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This is what I call a "FOMO round": Founder talks to VC A, B, C, D, E for a fundraise VC A leads a round at valuation X VC B-E have a ton of FOMO and one of them says “What if we give you more money at 3 * X” Founder says "f*** yeah!" Lots of this happening right now.

There is now a strong selection bias in how companies go public: Direct listing - the best companies IPO - good companies SPAC - the rest Obviously exceptions in all 3 buckets but that’s the trend.

1/ A simple but effective tactic for negotiations that I learned from an advisor when selling my previous company is “instant rejection”. If someone offers you a deal where there is one deal breaker item, instead of negotiating the deal entirely, just instantly reject the deal.

6/ Do: run a strong investor pipeline. The biggest thing in your power is to get connected with or reach out to as many investors as possible. For @BankMercury seed I talked to 150+ investors. For our series A, I talked to 25 VCs. Those were both relatively quick rounds.

1/ Fundraising is a bit of a chicken and egg process, where once you get momentum it's easy and before that it's almost impossible. Closing a funding round requires momentum, and there is an art to "creating" FOMO in a genuine way. Here are some do's and don'ts:

🧵 Keep investors updated through the hard times twitter.com/immad/status/1…

over 2 years ago

🐦 Perfect your product, not the look of your pitch deck twitter.com/immad/status/1…

3/ C: Partners at series A+ VC firms often make ~2 per year, so they can be quickly over stretched. Unfortunately as with B this doesn’t stop them taking the meeting with an entrepreneur even if it’s near impossible for an entrepreneur to get a yes from the VC

over 2 years ago

1/ A lot of the time when an investor passes on a deal it has nothing to do with how good your company is. Three common reasons: A) your company is off thesis B) investor doesn’t have funds C) investor has invested too much recently and is being extra picky

7/ E) always mentally prepare for “shit hitting the fan”. What if your biggest customer churns? What if you have unexpected taxes? What if your term sheet falls through? Ideally have worst case scenario contingency plans. I call these cockroach mode plans :)

6/ D) avoid non-lead checks from “series A brands” in your seed. This can really kill companies. Just talked to a company that did well but not “amazing” but their seed “series A brand” investor didn’t want to lead the series A. They really struggled raising from anyone.

over 2 years ago

2/ this means what you are really fighting for in fundraising is making sure in the medium scenario you do okay. The medium scenario is where you do well but not quite enough to get profitable or attract a 3x+ valuation premium. This case is actually really common.

🧵 Handle tricky fundraising questions with informed confidence twitter.com/immad/status/1…

🐦 What to do after you raise a seed round: don't overspend twitter.com/immad/status/1…

1/ As an investor you are often making very quick decisions about startups. Here are some questions I think about: Team: - have they built something impressive before - have they thought about the problems deeply - have they shown perseverance - do they care about the problem

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over 2 years ago