Hey - it’s Jason Yeh 🕺🏻

Crazy times in the startup funding world huh?

For the next few weeks, we’re going to focus on content tailored to founders whose fundraise plans were thrown off / blown up / redirected / rescheduled by the crash in investor sentiment.

This week, I cover the silver lining of it all but before beginning... I have a relevant gem to share.

Alright, on to this week’s essay… (6.7.22)

The Silver Lining of Pausing Your Fundraise

The market sucks and you paused your fundraise last week. You’re not alone and for many founders like you, guess what? It might end up being a blessing in disguise.

In the last couple weeks, founders everywhere have either been forced to abandon fundraises or proactively “pause” fundraising activities. Pausing was one recommendation I gave in my article summarizing the current mess and possible paths forward.

As painful as it might feel in the short term, for many founders this is better than OK. It’s for the best.

3 reasons why waiting till after the summer is great

1. You didn’t start at a great time anyway

Independent of market conditions, starting a fundraise that might run into the beginning of summer vacation is not ideal. In pre-pandemic times, VC activity would begin to slow in June as kids got off from school and vacation travel began ramping up. VCs are already highly distractible creatures, so throw the summer dynamics in there and good luck driving that process to a close! There were 2 COVID summers where it seemed like VCs plowed through June – August processing deals, but 2022 looks to be the first return to (new) normal with more normal vacations. Even if the market hadn’t tanked, your timing would not have been opportune.

2. Power of creative constraints

If you paused your fundraise in favor of running a process in 3 to 6 months when VCs will have regrouped, you have set up perhaps the most productive sprint of your company’s life. Up till now, maybe you were following a few possible plans. If XYZ product hit an inflection point you’d raise a month sooner. If ABC partner signed a contract, you’d raise a month later. You had some flexibility. But now? Those “choose your own adventure” plans are out the door. The market has forced you into a singularly focused mission: Take the next few months to manage cash and execute your brains out. This is what some people call a “creative constraint” and it might produce some of the most exceptional months of work from your company to date.

3. Avoiding the most common mistake in fundraising

A common sight for me is the founder who lightly understands the concept of fundraising. To them it’s just the act of asking people with money, for money. With that dangerously light bit of knowledge in hand, they quickly throw together a deck, pick a handful of investors to start conversations with, and let ‘er rip. This under preparation is the most common mistake in fundraising. A mistake I would guess that many of you were about to commit.But the universe acts in mysterious ways. The market seizure that you thought was a slap in the face was in fact a gift. It’s like your startup teacher assigned a 1000-word essay due Monday on “why you deserve millions in funding” that you had barely written a paragraph for… AND JUST GAVE YOU AN EXTENSION (praise the lahd!)

So you got a stay of execut… I mean, an extension. What should you do?

Besides doing as much as you can to push your business forward, you now get a chance to really focus on REALLY preparing for the fundraise. The next few weeks I’ll be sharing content to help with this.

This week… it’s a mini pod by yours truly. At the beginning of April, I published an episode of The Backchannel leaning into the importance of intense fundraise prep and how valuable that work can be.

Whether by choice or not, the summer is forcing founders to prepare for fall fundraises and, to me, that extra time can be a great thing. Listen to the episode and hear why I think this preparation period can be transformational for your business.

Also, If you’re new to the podcast, make sure you check out past episodes and review / subscribe - appreciate your support!

Smart Twitter Takes

Each stage might require a bit more b/c of the correction, but these broad strokes are directionally accurate

A great Elizabeth Yin thread with thoughtful consideration of when, where, why, why not to raise VC... worth a read

Till next week. Stay adamant and be chased.

Jason

P.S. Did I share this already? Doesn’t matter. Funny enough to reshare.

In case you missed it…

What should founders expect from the fundraising downturn, and what can they do about it? Read last week's post for more:

Small asks!

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