We are going to try to establish a fun new blog series every Friday called “Friday Fun-isms”. These are a collection of phrases and sayings that we often say internally at NextView or with the founders we work with. These posts aren’t meant to be super detailed, but a bit of a peak into our thinking and hopefully a reflection of something interesting or helpful.
Our first Friday Fun-ism is one that I always talk about when it comes to fundraising: “It moves slow until it moves fast”.
Fundraising processes have an unusual tempo. There is usually a fairly lengthy period of preparation, followed by the initial flurry of first meetings. In some cases, these immediately convert into heated interest. But in most cases, it takes a while for the fundraise process to build momentum.
But what I’ve found is that the end of a fundraise is always a mad sprint. Usually, once someone starts to show real interest, it’s like a raven has been sent to the rest of the market that they need to pay attention. Maybe it’s the gossip chain, or maybe it’s just your own body language that communicates this. But processes tend to move at a fast and furious pace at the end.
It’s at this point that the power dynamic between founders and investors tends to flip. Investors start to fear that they may lose an opportunity to invest, and so are willing to move faster and maybe become more flexible on terms. They will put pressure on founders to get things done quickly so they can lock things in. As a founder, it pays to try to slow things down a little at this point. Do so respectfully, and don’t play games, but don’t let the fast pace at the end prevent you from doing due diligence and making the right decision. Remember that the investors that came out of the woodwork once there was heat are probably not the investors who will stick with you through thick and thin. And don’t get too overconfident and push the boundaries too far either. Just as it moves slow until it moves fast… things can also change in an instant. But we’ll save that for next week!