Process & Velocity
In our experience of observing thousands of raises, a high-velocity process is the most predictive element that defines the probability of a successful raise.
Developing a Systematic Process
Once you start to raise, the most critical aspect is to develop a systematic process that constantly pushes fresh energy into your raise funnel. The below view illustrates the various steps of a successful raise process:
Identify & Qualify Investors
Founders need to build a process around identifying and qualifying strong-fit or “most likely” investors. For guidelines on identifying and qualifying investors, refer to this section.
Land Introductions
Once the right mix of investors are identified, founders need a systematic process to land introductions. The right process starts off with people the founder knows well and gradually taps into the peripheries of existing networks. For guidelines on building access, refer to this section.
Convert First Calls to Due Diligence
In the final step of the process, founders need to convert some of their first calls with investors into due diligence. Based on our data of tracking thousands of raise processes, our estimate suggest that anywhere between 10-50% of first calls should convert into due diligence discussions (whereby due diligence is defined as a state in which the investor wants to dig in and evaluate the opportunity for a potential investment).
In each of the above areas, the most critical aspect is to do it systematically (I.e. have a replicable and predictable process that delivers results every week). Fundraising is best viewed as a process and not as an event. Instead of putting too much weight into a few conversations, most successful founders view a successful raise as a byproduct of running the right process.
Recommended Process:
In order to manage the raise systematically, it is important for founders to have general clarity on the process that they want to follow. The below visual illustrates a recommended process:
The visual provides a decision-making framework for common scenarios in the raise process. Instead of getting stuck on the dead-ends, users can view these as inevitable “resting points” for many investors that are either not leaning or, or that they are unable to access. The below table expands on the key decision points in the process to ensure a high-velocity approach:
| Process Part | Scenario | Recommended Decision | Rationale |
|---|---|---|---|
| Identification & Qualification | The investor does not meet one of the criteria identified by the user | Disqualify the investor and move on | It is critical to spend time on the right investors |
| Access | User is unable to identify an intro path and/or get an intro | Temporarily move the investor to “Unable to Access” and move on | There are probably many other investors that are a strong-fit and that you can easily access |
| Process | Investor has gone silent and/or has not responded to the last follow up email | Move the investor to the “Leave for Next Round” stage and move on | It is crucial to know when an investor is not leaning in, and to focus efforts on ones that are are leaning in |
A key component here is to move on when an investor stops engaging or responding. Statistically, most investors that a user pursues will not lean in. To find success, it is important for users to correctly discern when an investor is leaning in (versus when they are not).
For investors that are not leaning in, users should stay in touch and build the relationship for subsequent financings. For investors that are leaning in, users should prioritize these discussions, and spend most of their time in this part of the process.
Process Velocity
A high-velocity pipeline is one in which new investors move through the different stages at a rapid pace. By bringing process excellence to identifying and accessing investors, founders can develop a high-velocity rhythm to maximize the odds of success.
In order to run the fundraising pipeline at a rapid pace, founders need to develop up-front clarity on how to tackle given situations. With the above process, users know exactly how to respond when unable to access a given investor, or when an investor stops engaging.
In our experience of observing thousands of raises, a high-velocity process is the most predictive element that defines the probability of a successful raise. Founders that raise tend to move through the pipeline 5x faster than those that end up not raising.