most startup founders have weakness in fundraising 4 min read

raising just an investment is easy.
some founders would say, “hey it’s actually the easy part.”

but the reality is,
raising investment at the valuation you want,
with the terms and rights that benefits you more,
while keeping a win-win situation — this would be a lot harder.

the terms

want to be a perpetual company CEO like zuck?
or have the risk being booted from the CEO seat from your own founded company like stevejobs?

all the terms and agreement lies in the fundraising process.
fundraising is an incredibly crucial part in a founder journey.

yet not many master this.
or care enough to learn it.

never delegate these

I think a VC, and maybe brian chesky too (l forget which one) said that there are 2 roles that a founder should never delegate until he’s forced to do so:

1. building the early team

recruiting, interviewing the candidates, make sure that they’re culture fit, and so on.
like maybe the first 50-100 people. they will determine the company’s future, company’s culture & personality.

2. fundraising

investors want to talk to the Founder-CEO.
the one who can make decision on the spot.

the other tasks can be delegated to the team.
if you handpicked the right team, you might not need to interfere them that much.

fundraising

out of all startup knowledge I have,
the one knowledge that I share the most, to my fellow founders,
were about fundraising (including pitch deck).

I’ve collected maybe 10+ pitch deck drafts which they asked me to evaluate.
some are good & professional. but mostly bad 😂

so this fundraising is a role that a founder will do for the rest of the company’s life.
because even if a founder were not a CEO anymore,
most likely he/she will still be somewhere around the Board,
and involved in the fundraising processes.

a skill which mastered by few

but most founders came from, either a technical, or marketing background;
and the skill to grow the early stage business and fundraising is not one of them.

it’s complex

the fundraising is indeed quite a complex knowledge.

I know at least there are:

• 25 Term Sheet clauses.
• then the cap table. how not to make this thing messy.
• then the valuation. what number makes sense and don’t. the pre money post money thing.
• the projection.
• the founder compensation.
• etc.

fundraising will also relate with the other part of the startup. like the ESOP.
you can use the default ESOP, but I think it’s not really that good.
the default ESOP can still be improved by a lot.

overwhelming

when you fundraise you will contemplate with many startup foundation principles which only the founder can answer. this can be overwhelming.

SAFE

in the US, there is this investment agreement thing called SAFE.
I don’t think it’s recognized well enough here in Indonesia.

nevertheless SAFE is actually giving the investor to choose the best outcome,
which means this would benefit the investor, but instead not really beneficial for the founder except the quick money to run the business.

terms

there is a joke in the VC industry:
a founder may write any (cheque) number he/she want, as long as the VC can decide the terms.

this means the terms can be more important than the numbers.
there are also some things that can only determined on the beginning.

if the founder give up several important rights, most likely it will be very hard or even impossible for him/her to get it back. the founder will have to just live with it.

most want to get away fast

so basically fundraising can be a complex process & steep learning curve for founders who are clueless about it. a lot of founders just want to get away with it fast.

not really reading the long legal documents, only ask the legal team to review it; not realizing what’s the implication to the founder.

most founders just want the money, and going back to the business fast.
and when the next investment round come again, he/she will still be clueless about it.

not based on DMs

ps:
this post is not based on the discussions I’ve had with several founders in the last few months 😁 because I happen to have 2-3 founders who DM’ed & discussed about fundraising with me these several months.

this is an ordinary post with a generic view, just like any other earlier posts.