How to Get the Best Outcome for Your Startup While Fundraising | Camila Noordeloos from Grand Ventures

Camila: [00:00:00] One of our portfolio companies had five term sheets within a week, and it was great because we got in a call with the board and it was very clear to them which VC they wanted to go forward with. For me, the best outcome is having multiple options. At the same time so that you can really go back and negotiate timing of your intercalls and timing of when you release the data room.

Camila: I think two tactics that are very, it's kind of like the only things that you can control from a timing perspective after that.

Rahul: Hey Camilla, thank you so much for joining me today.

Camila: Thank you. Thanks for having me. It's a pleasure.

Rahul: So you recently shared with me how a few of your portfolio companies had really successful fundraise receiving four to five term sheets within the same week. So what was more interesting to me was the point that you made that a company [00:01:00] performing well does not guarantee the best outcome. In a fundraising process.

Rahul: why is that?

Camila: Yeah. Um, when we talked recently, we were talking about like, what are the subjects or topics that we could cover? I think one thing that, recently stuck to my mind to your point is that we had a three portfolio companies that had very successful fundraising rounds. Yes, they were a company that they were performing and performing well, hitting their milestones, has shown growth. So we knew that they would be able to, to, raise. To my point is there's so much capital out there. There's so much dry powder and in venture funds out there. So if you are a company that Is performing well, is growing, has a good team. You most likely will be able to find a investor and will be raised to be able to raise a successful round. but when I say that it's not guaranteed, the best outcome is because [00:02:00] ultimately what you want is. Many term sheets around the same time to really increase your odds, increase, your negotiation power. Right? So, founders typically will focus and that's not wrong, right? They focus on the strategy and the purpose on, you know, the overall story of the company. Showing how they're doing great. And it's easy to forget the crucial step of like really planning your fundraise in a very structured and efficient way to try your best. It's really hard to do, but really try your best to time when your, your lead, potential leading investors are going to put that term sheet in because you want them around the same time.

Camila: So just taking a step back because I know. a lot of your audience are founders, but for those who don't know the term sheets, kind of like an offer to invest in your company, you will have, [00:03:00] it's a little quick legal document and we'll have like the main. Terms that that investor care about. So there is no surprise later on the full package of legal documents. There, there will be the evaluation and it's pretty much the investors saying like us at grand venture is saying, Hey, I'm willing to put this much in your seat round or in your series eight round. I'm going to lead with this check, et cetera. And at the end, he has a timing, he has a deadline that you have to provide an answer. So that's when. It becomes interesting because You want to time that till you have many of them at the same time. So you don't run the deadline from other, investors. So you, with that, you allow yourself to have more negotiating power because you see many. Many offers, you can see what's a fair value.

Camila: What's the market's willing to pay the kind of like the range, the different terms. [00:04:00] So the reason why I say why good companies don't necessarily have the best outcome is because for me, the best outcome is having multiple options at the same time so that you can really go back and negotiate. and sometimes they don't. If, if it wasn't time. Timed correctly. you, you get a term sheet and you're like, what are you going to do? You have one here in some that might like in a month from now, but are you going to risk not signing for someone else that might drop along the way? So that's, um, that's where, the best outcome comes from.

Rahul: Yeah. Yeah. This is so true. So I was helping a startup here, um, fundraise. And then we decided to meet with one of the investors just to get a sense of whether that VC would be interested. But then we didn't expect the VC to quickly give us a term sheet. And then, then it was like, okay, now we didn't plan through [00:05:00] the thing through the entire process.

Rahul: and have any other investor meetings lined up. So even when, when they offer the term sheet was like, okay, is this the best that we can get? We could not have an answer. So I guess, having multiple team term sheets is the only scenario where you have the leverage, uh, in negotiation. Right.

Camila: I don't know. I mean, you have more leverage, right? I don't, I wouldn't say that now that the startups that only have one term sheet, um, I'm in a bad situation. You got a term sheet that's already exceptional, right? Um, what I would say, just like in a job search, you can still go back and negotiate, right?

Camila: You can still go back to that potential investor and say, Hey, I was hoping for, uh, A little more of an evaluation because I don't want to get very diluted. Or there are [00:06:00] other places that you can negotiate too. You can negotiate in certain terms. You can negotiate maybe in your size of your option pool. Normally investors are reasonable. and hopefully you are getting one that is reasonable, especially if the company is doing well. And then in some cases, even a company, uh, investor might be, might be able to extend that period. You know, you can say, Hey, I have a few other conversations that are at the end of their due diligence process. Can I wait one more week? Can you give me a little more time? And sometimes they will let you do that, because they also want to play nice. They want to, They want you to pick them and that's a sign of like the quality and how you guys will work together in the future. And then that's when you can go back to other investors that have shown more seriousness to pursue [00:07:00] the investment to say, hey, I have a term sheet. How quickly can you make a decision if you're moving forward or not? And you can get a sense there before you're giving an answer to the other, um, the main lead investor that you have on the table. So it's not the end of the world, obviously, but it is much nicer when you actually have it, you know, several timesheets in your hands and you can quickly go back and forth. In pushback on some of the terms, so in our case, for example, we, One of our portfolio companies had 5 term sheets within a week and it was so great because we got in a call with the board and it was very clear to them, which. VC They wanted to go forward with, as far as just like the quality of the conversations they had along the way, the, the team, everything, the whole process, right. But they had actually the [00:08:00] second to worst valuation out of the five. but with all five options. We were able to go back and say, Hey, we really want to partner with you. We loved how you did this, this, and this. If you can come here to this valuation, you're gonna make our lives much easier to decide.

Camila: And that moved the needle very quickly because they, they did, they, they came up on valuation and we, they were able to get The best valuation with the VC firm that they wanted and only because they could compare things, you know, apples to apples in and use that as leverage. I think one thing also that it's, it's interesting and it's important to remember is for serious investors leading around is a, it's a, it's a big process.

Camila: It's a heavy lift. You know, you have a lot of team members involved. You go through at least At our firm, like you go through [00:09:00] extended, you know, comprehensive due diligence, you talk to customers, you talk to experts, you talk to other investors, you talk to the team at the startup, you do background checks, they do all these kinds of things. And it takes time. It, it, it takes time from all the investments that you could be doing because you're heads down, doing due diligence in this specific company. So when you do put a term sheet. You want that term sheet.

Camila: And it's almost like a combination of like, Hey, I just wasted all this time. I don't want to lose it because our term sheet is not the best. Or there's an ego thing in the VC industry. Like, they like, what they pick someone else. It didn't pick me. So again, when you do have multiple term sheets, you have that power to, you know, pick between different ones, but most likely they all know that you're going to go back and try to negotiate, you know, it's just like nowadays when people are again, going back to the job hunt analogy. Most likely someone's going to get an offer and be like, Oh, [00:10:00] can I negotiate here? It might not be in the salary, but it could be in the bonus package. It could be on the benefits. It could be in the flexibility from working from home, whatever that is. There are different ways that the startups can negotiate that as well. So,When you go back to that, you know, whatever VC you like the most and say, Hey, I got valuations that I'm much better than yours. but I really wanna work with you. There is room for them to, to go up, most likely. So I'll keep that in mind. And, and again, nobody wanna lose, like if they. Made the bet on that company.

Camila: And like, for example, we looked at thousand companies a year. If we made a bet on like, if the few that we actually put a term sheet in, we obviously want that very much. So dig that in your favor.

Rahul: Yeah, you have leverage even if you just receive one, it's, it's, it's exactly like you said like when you get an offer, the company has spent so much of [00:11:00] effort, then there is a lot of sunken cost and then there is little bit room for, uh, negotiation for sure. but you mentioned, the different terms, right?

Rahul: When you say best outcome, uh, what does that really mean? is it just higher valuation or some other terms, or you get to pick the partner in a particular VC firm who you think might be the best fit or the right person for your business, uh, to work with. So how would you define the best outcome?

Camila: Hmm. That's a great question. I think it will vary company by company for me. The best outcome is a combination of a VC firm that will provide the capital obviously, but also support in different ways.

Camila: It could be that you already have a board that is very sector focused in adding someone that now actually brings a different type of expertise. And it could be like a VC firm that [00:12:00] the expertise for them is go to market strategy is, you know, it's something very specific that that VC needs at that moment. So finding a, you know, That we see that is willing to help is willing to add value beyond just the capital, but I think what's going to be the best outcome. It depends on the, the specific need of the company. and, of course, you, you don't want to get diluted too much. You want a valuation that is fair.

Camila: especially when you have multiple term sheets in hand, you can say, Ooh, wow, this company here, they're so low. they're very price sensitive. It's not the right fit because I can have three others that are putting their price range over here on the top.

Camila: And this one is much lower. Most likely they're not going to be able to meet a huge gap, but, um, But again, maybe that firm has a ton of the strategic value to add, and it's [00:13:00] going to be more beneficial to the company. So I think it's going to depend in each situation. And it's a conversation that the board, the, the executives can have together to help make that decision.

Camila: But, for example, 1 of the companies that I mentioned to you, what really drove them was the culture fit was the. More like how they work through the due diligence, little things along the way that really impressed the founders and said, I want to work with these people. I love these people. They get us, they get our style. and that was way more important than the valuation. They were willing to take the valuation, lower the terms. Now, obviously if they came with very unreasonable terms and valuations, it's a different story, but no, they came somewhat in the range, so they were willing to work with those, those people. Regardless, and then by having multiple options, they also able to go back and say, Hey, make it a little easier on us. Like, if you can increase valuation a little more, it would make [00:14:00] this decision really quick and easy and they were able to. So, yeah, it will depend on each. specific situation.

Rahul: Okay. So in a situation where you receive one term sheet and a situation where you receive multiple term sheets, what would be the Delta in the outcome?

Camila: Yeah, are you, are you saying in terms of valuation or

Camila: another?

Rahul: all the other factors?

Camila: think it could be very significant. I mean, again, you don't really know because you only got one term sheet, right? But

Camila: like it could be, you know, if, and we can talk about little strategies on how to try to time. Again, I said it's, it's really hard, but when you only have one option in your hands. And you're like still meeting people from inter calls. Like it's so early in other conversations that even if a new firm shows some interest, it's like, Oh, I really like this. That [00:15:00] interest could drop significantly two or three weeks from now. You know, like you could have an intro call, a second call, a third call.

Camila: That's really good and nice. But then you go to the investment committee. And one of the partners absolutely hates it and then kind of like get cold feet about it or you are Really digging deep in you you say like let's say green ventures put a term sheet and they have two other firms that Is much also further in the process, like they're talking to customers, they're doing this, they're like in deep due diligence and they say, okay, well, I'm not going to take it.

Camila: I'm going to wait because maybe that that firm's a little more well known, but then something may happen. They have a call with a customer and again, get cold feet or, you know, They have a call with an expert that they respect a lot. And that expert like points out a competitor that could be doing well.

Camila: And that firm also drops out. So last thing, you know, [00:16:00] you passed on a deal on a potential term sheet.and now those two other firms that had shown so much excitement, literally out of nowhere, decided not to pursue. And now you don't have any term sheet in hand. So it's hard to know the Delta because you don't know. What you, you could be getting in the future.

Camila: Right? Um, so you, that's why you want to bring as much control of the process early on. The intercalls with the data room release so that you can try to get the interest parties along the same timing. Almost.

Rahul: Yeah. Yeah. I would love to know, uh, how to do this really well, but, uh, just before that, this only applies to companies that are doing really, really well.

Camila: I wouldn't say really, really well. But I, yes, this process, like getting multiple term sheet and within a [00:17:00] certain time frame, It typically means that you were able to dictate a little bit of the process and when you to do that, you need to be in the upper position of, like, I'm a good company. I'm at least good compared to what's out there because then you can, like, go to the investor, say, hey, such and such is in this stage. So then the other investors start moving faster, you know, so you can control a little bit that way, but I wouldn't say like, it's, Oh, the company needs to be doing super, super well, it's, it's about how you communicate your, your wins. It's about how you communicate your strategy and how you run your process.

Camila: Now, yes, if the company's not doing well, if it's,I don't know, a bridge round, it's something that the company it's struggling, hasn't grown. It's hard to get one term sheet. So like at that point, you just gonna try to go and, and see what you can get. And it's a whole different topic for like a whole new

Camila: [00:18:00] podcast. So it's a very different. how to communicate with investor, how to be very upfront with them, how to, you know, anyways, butfor a company that is, you know, growing steady or showing some wins, it might not be revenue growth, but there are wins in customer engagement on other KPIs, if there is a story behind in a purpose in close to inflection point, they will most likely be able to raise capital.

Camila: And. Trying different strategies to get as many investors. Around the same time is what you want to do the best, but yes, this is for somewhat a company that is doing okay or good or really good for, for you to, to even have that possibility to have multiple term sheets in hand.

Rahul: Yeah. So, yeah. Uh, how do you do this really well? where do you start?

Camila: Oh man. [00:19:00] Um I can think of a few ideas from, you know, the conversation you had, like we had three portfolio companies, two that were in our portfolio already raised their, Series A and Series B very successfully because they ran, a very effective and. successful fundraising process. and then the third one was a company that we actually participated in around. And similarly, they all had like three to five term sheets within a week. But what I would say is there's two pieces. One is before the fundraisers actually starts.and one that is doing the fundraising and I'm happy to go into details on each one of them, but I would say like. Before the fundraising starts, it's really creating a plan. It's crazy. As crazy as it sounds, you'll be surprised how many CEOs or founders don't actually create a [00:20:00] process of having like the responsible party. What's the task. What's the due date. And And the reason why this is very important is because not only you, you set your, your personal deadlines, but also you start seeing where there are gaps, right?

Camila: Like, Oh, I'm going to go from here from here. I'm like, Oh, but before that, I'm going to have to be able to create this file or create this pitch deck or create this. So you start seeing where the gaps that you need in the process. And most importantly, you can. Start seeing where you can ask for help and ask for support and could be team members.

Camila: It could be your board, your investors or colleagues. So, a plan is extremely important. then we have, you know, what also is. Sometimes overlooked. It's just like a collaboration tool with all of your potential conversations or potential VC firms

Camila: that you want to meet. and it's [00:21:00] super important and you'd be surprised how many times we have even portfolio companies start the fundraise without one or without one, that it's actually helpful. And we like, we push back and like, hold on, let's, let's, Create like a Google sheet or something that not only the founder, the CEO, the executives there can collaborate and put some, some of the name of VCs that they already spoke in the past, that they know what they think or, but also your investors, right?

Camila: like, who are the investors that are really, really helping you right now? Because then you can all be on the same page. On how to reach out to the VC. So for example, I could go and say, the CEO starts this, collaboration Google sheet with like the firm name. Does this firm lead or not lead? What's the typical check sizes? Um, or do we have a, a warm intro? Do we already know them? And who is going to make that warm [00:22:00] intro? And then what are the last steps? You know, notes or last time we spoke. So that already helps everyone get in the same page.

Camila: So if you, the CEO starts there with like. VC firms that they spoke in the past that they know of. And then after adding like some of the research that they've done to say, Oh, these are the ideal VC firms that we would love to have in our cap table. So they can list them and then your investors can go in and say, okay, well, let me see what you already have and let me put more because all of the investors know a ton of other investors.

Camila: So for example, let's say it's a supply chain company. We invest in supply chain. And. We, let's say we're supporting a Series A for one of our portfolio companies. And the CEO goes and says Dynamo Ventures. Dynamo is a supply chain focused VC. And he's like, Oh, I would love to meet with Dynamo. Well, I know that Dynamo does pre seed and seed.

Camila: So I'll put on that note, like, Hey. I don't think Diamond will do series A.

Camila: I know them, but it's worth me checking. [00:23:00] So all of this is just allows like this collaboration. And again, the CEO and executive putting their context that they already have, putting their ideal investors in their minds. And us, the VCs or investors going in and like, okay, I can make these warm entries.

Camila: I don't know anyone here, but I can ask.or I don't know of this strategy. I don't think it's a good fit or they don't need they need, you know, we know, so much of like other VCs strategies, because we meeting with them constantly in conferences on calls. So it's really important to to to collaborate.

Camila: So that I think it's a huge step as well that it's sometimes overlooked or not done. Properly, and if it's not something that's really going to be helpful, it defeats the purpose. So those are 2, like creating a plan, creating the collaboration tool. And I think while you are doing these before the actual fundraise, you can start some casual conversations as [00:24:00] well.

Camila: You can. Go back to investors that you know from the past or investors that you met when you were not, fundraising and say, Hey, um, I think I would love to catch up. I think we're going to be fundraising in a quarter or so. So we'll have to give an update on the business and also hear a little bit about your firm.

Camila: If there has been any strategy change and this is a great opportunity to like, have like a preliminary. Qualifying call,

Camila: to really see like, is this a good fit for us? What are they looking for? Or getting a sense in the market of like, what are people looking for nowadays? Like there's times that they want growth.

Camila: There are times that VCs are more worried about cash efficiency because it's a tough market. So like just having those casual conversations are super helpful while you are creating these preliminary steps. To eventually start fundraising.

Rahul: Yeah.

Camila: That's kind of like before. So [00:25:00] if you have questions, like the, before the official raise, these are some of the techniques that I think is just like getting structured, getting organized.

Camila: And again, there could be so many things, right? Like you need to think of strategy, the message and da da da. I'm only focusing here. On the process of like how to run an efficient process.

Camila: Yes. Nothing of this matters if you don't know how to tell your story and your strategy in a very persuasive way. But, if we were to focus on the process itself to try to time it, These are little strategies that are helpful.

Rahul: Yeah. How important is the, the, the role of investors in, helping the,startup fundraise at this point?

Camila: Um, I think it's extremely important. I think, you know, VCs, us investors, we are not, we can't run the business for you guys, nor we want to, [00:26:00] right? It's not our job. We can't get into the day to day. so we take board positions. We, we, even if you're not a board members, a lot of times there are VCs out there that are super engaged and talk to the founders frequently, um, And this is one of the moments that your investors, your current investors can help you the most.

Camila: I know sometimes people are raising like a pre seed or a seed round and don't have like institutional investors, but they can tap into angels or they can talk to other founders to see like if they have tips or, or things. But if you do have investors in a board, This is one of the moments that you can leverage them the most.

Camila: Like one, your investors see thousands of deals in pitches. Every year, and then add that of like many years of experience, like they've seen it a many of these, and they've helped a lot of their portfolio companies, fundraise, follow [00:27:00] on rounds. So they have that experience and in perspective, I'm not saying that they always going to have the right answers for every situation.

Camila: That's not the case at all. But the role of us investors is to provide perspective, to provide other possibilities, and feedback. So this is definitely something that you could be talking to someone that has more experience than you and seen many, many other outcomes and situations. Two, VCs also fundraise.

Camila: So they know, a lot of them know what it is to be sitting on their position. Yes, it's a little different, but like at the end of the day, we also need to have a CRM. Do we also need to be organized? We also talking to. Hundreds of, of LPs to get the field that will invest in our fund. So a lot of times VCs also have that experience and can truly understand what you're going through.

Rahul: and, and I often hear that, uh, that's [00:28:00] often a lot harder than racing capital as a startup.

Camila: yeah, I don't know. I never raised capital for a startup, so I won't go and say that. but it is hard. I have to say, you know, running our own process to, to raise capital. It's always hard. It's not, it's not. Super easy all the time. So, um, yeah. So, and then finally, I think a good reminder is that the VC wants the success of the startup as well. You know, like for the VC to be successful, their startups needs to be successful. So this is a time that they can provide a lot of value because. Of their experience in all the connections that they have. So leverage that because the VC know about all the investors, the VC have connections to many other investors that you don't have in that warm introduction.

Camila: It's. Makes a big difference in our industry. and even if they don't know, I can, they can find someone else who knows, you know, like, so I, [00:29:00] you know, in our situation, there will, someone wanted to meet with Bessemer and I said, Oh, I know someone from Bessemer for my Kauffman fellows class. Sure, send the email that person puts in the right contact and that's where the networking and the introductions happen. And even if I didn't know, I couldn't go on my LinkedIn, see who in my network knows that person and be like, Hey, such and such, um, we have a deal, they're doing great, they would love to, you know, connect with such and such, would you mind making an intro? And it's sometimes a lot easier. Sure. Then coming from like a startup, trying to like send a cold email to that investor. So it's definitely one of the, I think one of the times that you can leverage your investor base the most, because it's what it's, it's an access that they have that you don't have. So it's extremely important to, that's why keeping a process that is well communicated with your [00:30:00] investors, you know, having a collaboration tool that they can also look in and see where they can help in being very vocal of what you can, what they can help.

Camila: Like you need to know what, what you ask for. it can really help you, succeed.

Rahul: Do all of your portfolio companies, uh, leverage you, uh, to help with fund, with fundraising as much as they should?

Camila: I think so. And maybe it's because they ask, or maybe because I just like, hold on, I can help you, um, the, our approach and it's not for every VC, we're very hands on, investors. So, 1 of the things that we pride ourselves is really to help our, Companies beyond capital, so we typically needing, or even if we don't need around, we would take observer roles.

Camila: So we're very engaged of what's happening on the firm and yes, if they're going to come and start fundraising, then we would turn on [00:31:00] that fundraising bucket and we're helping them by reviewing their pitch by offering to practice the pitch with them offering these little things that sometimes they oversee, right?

Camila: And then we tap into like the rest of the team. We have like four partners, two associates. And that's when I'm like, Hey, This company is going to start to fundraise.

Camila: Here's the blurb. This is the email I'm talking about, or, Hey, they want an introduction to X, Y, and Z. I go to our CRM and I can see that Tim, my partner has a connection there. Like Tim, can you send this email to such and such? So like, we spend a lot of time likeReally helping with introductions.

Camila: And plus after the intros, when companies start, VCs actually start getting serious about the investment, they actually call you and they're like, okay, well, Camila, thanks for the intro there. We really like what we see. We, this is the step we completed so far. Can we get on a call very quick? I want to hear more. So they want to know like, how has it been to work with that founder? [00:32:00] On the board level, how has it been like, as far as growth and Where do we see the company going? What, what is the growing pains? So there's a lot of calls that we take through that process. And like these 2 companies that I was talking about, um, I had several calls with. Potential investors to kind of sell the company to, but also be honest, because now it's my brand too. Like I, I can't go and be like, try to, um, fake the growing pains or, or the challenges. Because if that becomes the, the investor in the round, they're going to have and see access to everything and see everything anyways.

Camila: It'd be like, Camila, what did you lie to me? No. So it's. It's like being very honest to be, Hey, this is the part that is challenging. This is why I think you guys would add a lot of value. Or this is why this fundraise is going to change the course, because this money is going to allow them to invest in this, in this area. [00:33:00] So yes, there's my, our portfolio companies do leverage a lot of our help, both with Talks to other VCs, a ton of introductions. We have like a wide range of network with four partners. So like very different backgrounds, various areas that we can touch and reach. So hopefully, we contribute a lot to that fundraising process.

Camila: But I do have to say,

Camila: at the end of the day, who's pitching is the CEO, is the founder. So our help is in the backhand, we can help that founder pitch, give feedback like, Hey, it's not great. Hey, let's change the pages here.but who runs the company, who is really, really responsible for the success of the company is the founders, is the CEO, is the executive team. And same with the fundraise, you know, I, I won't go and like take credit.No, but we're there. To really help along the way to really help the founder of think about all the different scenarios and have different perspectives. So, yeah, [00:34:00] we'll help as much as we can, but at the end of the day, there's a person there that is responsible to

Rahul: Yeah. So, so before you actually start fundraising, you're saying that you need to have like a clear project plan ready, make sure that you have all your stakeholders in like your investors. And then you. Also have conversations early so that you get a sense of who are your right target of investors. And then you also prepare like pitch and stuff, practice other things.

Rahul: But once you start the process, like you said, the goal is to get multiple term sheets in the same week. Right. So,

Camila: Yeah, I think once you start the process, I think there's two things. Two main things that you can control and, or somewhat control. So you did your best in preparing and planning and starting some casual conversations. I think one first thing that [00:35:00] you could control is. The timing of when you're taking first intro calls, aside from the casual conversations before you actually fundraise, you can, those you can have and say like, Hey, just wanted to give you a quick update. If you're interested, we're going to kick off intro calls on the week of the 15th, whatever. and if you are able to get a ton of those introductions, From the VCs or emails going, you can always say, Hey, we're finishing up the pitch deck and a couple data points, but we would plan on kicking off intra calls on the week of such and whatever 15th in the following, the following.

Camila: So like, if you try to time that two to three weeks. For just intercalls, you can have as many intercalls at the same time. So you at least get a lot of people started in the same time. And the other way. that you can try to control. And this is actually was shared with one of our CEOs that, um, [00:36:00] when I was talking to him about the process, successful process process that he had, he said, your data room release was a way that we were able to, control the timing as well. And he, it was funny cause he said it was not intentional. We actually were just finishing up a few materials that we were like going back and forth. In last thing, you know, started to create this buzz of all these intercalls that he had had. And people are now talking to each other. I'm like, yeah, I met with this company and they really interesting, but they haven't really stayed at home.

Camila: And then I got started to create this buzz of, Hey, who is this company fundraising and still like having like release the data and that is another. Great. Opportunity, one of the very few opportunities that you have to control the process, because one, you start seeing who are the investors that actually are interested in digging deeper, um, because they were going to ask for the data room and you can use the same [00:37:00] thing.

Camila: So like, you want to keep that excitement and maybe you see an even like. A quick email in between like, Hey, just quick follow up. Everything's going well. We just finishing a couple of things and I'll release the data room by this date. But again, releasing the data room around the same time allows the, to at least get all the investors that are interested in digging deeper started along around the same time. After that you have zero control. and it's a combination of luck, honestly, because You can, you can have a company, like for example, it can happen to us. You can have a company that move fast, but it's overwhelmed with two or three other deals that are writing super deep due diligence. and we just don't have the bandwidth to process that deal, right?

Camila: so it takes a little longer for that firm to, longer than usual to do [00:38:00] that due diligence versus could be a firm that, Hey, I don't have anything interesting looking. Like right now, and therefore I'm going to go super deep on this one, super fast. And now this company is like super quick into the process.

Camila: And the other company is not, as quick. But so I guess it's like the timing of your intro calls and timing of when you release the data room. I think two tactics that are very, it's kind of like the only. Things that you can control from a timing perspective after that, you kind of just need to like manage case by case and seeing like, which ones are really interested. And I think what's always important, and I think actually it's a good, sign of how well you work with the investor is just keep them updated, you know, because if the investor, so sometimes our bandwidth is sacrificed. Like we, we, we don't have much bandwidth that month, but if the investor, and I see a deal that I like, I'm like, okay, I love this [00:39:00] deal.

Camila: but they're super early in the diligence process where this one is late. I need to finish this one. So I will casually start that one, but not push too hard or too fast. But if that CEO comes and say, Hey, Camila, just wanted to give you a quick update. We really like meeting with you guys. We, it would be great to work with you guys.

Camila: So I want to keep you up to date. In the loop of what's happening, I have two other companies now. Don't lie, please, because that we find out, right? But like I have two other companies that are actually in their investment committees meetings this week, and we'll probably be able to give a yes or term sheet within the next two weeks. Giving me that update of like how fast others are moving allows me to say, Oh shoot, like I got to move this fast if I really like this company, or I can say, I really can't. so we probably won't because I, then I can be very, I'm very blunt with the [00:40:00] founders. I'm like, I can be very blunt with them. Like, I will not be able to meet that, with our process and where I am.

Camila: I'm too early in the process to pursue all of the steps that I require. But hey, go for it. Let me know. And I'll continue to do my due diligence and maybe I come as a syndicate. But again, like keeping your investors in the loop allow you to put some pressure on them or to get the real answer from them to see like, Hey, I'm not going to lead.

Camila: So don't worry, don't wait for me for a lead. Maybe we'll come as a follow, you know, so it allows you to get a little bit of answers from them of what's the expectation is.

Rahul: Yeah, just some clarification around dataroom. So you, you're suggesting to release some parts of dataroom initially or nothing at all when it comes to timing,

Camila: Um, I would try not to send anything at all. I mean, obviously you when you have like the intro call, you have the pitch deck and in [00:41:00] some metrics. Um, but after that intro call, you can say, all right, we're finishing up a few things, um, for the data room. I will send it to you as soon as we have it available. And then in the kind of the same material, and then you can send a data room that it's like, you can track who is going in or not, that's ideal because it allows you to really see the investors that are staying engaged or not, or even if they don't get in, you can go and sit in those, Hey, just FYI.

Camila: I want to make sure that. You saw the data room. And if you, if you have any questions, right. but yeah, I would, I try not to release anything at all and release it all at once. Like if you have everything planned ahead of time to be like, okay, here's my two to three weeks of just intercalls. If they ask for data room, I can be like, Hey, I'm going to release, you know, in a week or so, I think, because I have, I'm finishing up a couple of things. and then release it all. yeah.

Camila: To all of them so they all have [00:42:00] access to information at the same time.

Rahul: but will that be seen as a negative thing? it could come across as that. You are not prepared and you don't have anything in place before you started the process.

Camila: I see what you're saying. I think it all depends on the delivery. You know, um, I think it depends of how you say, like, yes, thank you. You know, really enjoyed our call. I want to make sure this process is run effectively. I am finishing up a couple of details, and getting reviewed by our board. And I will have this ready for you at this time.

Rahul: Again, I don't want you to wait too long. So if you plan it, you know, as much as you can, at least you, you release somewhat in a timing that doesn't lose momentum. But I do think, I mean, VCs appreciate that you're running an effective process and you're, you have the [00:43:00] upper hand because maybe you're performing good. so you might as well use it. And I don't think VCs necessarily would look at. I think they will most likely look at it as a positive versus a negative, because okay, here's a CEO that knows how to run this process, that has control through the process, that is doing the thing the way it should be done, like the, you know, is doing his or her best to run a successful fundraise. and it doesn't look desperate. Like, Oh yes, this here, you know, it's fine. I do like responsiveness. i'm not saying like Oh, someone sent the email say, Hey, can I get, you know, your projections or your data room and then like, don't reply for days to gain time. No, that's not how I say no reply and say, Hey, love the call. Really enjoy meeting you guys. Yada, yada, yada. we are finishing up a couple of things. We will release the data room at this day and you'll be one of the first ones to receive it. So, [00:44:00] um, two things, you're going through a list of investors that you prepared before the, you know, as a preparation thing. Right. Uh, so, In what order do you go through the list of investors and also, what is the goal of this qualification? Like, I mean, intro calls.

Camila: So. There are VCs that lead rounds, VCs that don't lead rounds. Typically you want to focus or prioritize those conversations with VCs that are potentially going to lead the rounds. And then especially if you have like a warm introduction, there's a fit from a stage perspective and sector. Yeah, those are the ones that we know well. So like, let's prioritize those because you have an in those relationships. One thing I learned when I talked to a founder, when we were talking about the process was he said, yeah, I mean, yes, [00:45:00] having the conversation with VCs that lead is super important. But you will be surprised. with how helpful of VC that comes as a follow on, can really be in the process. And nowadays you see a lot of emerging managers and VCs that don't necessarily lead rounds. But that's their strategy. And they've been doing this so well and execute so well that they, however, can run a due diligence and decide if they want to invest it very quickly.

Camila: So they, they say, I'm in when you get a, when you have a lead investor, I'm in. But the interesting thing there is that these VCs actually know a ton of VCs that lead because they see a bunch of deals.

Camila: They cannot lead. So they need to find a VC to lead so that they can get in. So, and they have a really good relationship with these VCs because once the syndicated needs to be closed, they want those VCs to [00:46:00] pull them into the round, right? So what I would say, like I, I would typically, say prioritize the ones that lead, you know, that's, that's the ones, and I still lean towards that because you do need a term sheet at the end of the day. There are a few, um, firms that also have very strong relationships with lead investors. And we know a few of them because they bring us deals all the time.

Camila: They're like, Oh, Camila, I saw this deal. We're in. And you decide, but I, I wanted to share with you cause I know you could lead. Um, so I used to say like, Oh no, let's focus only on the lead investors. Now, after this process, I started to realize, Oh, maybe, you know, there is a strategy here, like there are a few, um, fall on VCs that actually can help you find in that lead investor, especially if you, you're I start up in a very early stage that don't [00:47:00] have many warm connections to lead investors or ways to get to the lead investors. Some of these VCs will be able to help you get there. So if you convince them that you are a good deal. They will be able to give you a very warm introduction to a VC that could lead your deal. And they know those so well and their strategies so well, so like they're very targeted as well.

Rahul:

Rahul: Uh, the other question was also like, uh, what are you trying to get out of that intro call?

Camila: I think it's understanding. I mean, again, I'm very focused right now on the process, right. On the efficient process on timing and trying to. To get that project management piece of the fundraising process successfully executed. Obviously, when you are meeting with VCs, you want to understand like beyond capital, how they can add value.

Camila: What's the fit, you know, do they have sector expertise? can, they [00:48:00] introduce you to new people, to customers. There's so much value that other VCs can add based on their expertise. but here, focusing on the process itself, I think there are a, a few things, you know,what does your due diligence process look like?

Camila: What's the timing? what are the steps, how many calls you typically need. After the, the investment committee meeting, are you ready at that point to do term sheet or is there more due diligence that you do? So really understanding like, what, what are the steps for that person or the, that firm?

Camila: Every firm is different. Some can. Do a very extensive, you know, analysis and talk to customer calls and talk to experts, do cohorts analysis, look at all the financials, others are not so thorough on their due diligence. So understanding timing, understanding if they lead investments or not, because [00:49:00] then you can prioritize, like maybe you don't necessarily prioritize the intro call So you can start saying, okay, I only have one block in my calendar tomorrow. I'm going to put the one that leads versus the other one, right? So do they lead your, your round, your, your stage?

Camila: What are the check sizes? So to really help you move them along the best way possible.

Rahul: Yeah. And what percentage of founders that you work with, uh, actually run this kind of very efficient process, fundraising process?

Camila: That's a great question. Um, I think from our perspective, we try to run the, this process with all of our portfolio companies, right? That, that's kind of like our playbook. We have different things that we help for the C2 Series A process. And this is something that we try to help our portfolio company. [00:50:00] Companies do sometimes they're in a position to do this and focus on the process more than anything. Sometimes they're not in a position to do that. And it's less about, you know, the, the process because they're not doing so well, or they, they're, you know, moved in a different direction. So there's, they need to reset expectation.but I think they all start with. Needing help in some sense, you know, like just, okay, you, you had a, you started a, uh, a collaboration document, but it's not really adding value. Like, let's, let me help you like, put the right columns and stuff with the information we need.

Camila: So we can actually add value. And it's because it's hard, you know, like you are the CEO, you're the founder, you have very limited resources. You're leading sales a lot of times in the stages that we invest, right? Like seed stage. So you're, you're leading this, you're leading partnerships. And now you just got another full time job, which is to fundraise for [00:51:00] your firm. And, and you have to talk about strategy. You need to talk about this. So it's, like I said, in the beginning of the podcast is, It's easy to forget, you know, what's the process, project managing this. And that's why it's so crucial to do it and push them to do it. Because then you can actually find maybe someone else in the firm that can project manage it. To be on top of people like, Hey, did you do this? Did you do that? But I don't know. I don't know if I have an answer as far as like exact percentage of founders. That successfully started with all of these, you know, I think they all start with something and the investors in the room kind of chime in and like, okay, let's also do this.

Camila: Let's also add there that, but you know, recently we have those three cases that were very successfully run and it's super exciting.

Rahul: Also, is there any correlation between companies actually doing well, uh, who are also the guys who run these processes [00:52:00] very efficiently?

Camila: Yeah. Yeah. I think companies that,prepare and be disciplined on execution do really well. Like, what is that famous quote from Lincoln? Like, Give me six hours to like chop down a tree and I'll spend four like sharpening the axe. Um, and it's because you need to plan, you need to create a project, create, see all the pieces together to, to, to really think about it.

Camila: think through of what's needed to be successful. Um, now execution is also everything, right? Like you can spend hours and hours planning, but if you don't go there and execute, it's pointless. But, in order to execute well, you need to have a good plan behind in the discipline to follow that plan. so that's why I think there is a correlation.

Camila: Yes. If someone can run a successful fundraising [00:53:00] round, most likely they have the skills to run a business to like, not everything in a business, but like to be disciplined, to create plans, to, to be thoughtful, to ask help where it's needed. Now, obviously a business has way more factors and functions and things that, you know, the CEO doesn't necessarily owns expertise in every single aspect of this, but it's again, creating the plan, finding where are the gaps in where they need help, and asking for that help, that pulling the board when it's needed to pull, you know, hiring that right person when they need

Camila: So, I think there's a big correlation for sure. And obviously. The correlation the other way, like if you're doing well, most likely you have a lot of interest from investors. So now it's just a matter of. Maneuvering the process so that those interest parties come in together at the same time. and like I said, sometimes you could be that, you know, let's say grand ventures moving faster than they expected and I might say, [00:54:00] yeah, we have the, I see meaning. Tomorrow I'll be able to put a term sheet next week. If I'm the founder, I can go quickly to the other conversations that I'm having that are strong, that are potential leads. And as I mentioned, go and say, Hey, I have another VC that said that they could be putting a term sheet next week. Just wanted to let you know, to really understand where you are in the process and see how we can help you move along.

Camila: .So you can communicate that with other investors that are in the same, um interest level and try to time it. So if, yeah, if the company is doing well, it's a different conversations that you, you can have with investors for sure.

Rahul: Yeah,

Camila: The only thing that I would add, and I don't think we touched on, It's so important to keep everyone on the same page of how I think thinking and executing after the, you kick off the fundraise, a lot of the help from the investor is like, oh, we already helped you with [00:55:00] reviewing a data room, reviewing the files, your pitch deck, practicing, making introductions. the companies that I mentioned we would have almost like, a weekly update with the board. Some of them started with like a 30 minute call on the calendar on Fridays. that we can be like, okay, how was it?

Camila: So you can start saying like, okay, yeah, I had these conversations this week. It went well. these are the passes this week and then us investors can look and like, Oh, three of the four passes were due to traction or market size or whatever it is that we can chime in and say, Hey, let's get in a quick call just to discuss here. How are you guys presenting this slide? How are you presenting your market size? What are some. Complimentary document that we can provide to really show our rationale why this market size is actually great and not this. Um, soif you're constantly communicating with your investors so that people can chime in and help as needed So [00:56:00] anyways, just having like maybe a weekly update, rather that it's a call that can be canceled if there's no significant update, or if it's an email, that it's just a flash quick bullet points of like what happened in the week.

Camila: It's super important.

Rahul: this was great. Uh, Camilla, thank you so much for taking the time to do this.

Camila:

Camila: Yes, it was my pleasure. Thank you. Thanks for the patience when we were trying to schedule time here to do this, and I'm glad it finally happened. Thank you.