TBC: Grease the Friction in Fundraising

TBC137: Grease the Friction in Fundraising

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[00:00:04] Jason Yeh: Hey everyone. Welcome to anotherepisode of the Back Channel. In today's episode, I wanna share a lesson thatI've learned along the way as a coach and a mentor, an educator, something thatI come back to or run into where I'm like, oh, I, I thought about this conceptas a teacher. Now I'm seeing it in a different part of my life.

[00:00:23] I'm sharing it herebecause I think it has a really big application with fundraising and beinggreat at fundraising. Okay, so here is the concept that I've learned. In orderto be a great teacher or a coach, you really have to understand why the advice orthe directive that you're giving someone is gonna be hard for them to followthrough on.

[00:00:45] So if I'm teachingsomebody how to raise capital, or I'm teaching somebody. How to code, or I'mteaching someone how to do X, Y, and Z. In order to be great at getting thatperson to do that thing, it's not enough just to tell them the right answer. [00:01:00] You have to deeply understand why it'sgonna be hard for them to do it, what the friction points are, eithertactically or psychologically, so that as you give them the right answer, yougrease the wheels around the friction points around the things that'll make ithard.

[00:01:17] For them to takeaction around. That is what I think makes a great teacher and a great coach. Ithink about that for myself as I'm trying to learn about personal developmentthings to make me better, like why is this hard for me to follow? And then I'm,I'm trying to like incorporate my own lessons into maybe the bad coaching thatI'm getting when like, I wish they understood why it's hard for me so theycould work through these friction points alongside of me Now.

[00:01:43] I think this is aworthwhile thing for people to understand as it relates to fundraising, becausewhen it comes to the best fundraisers, the best opportunities for investors toinvest in, a lot of it comes from a founder. Who [00:02:00]has an amazing concept and they are the experts in the space, and in some waysthey are teaching the investor.

[00:02:07] In some ways. Theyare coaching and advising the investor on a great investment for them. They'reshowing them that this would be a great investment, but in order for them to begreat at doing that, at leading the investor to the right place, the right place,which is to invest in the company, they have to deeply understand why is itgoing to be hard.

[00:02:27] For them to makethat decision

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[00:02:30] Jason Yeh: One thing I learned running my lastventure-backed startup is your lawyers really matter. Some founders like toglaze over this decision, but don't do that. It's really important. Last time Iused Gunderson Detmer and I definitely do it again.

[00:02:44] They weren't justtransactional. They really felt like they were a part of a team. There's alegal perspective on almost everything you're doing at a startup, so they'reinvolved in everything from fundraising.

[00:02:53] I. To equity comp,to hiring, to commercial contracts, really everything. And Gundersen is [00:03:00] really built for the early stage. Theywork with more startups and VC firms than anyone else, over 3,500 companies,500 funds, and they've been ranked the top VC law firm for over a decade. So if you're raising so if you're raising, scaling, orjust try not to mess up your first safes as you go out to fundraise. GunderEndeavor can help you navigate all of it, so you can focus on what really matters,which is building a great business, growing that great business, and followingyour dreams. So if you'd like to learn more, check out gunder.com.

[00:03:12] All right, back to the show. I.

[00:03:12] So if you'reraising, scaling, or just try not to mess up that first safe when you go out.Fundraising, Gundersen Detmer can help you navigate it all so you can focus onwhat really matters, which is building a great business, growing that greatbusiness.

[00:03:24] So if you'd like tolearn more about Gunderson Detmer, check out gunder.com.

[00:03:29] This is in part a,a, an encouragement for you to understand what the decision making process fora venture capitalist is like. What is it that they have to do? What is it theyhave to convince? Who do they have to convince, whether it be themselves or their,their partners in the fund or their LPs that this was a good deal?

[00:03:48] How do VCs makedecisions? At a high level, that'll be your starting point for like, okay, ifthey need to make this call, what about the mechanics of their business willmake it a [00:04:00] little bit challenging toinvest in? And then as you dial in deeper, talking a little bit more about whatyour story is, what are the parts that are like a little iffy?

[00:04:09] What are the partsthat you could see someone questioning or not really understanding or having totake a flyer on? If you're able to uncover what those things are, then you canreally figure out how you wanna lean into your story, how you wanna change aspectsof what you deliver, or what is the work that you need to do before you even gopitch to make sure that sticking point is not really a sticking point.

[00:04:35] What is it that youhave to do to push your company to achieve so that that is no longer the thingthat everyone talks about? Like, I kind of like all these things, except forthis one thing makes me not want to do the deal. I think this is such a greatframework to help founders understand, well, what do I need to work on?

[00:04:54] What are the thingsthat I need to do before I can be comfortable going out and spending real timeto go [00:05:00] try to raise capital becauseyou might not be ready. All right, so think about what are the things that willmake it difficult for someone to invest and then work on the package that willhelp overcome that.

[00:05:12] All right. I hopethis framework is helpful for you as you consider what you need to do to prepfor your next fundraise, and I'll see you next time on another episode of theBack channel.

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