The current founder fundraising playbook (pre-COVID) according to the All Raise Seed Boot Camp was for female founders to conduct 200 meeting in 2 months and close your round in under 4 months or you will be dead in the water living off zombie money. This means 100% of a founders time must be spend on networking and fundraising. For an early stage company when the founders are the drivers of traction this drastically impacts their traction and growth. This is a huge opportunity cost for an early stage company without a 6 month to 1 year runway to raise. Which is most female and minority founders across the country. What if we could raise faster and minimize the opportunity cost of fundraising?
One way around this I thought was how about we divide and conquer. If funders could invest as groups why couldn’t entrepreneurs fundraise as a group? I reached out to 7 fellow female founders to try an experiment of fundraising together alongside our own fundraises. We identified the main areas where we could more efficiently run our fundraising processes as a team. We assigned tasks, strategized our pitch as SheTransacts, and split up our 200 meetings into 40 a piece. Then we would transparently share, report, and adjust to improve and refine who we truly wanted on our cap tables to become more than just a check but a valuable ongoing resource to our companies.
In order to assess the variable of time in our experiment we needed to be diligence in our execution. We implemented a very consistent “fundraise meeting”each week at the same time. Instead of questioning ourselves as most entrepreneurs who fundraise alone in isolation do, we took a scientific pragmatic approach to fundraise together.
We successfully completed 200 meetings in record time but did not increase the proportion of actual investments.
We quickly identified that not all investors are equal. Many so-called “investors” don’t actually have money or are not actively investing. Not to mention… A million other things that make them the right investor for your stage of the company, risk level, and mission-driven focus. We learned that despite our divide and conquer approach, finding the right investors to maximize our companies growth and impact was still a game of luck and often chance-warm intros. We had only succeeded in the amount of time saved reaching out but not increased in finding a greater percentage of aligned smart investors for our startups.
Another result was that all of us gained back confidence we had when we started that had been crushed fundraising alone.
Instead of questioning ourselves as most entrepreneurs who fundraise alone in isolation do, we took a scientific pragmatic approach to fundraise together and this support system also was positively impacting our growth as strong leaders.
How do we adjust our divide and conquer approach to also increase the alignment with actual investment? This required understanding the criteria that each individual investor and each founder were critical to deciding to invest. As an Olympic-level athlete, I always had actionable feedback to determine my next approach so we needed more transparency from the investors and funds.
Funders have very generic investor thesis statements and public PR about what types of investments they are interested in funding. We needed to have greater transparency from the funders as they were not providing actionable feedback and/or providing clear criteria by which companies are being judged for investment. This is a serious problem leading thousands of founders down a rabbit hole of trying to guess why they didn’t get investment, creating 50+ pitch decks each time an investor gives them advice, family and friends losing faith in their abilities and questing them being an entrepreneur, deeper founder isolation from their previous support systems, and then predatory lending/equity exchange to get thru the fundraising process. All because of a lack of transparency and feedback.
We needed more real-time data to search for the right investors for our circle. We needed to know more from both sides about our parameters and goals before we could truly assess and prioritize our time fundraising to maximize our results as a group. Having transparent data and feedback to prioritize the best use of our time as founders was critical to maximizing our runways and making it thru all the post COVID surprises.
After asking deeper probing questions with investors and funds. We quickly saw that each funder had their very own equation and criteria to decide investments or horrifyingly no criteria at all. Why? even with a heart of gold investor time was also the culprit trigger variable. As the number of startups grows each year and the capacity of funders to review all applications, respond to warm intros, interview founders, and handle due diligence to invest gets smaller each day. I spoke with an impact investor just last week who said he gets 800 pitches a month! Funders are now often delegating the pre-screening to interns, sharing due diligence and deals with fellow funders, and/or simply investing in the founders they already know. It’s no wonder that the stats are only getting wore despite the returns for investors. Funders don’t have a problem with deal flow, but they have a serious problem with assessing the best deals. They are leaving investment dollars on the table because they simply don’t have the time or bandwidth to invest any other way.
It is obvious that there is a serious scaling problem occurring across the startup ecosystem prohibiting an effective flow of resources. The previous 1-to-1 review process of applications and due diligence was no longer working effectively for the numbers of increasing investment opportunities. In fact, it was creating an investor’s first approach. Pre-seed money investment used to be for testing a market fit and seed was for developing the product to go to market. Now many investors won’t invest until proven market fit, gone to market and revenue-generating. Leaving founders without family and friends even more vulnerable.
What if instead of waisting time for everyone and performing due diligence at the end of the investment process we could do it 1st? Imagine how much more value due diligence could have as the actionable feedback loop to educate the founder thru every stage of their growth as well as provide the funders with their real time data.
We knew our team could solve this alignment problem and save valuable time for both funders and founders by doing real-time ongoing due diligence right from the start. Due Diligence 1st would realign the needs of both the founder and investors and save both valuable time they could be spending on higher ROI activities!
We went into stealth mode and began creating the first AI+human Saas to solve the alignment and timing crisis for startups and funders globally. Today it’s live and we’re ready to share it with the world via our white label license. We use our own WeTransact platform and IGI, (our AI) provides real time insights, guidance and inspirations to maximize the alignment across the startup ecosystem globally.
Deal flow becomes investable deals and investors become assets to the success of the founders. Fostering a smarter way to raise and invest with more transparent and actionable feedback so everyone is more productive and maximizing their global impact.
It’s now my turn to get back into the trenches and fundraise the old way so we can revolutionize the a more aligned and prosperous startup ecosystem for both founders and investors.
Have a warm intro? Believe in our solution? Understand the problem? Want to increase efficient deployment capital to maximize impact?
Gratitude and Wish me luck! (since that’s what it will take to find the right investor for SheTransacts and our WeTransact platform)
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