What should founders look out for when they're fundraising? If you do a quick Google, you can find loads of things investors should think about before investing in a founder… but not so much for the other side of the table. Founders who are new to fundraising don't have a playbook on fundraising - like what term sheet is right for them, how to carry out DD, what good value add looks like - and because they're new to all of this, some of them don't even realise they signed the short end of the stick.
To change this, we invited Nikhil Kapur from STRIVE and Brian Ma from Iterative, investors who were founders prior, to share more about the common things founders need to look out for when fundraising. In this episode, they talk about…
- What founders should be asking investors
- Horror stories on investors from Nikhil and Brian
- When should convertible notes come in?
- How founders can navigate through the current funding cycle
- The green flags from investors - what good investors look like
Founders Aren't Asking The Right Questions
Difference Between US and SEA VC Ecosystem
Nikhil's Personal Horror Story With Other Investors
After a decade spent in development and product at Microsoft Office (10M+ SaaS deployments), TommyJams (founder), Pie (SMB SaaS acquired by Google), Nikhil knows how to build scalable SaaS businesses. He's now currently applying these as a VC at STRIVE ($200M+ AUM) as he invests in SaaS and DevInfra being built out of Asia by exceptional founders with a product-led mindset.
Brian Ma, General Partner at Iterative
Brian was previously the Co-Founder and CEO of Divvy Homes (a16z, GIC). In 2014, he and Elpizo Choi started Weave (YCS14). In 2009, he started Decide.com an early machine learning company that predicted the future price of consumer goods. It was acquired by eBay in 2013. In 2005, he was one of the first PMs at Zillow before they launched.
5:47 - How have the conversations between founders and fund managers shifted
10:42 - What are some of the interesting questions investors get (11:21: Founders aren't asking the right questions - what founders should be asking)
15:31 - Brian's personal story on how he was shortchanged by investors
18:04 - Term sheets signed, and not honoured, is extremely common
18:26 - Nikhil's personal horror story with another investor that "caused a ruckus” - how Nikhil had to personally jump on calls to convince investors to go ahead at 20:44
22:33 - At what stage should startups start considering notes being included into the term sheet
22:57 - Nikhil's blog post 'How convertible notes are killing you’ that went viral four years ago
29:02 - How should founders navigate through the current funding cycle
30:45 - Why Nikhil advises founders to take more active investors in the early stages
34:31 - Why Brian suggest for founders to figure out what your investors are really good at
36:07 - Investors' green flags - what good investors look like
37:41 - Brian's personal story of how his investor value-added for his company in the early days
39:51 - A VC's job is to predict problems that will crop up
41:14 - Nikhil's rule: Try to contribute to every one of his portfolio/founders and be there for them in the tough times and have no judgement policy
43:38 - Should founders spray and pray, or pitch only to specific investors?
46:41 - LP fundraising is very different - Brian spoke to 600 people for Iterative's first fund
47:59 - How to tap into an angel investors' or an accelerator's resources