Lesson: Fundraising Series Seed with Jenny Lefcourt

Step #10 The Close: Closing investors is like throwing a party

People talk about getting in investors in is like herding cats, and it's a fair analogy. You have to work hard to get them to move the way you want them to move, and I used to talk about it's like throwing a party, right? And there was a time where you have to say, well so-and-so's coming, you should come, and then you'd say to the other person, they're in, are you in? You're really trying to drive everyone to a similar place at a similar time.

Timing is really important, and so you care about it. You're thinking about it 24/7. The investor's not. You're one of the five companies they maybe met today. And so how do you make it happen? And that's kind of more of an art than a science. You have to work it. You have to keep communicating. You have to go and have a process. I'm closing at the end of June, would love to have you be a part of that.

You have to have an end point in mind. What you have to understand is you're an entrepreneur. You're thinking about this 24/7. You wanted the money in the bank yesterday, and you are impatient. You're sort of frustrated. Why are they not moving? Well the people on the other side are very busy. You're one of the five companies they met today, you know, or 20 this week or who knows. Different VCs meet with different numbers of companies. But the point is that you're on different timelines and it's your job as entrepreneur to herd the cats, to get them where you need to get them in the timing that you need to get them. That's a little more of an art than a science.

I've seen closings be as quick as two weeks. I think the harder part is getting to the term sheet, agreeing to the terms. But the good VCs from agreeing to terms and getting the paperwork done with the good attorneys, it's not a long process. And so if you're working with the right VC, they move quickly. The attorneys move quickly, and then the people who are joining the round, they're happy to be a part of the round, and they too will do what they're supposed to do.

The dynamics of fundraising has changed since I've been in the ballot, which has been 20 years, and I think you have to understand, how much are you raising and what types of firms are you trying to get it from? And then you'll understand a little more if you're likely to have cooperation or competition amongst your VCs. And therefore, how do you work your process? So if you're raising $2 million and you're hitting up CHS investors, you're going to be able to get probably two plus some other in there. Which means, when you're like, well, someone is interested. You better hurry up. It doesn't really work that way.

Where if there is likely that there's going to be one investor, and you really have interest from others, you want to sort of let them know of the interest so that you have options present themselves at the same time. So it's about timing. It's about the dynamics of how you're going to pull together your round. It is also interesting that entrepreneurs think if they just mention that, I'm meeting with a lot of other investors while I'm in town, that that's going to get you to move. And I think it maybe used to, but it doesn't anymore. There's lots of capital, and I think investors at least freestyle. We want to work with great entrepreneurs. We want to work with people we enjoy working with on big, interesting businesses, and we love to co-invest.

We love to co-invest and have other smart people hustling with us. So you have to be careful because you sort of think that you're supposed to play these cards to get people to move, and sometimes it's just a turnoff and not necessarily a driver.