How to raise a growth round and get the right term sheets for your business, faster
Ideas and resources on how to run a fundraising process when running your business is already more than a full time job
The next few posts will walk through the investment process for a growth round from start to finish and provide a few ideas on how to make it work for you as a founder. I'll break this up into five different posts and cover the first today:
Pre-term sheet diligence and how to manage a fundraising process so that things run smoothly and save you time as a founder
What's going on in the background during diligence from the investor side
Common reasons for a 'no' or 'not right now'
Term sheets 101
What happens once a term sheet is signed to get a deal to close
How to win the early fundraising diligence process and get the term sheets that you want
The key difference between a growth round and earlier stages of fundraising is the focus on data. When you have significant business traction, investors will dig into this as a core workstream that drives valuation and gets you to that term sheet.
An overwhelming majority of the founders I work with tell me that they have two main goals when they raise capital 1) set their company up with a partner that is a good fit for their business, financially and strategically and 2) do this as efficiently as possible so they can get back to running their company.
My prior post provides a good map on how to achieve #1. Before spending much time you can ask investors for their core check size and traction (ARR scale, profitability) criteria to determine if your company is a good fit as a baseline.
As for #2, founders I've seen run efficient fundraising processes have a great handle on their core business metrics and are ready to share these before or during an initial conversation. Making this information clear and easy to digest is very helpful, so its great to send a few bullet points detailing your ARR, profitability, retention trends. I've also seen a simple 1-pager with a core product overview & metrics work very well. An example template for my fictitious company, Lyndsay's Legos, that you can leverage is linked below (Substack doesn't let me post the editable powerpoint template, but reach out to me if you would like to repurpose it for your own use).
Content always wins over presentation, but the bottom line is when an investor receive information up front, they can prepare targeted questions and move an investment opportunity quickly to a term sheet if its a fit.