringing them on board.
The Next Step (Important)
Before you do anything, there are three critical questions you need to answer:
- Which investors should you approach?
- How should you approach them?
- How much should you raise and at what terms?
If you’d like my help answering these questions and want complete “soup to nuts” training on absolutely everything involved in raising money from investors, then you should check out my new live training course, The Capital Course:
Based on everything I’ve learned raising over $100M for my companies, the course is broken down into 8 modules:
- Start With The End In Mind
- How Venture Capital Works
- How Funding Rounds Differ
- “Manufacturing” Investor Interest
- Creating The Perfect Pitch Deck
- Delivering A Killer Pitch
- Negotiating Term Sheets
- Close The Round & Work With Investors
The training is delivered online via video and breaks down what can be a pretty complicated process into the 8 simple steps I’ve outlined above.
After you’ve gone through all of the training in The Capital Course, you’ll understand the entire process to raise money from investors, but most importantly you’ll understand how to do it SUCCESSFULLY.
I’m making The Capital Course available for the next 2 days only and because you’re on my list, you can click the button below to be taken to a special link where you can get it for $1,000 off the regular price.
Please don’t share this link with anyone – it’s just for you.
Enrollment Update – Thanks to everyone that’s already enrolled in the class. For those who haven’t, we’ve got less than 5 spots left before we pull the registration page down.
P.S. When you enroll in The Capital Course, you’ll also get 12 months of direct access to me, so I can answer all of your questions about raising money, pitch decks, how to deal with investors, etc. I’m looking forward to helping you out.