Thread by @epaley

It’s often said that the founder/VC relationship is harder to get out of than a marriage. Put that way, it’s shocking how few data points inform investment decisions.

That means it’s *really* important that you get them mostly right.

Some thoughts on how to do that:

/1

Here is a sample of the interactions/time spent between the founder/VC in a seed round (note that it’s often much less):

45:00 - 1st meeting
60:00 - 2nd meeting
30:00 - Video chat
60:00 - Partner meeting
90:00 - Misc. Phone/email
90:00 - Diligence
90:00 - Negotiation

/2

It’s very likely that you and your investor will spend less than the equivalent of a single workday together, in an effort to gauge fit for a relationship that could last a decade or more.

/3

The result is that every single signal is magnified. An oddly evasive response to a question about an absent co-founder feels portentous. Even small signals like showing up late can be viewed as a discomfiting signal. Here are some tips on managing the process:

/4

🦆 Get your ducks in a row: I wrote a long thread about this (

https://twitter.com/epaley/status/1112839097368891393

…), but laying the groundwork is what allows you to respond quickly, or not. Trust me, it's better to work out awkward founder issues in a prep session instead of a partner meeting.

/5

⏱️ Respond rapidly: In early stages of a fundraise, respond to every email you receive from 7AM to 11PM in <4 hours. By the time you’re negotiating terms, respond in <90 min, even if it’s just “Looking into it, will reply ASAP.” Going dark for even a day can scare investors.

/6

🚒 Put out fires in real time: If you see a confused look during a meeting, or sense that an answer isn’t satisfying a questioner, address it — then. Don’t let a lingering doubt become a deal killer. It’s a break from the normal social script, but critically important.

/7

📚 Overdeliver: If a VC asks you a question and you don’t have a great response at the ready, come back with a thoughtful one ASAP. If they don’t buy your sales story, build a model. While a misstep can kill the deal, deep thinking and responsiveness can rescue it.

/8

Note that the common denominator of this advice is communication. There’s only so much progress you can make with your business while you’re fundraising, but you can control the speed and quality of your communication.

/9

None of this is fair. A flat tire might make you late & the death of your great aunt Agnes might distract you, but that doesn’t change the fact that a multi-million dollar decision needs to be made with limited data & tiny signals can confuse that decision.

/10

This may sound stressful, but looking through the other end of the telescope, that also means you only need to be buttoned-up for a few hours in aggregate time ;-)

/11

NB: All of these points apply equally to VCs. In today's market it’s easy enough, & probably smart, for founders to be suspect of the investor who stares at a phone during a pitch, can’t seem to follow up on diligence or gets tricky with a term sheet.

/End #CollectiveWisdom