A pair of co-founders on the very steep learning curve they faced when raising money. By By Carly Zakin and Danielle Weisberg (Co-founders, theSkimm)
Now that the fundraising process is complete, we can be honest: We had no idea what the F we were doing when we started. Our pre-Skimm lives had nothing to do with a business background. The following are things we learned that may seem very obvious to many of you. But they weren’t for us. And they aren’t for many out there who are thinking about starting something (don’t let it scare you).
What it means: How much your company is worth before and after you raise money
How we learned it: In one of our first meetings in the earliest of Skimm days we were asked what valuation we were raising at. We had never heard this term before so Skimm A held up her hand and put a few fingers down to indicate a number. We didn’t know if we were talking hundreds, thousands, millions, or giving up a kidney. Turns out it can be a bit of a made up number that everyone else like to judge you on.
What it means: Essentially your sales pitch presentation you send around, ask others to forward, and bring to investors to look at. It’s your vision and your plan in a few slides. It should get you the meeting or help you close.
How we learned it: Right around launch, a friend sent over examples of some stellar pitch decks. We created our presentation and thought it was brilliant and gorgeous. It was neither. So then we met with some consultants who said they would do it for us. They’d write out our vision. It wasn’t until the end of our raise that we sat on a stoop eating turkey sandwiches and forced one another to present to the other. We realized that no one could explain our vision except, well, us. The rest is history.
What it means: An investor who likely puts the most money into the round and sets the terms for the deal. It’s a stamp of validation for other investors who want to make sure someone is invested enough in you.
How we learned it: An early potential investor asked us who our lead was and we said we were. We were leading ourselves. That was very, very much the wrong answer. We then learned that everyone likes to say they’ll give you money once you have a lead. It’s as fun finding one as it sounds. You should also seriously consider finding one you really want to have a relationship with because it’s compared to ‘a marriage’. Think about how picky you are just dating.
What it means: The terms of the deal as agreed upon with the lead investor.
How we learned it: When we had a signed one we thought our deal was done and could break out the champagne. Our parents thought we were done and told the world. You are not done until the fat lady sings and your lawyers go through and edit the hundreds of pages of documentation that the term sheet is mean to summarize. You are engaged, you are not married—this is pre-nup time. Again, as fun as it sounds.
New Entrepeneur Lesson of the Day: Fake it till you make it. And have a few close friends and advisors who you can ask A LOT of questions.
This post originally appeared on theSkimm Tumblr.
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About the bloggers: theSkimm was co-founded in 2012 by Danielle Weisberg and Carly Zakin. Danielle was an associate producer for MSNBC’s “The Last Word with Lawrence O’Donnell” and previously worked for NBC’s “Nightly News.” Carly was an associate producer for NBC’s Peacock Productions. Prior to that she worked on MSNBC documentaries.