#333 Unlocking VC Funding: Secrets and strategies from entrepreneur and investor Gian Seehra
Jan 10, 2024
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Gian Seehra, previous biotech entrepreneur and investor at Octopus Ventures, shares secrets and strategies for unlocking VC funding. They discuss pitch deck design, negotiating term sheets, supporting founders, market conditions for fundraising, and challenges in health tech and biotech commercialization.
Preparation is key for fundraising success, including building a strong network and practicing the pitch.
Consider party rounds or alternative routes if faced with difficulties in securing lead investors.
Negotiate term sheets carefully to avoid loss of control and ensure a mutually beneficial agreement.
Deep dives
Preparation and Practice: Key to a Successful Fundraise
When embarking on a fundraising journey, it is crucial for founders to prepare and practice extensively. This involves building an amazing network and creating a strong founder brand to enhance perception. Additionally, founders should engage in regular practice sessions to perfect their pitch and anticipate major questions they may encounter. The intensive preparation ensures that founders are confident, well-prepared, and able to effectively communicate the value of their venture to potential investors.
Navigating Challenges and Failures in Fundraising
Fundraising can be a challenging process, with potential for setbacks and failures. If faced with repeated rejections or difficulties in securing a lead investor, founders may opt for a party round where multiple investors each contribute a portion of the investment. This allows founders to secure funding and leverage it to attain the next milestone. Conversely, if a fundraising process is clearly not working, founders are advised to fail fast, reassess their strategy, and potentially explore alternative routes like bridge funding or repositioning their venture for future fundraising opportunities.
The Final Stretch: Evaluating a Term Sheet
When a founder receives a term sheet, it is important to strike a balance between being accommodating and negotiating favorable terms. While it is not advisable to be a pushover and blindly accept the terms, founders should also avoid being overly aggressive. Being thorough in reviewing the terms, seeking legal advice, and engaging in respectful negotiations demonstrates a founder's understanding of the implications and safeguards their interests. It is essential to find a middle ground that allows for a mutually beneficial agreement between the founder and the investor.
Importance of Negotiating Terms in Fundraising
Negotiating terms is crucial in fundraising to avoid potential pitfalls. Early-stage companies may face challenges if they give preference shares too early, as this can lead to loss of control and hinder future funding rounds. Understanding the terms, such as preference shares, is essential. Founders should be savvy, negotiate their term sheet, and ensure they have some level of board control to protect their company's trajectory.
Challenges and Rewards of Solo Entrepreneurship
Being a solo founder can be challenging, as there is no one to leverage off and the workload falls solely on one person. However, it also allows the founder to have control over their work and pursue their passion. Teaching and helping others can be a source of joy and fulfillment. In the unregulated world of courses, seminars, and coaching, it is important to find founders who prioritize integrity, honesty, and provide value. There may be negatives, such as financial uncertainties, but the satisfaction of building something worthwhile outweighs them.
This week, James is joined by Gian Seehra. A previous biotech entrepreneur where he raised $16m and a previous investor at Octopus Ventures in the health team. He now helps tech founders raise venture capital by helping them building fundraising operating systems. Founders have gone on to raise over $150,000,000 doing this.
