My First Fundraising Fieldnotes

Jason Yeh
March 25, 2021

First, a short mea culpa to kick off this launch issue

It’s been months since my last newsletter issue. I want to give tons of COVID related excuses but the real reason is that I struggled to develop a predictable format that was both helpful to the community and easy to execute against.

My first format, clever fundraising illustrations with a companion long form essay, cleared the first hurdle with flying colors but failed spectacularly on the second. So spectacularly that I avoided thinking about alternative formats.

The solution came out of the weekly Fundraising Office Hours session I began hosting on Clubhouse. In order to warm up the room, I share stories from my week of counseling founders through their fundraising challenges. This been incredibly well received and makes so much sense to be translated into a newsletter.

Anyway, my bad🙋🏻 for the radio silence, but I’m excited to send you all up to date insights straight from the field every week…starting now!

The window for this story is closing! I need to start to raise now😳

I talked to a founder whose business benefits from the reopening of industries affected by COVID shutdowns. He told me the strength of the story would lose its “you gotta get in now !” impact in a few weeks so he wanted to rush to kick things off. He hadn’t prepped his investor list or started mapping his connections. He just really felt like the story window was closing.

I told him to a certain extent he might be right about the story, but that doing the proper preparation for his raise was way more important than the timing of this ONE story. There is always another story to tell but you can only launch your fundraise correctly with diligent prepartion ONCE.

The valuation is going up! Am I raising too much money? (hmm maybe not enough)🤑

This week a founder had hit the amazing tipping point all fundraisers are hoping to hit. That point when it goes from dying of thirst to drowning. Just a couple weeks prior, she had been struggling to find someone interested and this week investors were bidding up her valuation.

She came to me and said her $1.5MM raise was going super well and now she had gotten to a valuation she didn’t expect and an opportunity to raise $2MM. She asked if I thought she was raising too much money.

Raising too much money is a well covered topic in venture capital education. The idea being too much money at too high of a valuation can dilute a founding team and raise a bar that is difficult to meet for the next financing or perhaps take a meaningfully large acquisition off the table.

But if a company gets an attractive offer at a high valuation, the play for a founder might actually be to try to raise MORE money. The logic here is if you’ve gotten a significantly high valuation from a firm you like, you should instead raise more money to make sure you have enough runway to execute and exceed the bar that is established by your valuation. Otherwise you should raise less and walk back the valuation to keep things in line.