Thread by @dunkhippo33

A quick piece of unsolicited advice to all founders who are raising money / have raised money:

Please give your past investors a heads-up that you are closing a round as early as you can. It will make your life easier and less hectic.

A thread >>

1) Let's say you raise on a bunch of convertible notes or SAFEs.

And then you later go and raise an equity round. You're going to need signatures of at least the majority of existing investors for that conversion.

2) From past experience, what typically happens is as a founder, you don't know this / realize this, and then in the 11th hour, you need your past investors to sign within 24 hours.

And now you're in a stressful frenzy.

3) This can be ok for angel investors. As an angel, I've often just skimmed the docs not half understanding them and signed anyway.

But as a GP, I would never do that with my LP's money. So, we need to rope in our counsel to review the docs.

4) Once that happens, you're kinda out of luck about making the 24 hour deadline.

There's little I can do as a GP, because often outside counsel is shared by many funds -- esp as a microfund, we don't have internal counsel.

5) And I don't pity lawyers often, but man, it must be challenging to prioritize all these microfunds' requests for deal review and other things as counsel.

Every client wants things done yesterday. That sucks.

6) This especially comes to head at the December holidays.

Everyone is trying to finish their deals by the end of the year. And every lawyer in town is bombarded by deal review and wanting to go on vacation.

7) So, how to get your docs signed off by everyone in a timely way?

A) Give all your investors a heads up that you have signed terms and are working on draft docs.

B) Ideally, share draft docs as early as possible.

C) Any heads up allows GPs to give their lawyers a heads up.