Introduction
Ceci [00:00]
It takes ten times longer to answer due diligence list sometimes than to send it. So be mindful about how many questions you ask.
Bea [00:07]
Keep your friends close, but your buyers closer
Ceci [00:11]
I get a WhatsApp message from Bea being like, by the way, if this goes through, do not buy X, Y, and Z stock, you will go to jail.
Bea [00:19]
And keep that sacrificial lamb at the beginning. More to that later.
Ceci [00:25]
You're a ballerina, you're not like a lad from Clapham.
Welcome to Top of the Ops, the podcast where we have a real conversation about what happens behind the scenes of startups. I'm Cecilia, former VC at Talis Capital and now FD at PortalOne
Bea [00:47]
And I'm Bea, former VC at Lakestar now chief of staff at Praktika
Ceci [00:52]
Today we're opening the door on a topic that gets talked only when successful. Fundraising, M&A and exit. But behind a successful or unsuccessful fundraising, what's going on?
Bea [01:06]
We both used to be the people that we used to send diligence lists, and now we're the people that receive the diligence list. So it's gonna be very helpful to understand how that changed and what preconceptions we had when we were VCs, and now from the operator side,
Ceci [01:22]
And you know what? It takes ten times longer to answer due diligence list sometimes than to send it. So be mindful about how many questions you ask.
Why Listen to Us on This
Bea [01:31]
Before the how, why should anybody listen to us? What have we done in this? Do you mind giving maybe the audience a little bit of a trust CV so that like we are actually allowed to talk about this topic?
Ceci [01:46]
The first thing Bea and I worked together in the VC fund was actually in the summer of 2020, if I'm not wrong, we worked on an M&A process. You
Bea [01:57]
I forgot about that completely removed from my brain. It was a long ass process
Ceci [02:06]
We really bonded. We spent a lot of our nights. I was making Keynote presentation and you were making
Bea [02:14]
Excel. It was quite a learning process though. So we met working on an M&A transaction from a VC. We were obviously in VC for many years and we looked at many, many fundraises. I don't know how many investments we've done combined, but probably around 20, probably.
I was three years in a bank doing M&A so I think I can talk a little bit about that side as
Ceci [02:37]
We were both on VC funds that, were lead investors, so quite involved in the portfolio management. And as a as a VC the fundraising part is where you add a lot of value. So we both did a lot of that for our portfolio companies. And we now are in different operators seats and have seen different fundraising processes from inside companies. we can help people.
Bea [03:01]
Exactly. what carried over well in your operator job from your VC experience?
Ceci [03:09]
Quite a lot actually. understanding how to pitch and how to create the story that will resonate for VC. That's number one. Number two is what metrics and what's the story behind the metrics and what metrics to present. And the third is the strategy on who to approach first and how and when, and that little dancing. you're doing.
Bea [03:32]
And keep that sacrificial lamb at the beginning. More to that later.
Banking vs VC: Keep Your Buyers Closer
Ceci [03:39]
You also had investment banking experience. how did that help you? And is anything that you learn in your investment banking years actually useful for startup fundraising or M&A?
Bea [03:51]
Banking was the whole contradiction about what I actually now think about an M&A process. I now think of an M&A process as a relationship that was built over many many years. and that I learned from my boss at Lakestar: keep your friends close, but your buyers closer you need to keep them close because you don't know the point where are running out of cash and you have to have an acqui hire or you're like actually going out to this pre existing relationship saying like we hire an amazing team, but we fucked up something and now you need to acquire us and we're gonna bring all the revenue to you. those relationships don't happen in a banking
Process they happen throughout the years whereas every Relationship that I seen on the banking side was literally a bank run process. So a company comes to a bank, they have no idea who to sell to, and then we put together a list of prospects, prospects between strategic and private equity, and the bank holds the relationship with these people and reaches out, and then kind of the process starts. it's very far from what I then saw in VC.
Ceci [05:00]
If you're doing so well, of course, people will want to buy you. But in the early days when you're doing so so people buy you because of you, because of the story, because of generally the founder, for the same reason people invest and you also need to have the edge and understanding, how sophisticated the industry is and your industry is and how you can merge together and how you can help And bank can only go somewhere and that's why I also think M&A it's the one thing a founder can't delegate.
Bea [05:28]
And think about building your startup for ten years, then going to a bank and selling to the highest bidder. Sometimes it's not just the highest bidder, but imagine your baby is being sold to a cutthroat company that just slashes headcount in half. you also owe it to your employees to just find a suitable home for your business?
Preempted vs Going Out, and the Story
Ceci [05:48]
And to your vision. let's go with the most common one, which is the fundraising. there's two ways fundraising happen. The first one, you're doing so well and people are approaching you saying that they're about to throw term sheets at you, and the second one you decide you're gonna go out and fundraise.
Can you maybe talk me through what what's the prep like? What do you do before either of those scenarios? And we can start from there.
Bea [06:13]
I mean,
Praktika Series A was famously preempted and it was quite a competitive process. the guys prepped very well for the amount of time that they had, and they worked really hard. it was very competitive. they had a pitch deck.
They had a product demo and they have a rudimentary financial model and a nice legal data room, and that was about it. So if somebody preempts, they already know that they want to invest, they already seen some traction, and so they're probably not gonna go through deep, deep due diligence. And that's really lucky because you can just not be distracted from the business for months at a time. But I saw also the other side, the first thing.
And the most important is set your story. only the founder and CEO can do it.
That is the most important thing. Investors are people and we love entertainment and we love a personal story. If somebody jumps on a call like, we are breaking the boundaries of category defining, like just like rambling that same three sentences, people are not gonna hold attention and people. tie and bond with a personal story. Like it has to be something that the founder was specifically called to. And if you're not called to B2B SaaS pretend.
Ceci [07:36]
You're not selling number, you're not selling with revenue, you're selling yourself and your dream. and you're like, I've always wanted to do this, just go to acting class it's actually like a pretty good idea. you can feel it as a VC when people are so passionate about something that they could talk for two weeks straight about that topic. You gotta be that person.
Bea [07:56]
And you also need to present well.
I have seen the evolution of Praktika CEO and he now presents incredibly well, but he has practiced and you have to practice the pitch. You absolutely have to. it's your TED talk, and you have to speak slower. 0.7 X of what you normally talk and you have to capture and like you have to have charisma. And actually The other thing is Never lean forward. If you lean forward like this, people are like you're too keen,
Ceci [08:24]
It
Bea [08:25]
Just relax, shoulders down, just like sit back and draw people in, right?
Bin the Frankenstein Deck
Ceci [08:32]
You're a ballerina, you're not like a lad from Clapham.
A couple of things on the pitch deck and the story. where I've seen it go wrong is you have a pitch deck from your seed or your Series A and you now are going out for your B round and you create this Frankenstein pitch deck where you're you're like patching new data, adding a lot of bit of the story because it evolved. Take that, put it in the bin.
And start from scratch and actually Creating a pitch deck is one of the few things that I generally use pen and paper or like a dashboard on. Because YC sent a template for a pitch deck that goes who we are, the problem, the market, and whatever doesn't mean that you have to use that. And you need to create your own story. where are the accents? I always call them the accent, the numbers or the anecdote that really make what you're seeing resonate and it needs to like go cohesively for you
Bea [09:27]
Start from the blank canvas. And actually, write down the story. Like, jot down your speech, jot down your stories, and then build the slides that fit into that presentation and not the opposite and for every claim that you do, accent, stat, and like proof that that claim is right. I love that. it gets me so fired up. and then who should write it? Like you you ask the Chief of staff?
Who Writes the Deck, and Should AI?
Ceci [09:50]
No, no, no, no. It needs to be written by the founder, who's going to pitch it because it needs to, flow for them and needs to sound like them because it needs to be them. So the Chief of staff role is to help with the accents, to help cut down or highlight certain things. Obviously when if you're raising a pre-seed round versus you're raising a B or a C it's slightly different. It's going to be a little less about me, my dream, and this is what we're going to do, and more like this is what we've done so far. So the balance changes. But it needs to taste like the founder.
Bea [10:26]
So the pitch deck is like the little teaser you just have to draw people into the fundraise
Ceci [10:32]
Would you recommend a founder has a small pitch deck that gets shared throughout the VC gossip group and then comes to the actual pitch with a pitch deck and with an appendix or with more data? That's the first question. The second question is: should you write the pitch deck or should AI write the pitch deck?
Bea [10:51]
I'll start with the second one. You should write the pitch deck. and for you, the founder.
Ceci [10:57]
Yeah.
Bea [10:58]
I have not touched the pitch deck at Praktika in ages. the co-founders look into that. it's their story. So, but no AI, no, I I wouldn't say so. It can help with design, of course, but then the language has to be yours. first question? the deck and the appendix. I don't have a strong opinion on that because Many VCs like different things. I used to actually read the decks and spend a lot of time. so I appreciate if I see a deck that has a bit more context so I can come to the pitch more prepared. but I know VCs that just scroll down the slides. And so in that case, then it makes sense to have like a smaller version first and then an extended one later. Definitely don't put the appendix.
In the version that you sent at the beginning, but keep them when you actually do the presentation so that if they ask certain questions, you can just refer back and then come back to the to the slides. What do you think?
Ceci [11:54]
I'm with you and I think AI slop will irritate people.
Bea [11:58]
I have to say something a call for all VCs, if you receive a deck and you take the meeting, spend some bloody time reading the bloody deck. don't come to the meeting just fully ignorant the the rule for me.
And for everybody that I worked with, it's like you read a deck, you look at the website, you look at crunchbase, you do some pre-research, and if it's a consumer thing, use the bloody thing. that's respectful to do.
Ceci [12:22]
I We move it to the second part.
The Data Room
Bea [12:23]
So data room. So how much data room do you need?
Ceci [12:27]
It really scales with stage, obviously. When you pre-seed there's very little you can show and series A, series B then there needs to be more. within the data room There are two parts. And we're talking about pre-termsheet data room, obviously. There's one part which is the stuff that you have to have, your accounts and your cap table and your old legal documents. That's just hygiene. And then there's the part that people are interested in. And they will ask you questions that would be the base for due diligence, which is financial model historicals plus three years forward your kpis file and then depends on the type of startup cohort data if you're consumer if you're b2b like have your
Anonymized pipeline. I would find helpful to always have some TAM analysis if it's a space that is not well known, what else would you would you have
Bea [13:23]
There are more and more funds that are now asking you for raw transaction data and they will build their own cohorts and they will they'll put in their own model or like AI internal thing and then they will spit out the model for them and some decision. it's a little bit scary, I think, to ask that level of detail, especially pre-NDA. Also, question: Do you sign an NDA for opening up data rooms or not?
Ceci [13:48]
For the first stage of room, no.
Bea [13:51]
And then if you go into every transaction data it's it's quite a lot.
Ceci [13:55]
For example I was working at a B2B company and we had the anonymized KPI sheet and our ARR sheet but the customer's name were anonymized And if we wanted to go further than anonymized, then sure.
Bea [14:08]
To give the list on legal documents, that's obviously in a second stage, and typically it's post-term sheet actually. So all the governing documents of the company, the board minutes and board resolutions, the capitalization documents, all the financing documents, all the IP, if you've got IP trademarks, all the contracts with vendors, probably above 20K a year,
And some VCs ask all the contracts of employments of contractors and employees. it might seem like an overkill, but it is important because it shows that the IP actually stays with the company and whether your contracts have the necessary clauses there. If you had any disputes or like criminal proceedings before, hopefully not. And then the stock plan and all the options associated with it. I would say that's probably a good summary, but if you have a good lawyer, the lawyer would probably fill it for you.
Ceci [15:06]
There's something that I've done in one data room that I thought was quite useful, which is a set of written documents to explain certain things. Because if your product is very simple in a market that's very simple to understand, you just throw numbers at people and they get it. But if there's something more to your go-to-market motion or your market, I would have a deep dive on the go to market motion, a deep dive on the TAM. Something that it's a a companion and helps explain the numbers that they're looking at.
Bea [15:37]
Yeah, especially because in a startup you will have probably some hero numbers that are doing well, But it's hard for all the numbers to fall into place and be perfect. And you don't want to send raw numbers without any explanation because people will come to conclusions. And so, for example, if this one metric is not doing well, have some explanation on why,
And then what are you doing? What are the steps to get that better? And I think investors really appreciate that.
Ceci [16:03]
It's basically storytelling again. You move from storytelling through the pitch deck, now you're storytelling through the numbers. it's really important that you keep remembering that.
Time Boxing a Fundraise
Bea [16:13]
What do you think about the logistics of a fundraise and do you time box it? what have you done in the past?
Ceci [16:24]
You have to time box it if you can, because it takes away so much time from the founder that you can't fundraising forever. but you can move the bar.
Bea [16:34]
Kinda like the idea of time boxing because also it creates an otherwise absent competitive tension with investors. most companies out there, they don't have investors knocking at their office door with a term sheet to sign. And so you have to set that artificially. And if you time box a fundraise especially if you're like seed, I would say pre-seed and seed. You say, I will do one month, So do some warm-up calls before with investors, that you know already or like you get in touch with. try to understand who's interested. Then do one week of pitch after pitch after pitch. And then go to the next stage, two weeks financial due diligence and data room diligence, Q&A.
Other sessions, and then there will be necessarily less investors obviously coming through. And then last week is term sheets and final Q&A. So then you have a term sheet, you negotiate, and then you move into stage two. and if everybody knows, like, look, I want to stay away from the business for this one month, and I need to get back into the business after we'll get the term sheet by this date. Then, arguably, investors, if they want to put the term sheet, they'll do some more work.
And if not, they miss a train, or you know, you also have the other risk that nobody puts a term sheet, but in that case, you extend it.
Ceci [17:51]
Exactly. I've done once we created a good deadline. That was also for us to be like, okay, if we haven't done it by now, we don't have to have to fundraise, we can come back to it when it's better. And it's it's nice, especially when you're time boxing a fundraiser that you don't need. You're we could raise money right now. We don't have to. Let's see what the interest is, give yourself like a month, a month and a half. That's great. You know what they're looking for after.
The Sacrificial Lamb
Bea [18:12]
Exactly. Would you tell the audience who's a sacrificial lamb? What is this concept?
Ceci [18:18]
Okay, let's bring it back. You have your data room, you have your pitch and your story, you practiced and the great role of ex VC chief of staff here is that they like can pretend to be the VC and grill you in the prep. But then you actually gotta go out and start Fundraising. My advice is always to have a list of all the funds that you want and tier them in terms of priority and don't start from number one. We start
Bea [18:46]
Start with start with tier five. The term sheets that you would reject anyway.
Ceci [18:53]
You start from the term sheet that you will reject anyway. You start from somebody that's you don't like too much. But He's the one you're gonna string along pitch, say everything, you're gonna get a term sheet from them, and then their term sheet is going to be the catalyst for all the other term sheets. Because you're gonna go back to your board and say, I got a term sheet, you're gonna go back to everyone else and say you got a term sheet. It's true, you got a term sheet. They don't know that you don't care about the term sheet.
Bea [19:19]
Exactly.
Ceci [19:20]
If the sacrificial lamb is one of them that they just don't care about valuation, this is even better.
Would You Fake a Term Sheet?
Bea [19:26]
I have a controversial question? do you know anybody who has lied to have a term sheet and they actually didn't have? And what's your opinion on that? Cause it could be tempting.
It could be like, are they ever gonna know? I'm just gonna go to all the investors and say I got a term sheet so maybe they'll play as well because some VCs are a little bit sheepy in the behavior.
Ceci [19:46]
I don't think you should. Also if you have a board already, you need to tell the board if you have received the termsheet and you haven't, you haven't. and then what's gonna happen if you receive the term sheet and nobody actually wants to invest and then you haven't received any money. You have to be really smart and that's why I think the strategy of the sacrificial lamb, it's the best strategy here.
Bea [20:09]
There should be some standards of ethics and trust and loyalty as a business owner, the trust you have is everything. And once even if there's a small risk of this going out and people actually know that you don't have terms you nobody's gonna trust you anymore and then you're kinda done, like reputation is everything.
Ceci [20:27]
For the sacrificial lamb, would you say somebody that you would never take a term sheet from or somebody that you don't hate. It's not your first pick. It's a neutral good. but if all else fails and nobody else gives you term sheet, you're still a man in the business. And they're like kind of innocent.
Bea [20:46]
So your question is, would you take money from the sacrificial lamb if that's your last resort?
Ceci [20:49]
Y yeah, maybe that's my question.
Bea [20:52]
It depends on the lamb.
If it's a net neutral and you're running out of cash, take the money, of course. any money is better than no money if the option is going bankrupt or like dormant or do a restructuring, take the money, but then don't give them a board seat or try to negotiate as much as possible for them
Ceci [21:07]
Yeah.
Bea [21:07]
To actually be neutral. If you don't need cash and you're just going out because you've got some momentum, and then the sacrificial lamb comes out, do not accept the term sheet. the partner that you choose is really vital, so Do you use a CRM for recording interactions?
CRMs, Warm Intros and Associates
Ceci [21:24]
I used Notion a lot of the work in the fundraise is on the project management, make sure that you know you're replying on time, everything is getting looked after, where everyone stands, you know who you may have to chase or not. So I kind of built my own. I think any existing CRM is a bit of an overkill sometimes,
Bea [21:44]
Google Sheet is also fine as long as you capture the information that you need and so that you're prepared when you talk to these investors.
Ceci [21:50]
Yeah, I wouldn't buy one. what's the best way to like get in front of your VCs?
Bea [21:54]
Find a warm connection. unfortunately for the most part VCs are more susceptible if a friend of theirs or somebody that they know very well introduces them to a company because the introducer vets So introductions and who you know in VC is the currency of exchange.
If you have good contacts and contacts that you rate, you will probably take the meeting if if somebody introduces you that you trust. Cold outbound sometimes works, it's like, cold emailing for sales prospects. It's like a similar funnel.
Ceci [22:26]
Yeah. another quick question Always speak with a partner or is associate okay?
Bea [22:36]
This is hard one because when I was in I was probably cuddling myself with the thought that I was important. and I remember there was one company that I reached out to when we were both at Talis and the founder said, I don't think I want to speak with an associate. I should do the meeting with the partner. And I got so offended and I was like, absolutely not. goodbye. We're not investing. by the way, this was my ego. But I thought it was a bit rude from the founder to be like, you don't Count and I think it there's an aggravating factor if you're a woman. you don't count. can I speak with a man partner? I was like so pissed off, and so don't do that. But of course, it's impossible to know the VCs when
The juniors have decision making and actually influence this decision versus the ones that they don't. And so it would be better to be on the partner level, especially in the US. what's your stance?
Ceci [23:32]
I think my two cents are one, do research on the fund because in some funds, even associates can lead deals. So do your research, go and look. Is the associate sitting just as board observer? Are the principal board director? Second, get the analyst or the associate or the junior to like you and if you have to have a call with them to like suck up with them do it because they're gonna run your due diligence and they're gonna find things if they don't like you enough. just do it So you have an extra champion, even if that's not a decision maker, it does not hurt you. then get to the partner and figure out who goes to the IC. So that's my my take.
Bea [24:10]
Yeah, the bottom line is be a nice human. I there's this one anecdote that I know from a founder
Ceci [24:17]
Even even VC Juniors, Yeah, feelings
Bea [24:17]
I I are humans. if you were a founder and you don't have a board to ask introductions to maybe it's your first round of finance and you're not a repeat founder, what would you do?
Ceci [24:28]
I would be very loud on social media about what I do.
Bea [24:33]
That is true, yeah. I feel like everybody starts to be an influencer on LinkedIn or Twitter these days. it didn't used to be like that.
Ceci [24:40]
A hundred percent is what I would do. Just be really loud.
Bea [24:42]
Yeah.
I would say you can grind your way into it by going to some VC networking events. if those still happen these or go into founder circles and you befriend them and try to get an introduction or maybe just go to angel groups that can help you out. So there are ways. if you open Luma in your city and type VC or entrepreneurs something's gonna pop up and you can start from there if you have zero network. if we go into like what the chief of staff or the operating person actually does in the fundraiser, what was on your plate?
What the Chief of Staff Actually Does
Ceci [25:18]
It was mostly eighty percent of what I was working on because I was coordinating all of the calls and meeting. all of the emails and everything was all me. I was joining the pitches. That's quite controversial, it's not bad. I was silent. People knew I came from VC, so it was normal. And then I can hear what my CEO hears and I would be slacking him extra bits here and there to refine the pitch or link something that they just asked so that we had it handy and then I could always have a read on how the call felt for me.
Then I was mostly doing the first pass on the due diligence you will have all of these questions coming through. I kept a bank of questions because VCs are not that creative, right?
Bea [26:03]
They're always the same questions. If you have a FAQ document, you just build it up with the first questions, you're gonna recycle 90% of the material.
Ceci [26:11]
And then I would liaise with the executive team, getting more data as we were getting those asked or prepping them if we go we're going in a product demo or they wanted to talk with like the Chief Customer Officer they're kind of like doing that at the exec team level. that's mostly during the pre-term sheet stage. How about you?
Bea [26:34]
Mostly on the financial bits. So pulling together the cohorts, pulling together the financial model, prepping the data room. I have never been involved in the pitching. I've never coordinated meetings and things like that. So I would say I was maybe like the acting CFO in a way of like the repository of.
Information and unit economics and things like that. And then I was prepping the Q&A documents, the master Q&A document, and sharing it with investors ad hoc.
Do You Tell the Company?
Ceci [27:04]
Do you tell the entire company you're fundraising? Do you tell only the executive team? Do you tell nobody?
Bea [27:11]
Praktika is always very transparent and we're not that big of a team and so if you lie on something and people suddenly see that you're not spending time, they will know that something's brewing. So we always said everything quite upfront, whether that was good news or bad news. we always told everybody, you
Ceci [27:33]
At Seqera we also did that and it also helps explain why the CEO is not available so much. So it's easier if you need to get a few questions answered. How about in M&A? 'Cause
Bea [27:48]
You shouldn't. No.
That's way more delicate because you don't know. Well, first of all, if it's a public company, then you're not supposed to tell because otherwise it's insider trading and you go to prison. and you're not supposed to buy the stock of that company, by the way.
Ceci [28:06]
I remember being in Cyprus driving in the middle of nowhere, I get a WhatsApp message from Bea being like, by the way, if this goes through, do not buy X, Y, and Z stock, you will go to jail.
Bea [28:17]
Because there's a bit of information,
But if it's a private company, it's still very delicate. they might have plans. employees do not know what the plan of the acquirer could be. It could be to only buy the IP and fire everybody else. It could be to acquire the product team but get rid of the whole operations and finance. So you don't want people to have expectations and plus the M&A usually goes through in six months
Ceci [28:43]
And so do you say you're working on a fundraise if it's an M&A or do you lie to your employees and/or executive team?
Bea [28:53]
I think the reason why, we got into this sale process, and we were on the VC side is because we were a bit external. And so not much of the executive team, had to be pulled into the process. And so that was non-suspicious for the company. so then okay, the term sheet arrives. You sign with Sequoia. Whoop-whoop. what changes like how are you involved after Termsheet?
After the Term Sheet
Ceci [29:19]
So even before signing, again, this is where the VC experience comes in handy because you can, look at the terms, provide some initial advice before involving lawyers. you do a lot of like cap table modeling, which is a fun little skill you pick up in VC. after that it it's really basic project management and that's work that honestly the CEO shouldn't do if they have a chief of staff you're coordinating lawyers and then you're like surfacing what needs to be surfaced to the CEO, you're making sure everybody's replying, you're making sure that any missing information from the data room is collected and it's project management work. But you're like tying everything up.
Bea [30:00]
Correct. do you actually read the shareholder agreement from top to end?
Ceci [30:07]
I have done that both in VC
Bea [30:09]
Yeah, me too.
Ceci [30:11]
And as part of fundraising processes. It is really, really important it's just like the rules of the game, right?
Bea [30:19]
You have to do it. I remember the first shareholders agreement that I read. I was on a train going to Scotland, I think I can actually picture it from London to Edinburgh, and I was just reading paragraphs over and over again. And I was like, What the freak does this mean? It was a a lot of legal lingo, by now you just get acquainted with it, but at the beginning it was Quite tough to understand. I have to shout out Howard from Fladgate now. the first lawyer that I worked with I have to credit him with a lot of my knowledge on shareholder agreements, term sheets, investment agreements and side letters and the whole shebang.
Ceci [30:56]
I read the term sheet, the book?
And it was quite interesting, but for me the first time I read it, I was like, I it's coming in, it's going out. But then you just need somebody to explain it like liquidation preference is first dibs.
You just have
Bea [31:10]
Yeah.
Ceci [31:10]
Somebody to translate it and you work as a VC, you have that lingo, you have that understanding of what it actually means, what are the terms that mean something, what are the terms that you shouldn't be spending time like arguing against, etc. and so the way you help your founders alongside the lawyers,
Advisors and Bank-Led M&A
Bea [31:26]
What is your opinion on having an advisor for a fundraise?
No, right? Or or your French?
Ceci [31:33]
Even then ick
Bea [31:35]
That's a massive ick. When you're like when you're a VC and then an advisor responds instead of the founder, you're like, what? You're a startup, I'm sure you can talk to your investors.
Ceci [31:44]
How is it if a chief of staff replies to like an inbound from an investor or is like doing the comms side?
Bea [31:52]
I actually wouldn't love it. I know certain chiefs of staff that have been super involved and they're essentially managing the fundraise fully end-to-end for the founder and CEO. I don't love it. I would love the founder to be involved because it's quite a key, project to do to like raise money for your company from the right partners. And so I would want the CEO involved.
Ceci [32:14]
The earliest stages, sure, because it's many people, but Then the CEO, need to probably even move on a WhatsApp basis, and just have that relationship. in my experience with Seqera at the beginning I was like, sure. I'll do the comms. And then we had, you know, five funds that we really cared about. And I was like, no, you gotta reply to the guy right now. But you can also reply on behalf, right? of your CEO if you really, really wanted it. as a chief of staff, you can really help prep everything. you don't have to be the person signing the emails, you can send the emails on behalf of your CEO or just prep it for them. But then they need to like build a relationship and they need
Bea [32:50]
Ya
Ceci [32:50]
To understand how they work together.
Bea [32:52]
I think in M&A the the Customs are different. you would want a an advisor involved to help out, especially with managing a sheer volume of buyers that we might want to pitch, and then the bank does everything, does the initial contact, the initial teaser, the initial call. in banking we used to do the initial call with the teaser and explain the company. And then only if they wanted to proceed, they would sign an NDA, get access to the financial model and the full presentation, still not meet the founder.
And the CEO and the executive team, only after that, after some Q&A, that the bank would reply on behalf of the company. And here, the knowledge that the bank needs to have on the business needs to be really, really profound, which is what I loved.
Then you have a management presentation, and then you do bids you collect the bids from the buyers, and then you move into the second stage of the process. This might be outdated 10 years, but I think it still works this way. And so the whole process is managed by the bank. And then in the phase two, you will have more.
Targeted diligence sessions with the executive team, and then you move into legal, and then you move into second bids, and then you select the Best bidder, whether that's for price or for like synergies and compatibility. So that's more like it's like a bank led process.
What Goes Wrong
Ceci [34:13]
Shall we do like a quick finisher tips and tricks?
What goes wrong? Yeah.
Bea [34:16]
Yes. What goes wrong? A lot can go wrong.
Ceci [34:21]
What's a fuck up? What's a recurrent fuck up that it's easier not to fuck up?
Bea [34:25]
A lot of numbers that are super important, they should not be on one single person. There should be some sort of redundancy sometimes when I am on a financial model, I'm so deep into that model. that if there's a mistake, I'm not gonna see it because I've been looking and staring at the model, my eyes are bleeding. I've just been looking at it for twenty-four hours straight. I haven't slept. sometimes I just cannot catch all the mistakes and so have some Trusted double checking. they should go cell by cell. So have some redundancy, especially on the key documents of the fundraising process. How about you?
Ceci [35:04]
Know your numbers. So
Bea [35:06]
Mm.
Ceci [35:06]
When you're presenting, like know your runway, know your burn, know your NRR, know your numbers inside it out. this customer went from blah blah blah to blah blah blah, know them because you move from storytelling to again ground in the story.
Bea [35:21]
True, something that fuck-ups that are easily avoidable from the VC side when they are in a fundraise.
Ceci [35:27]
Okay,
Being on the receiving end of the fundraise really help me evaluate funds in a different way. there's two ways. you can do due diligence just to be like annoying and picky and just ask a lot of questions because you want to do like your job. And you can feel it. You know it's not going anywhere, but you still gotta waste time and answer that. Or you can do the diligence process where you feel like people are asking you the three, four very important questions to understand your business. making you think and adding value in the way you look at the business be that, not the other one. That one.
Bea [36:03]
Yeah, be that be better.
For me, I was surprised how the more you're in a growth stage, the less investors ask you about your product. which is understandable. if you have if you're past a certain level of ARR, then they assume that the product works. But it is still the baby of the company. And so really spending time to understand that and not just like looking at the cohorts and the financials, and what is the product roadmap? what are you doing there? how is that gonna change behavior of a certain market? I think that's quite interesting and I haven't seen too much at the growth stage.
Any tips and tricks that we haven't talked about that you want to highlight?
Ceci [36:49]
If you're early stage, make sure that your demo works.
Bea [36:52]
Yeah. Rehearse. Maybe record it. Do a loop.
Ceci [36:57]
How about you?
Bea [36:58]
For me it's just a repetition, the story arc has to be there. you just have to come up with it, pull it out of your ears and everything. Just have to work on it.
Ceci [37:08]
Another tip, depending on the stage of the of the fundraiser, don't reply too quick to the emails.
Bea [37:15]
Ooh no, my god, so don't don't be too keen.
I might disagree with that. If you have a
Ceci [37:20]
It depends.
Bea [37:21]
It depends if people want you and you're like getting some preemption, then sure you have the luxury to be doing that. when you time box it to like a month, then you have to keep up with the momentum.
Momentum is important. if you know that fund is looking at you like that specific day, just get the stuff back sooner because they they might still have time boxed like two or three hours to look at that and do due diligence. I wouldn't I wouldn't make them wait for the sake of. but there's there's a world where you're kind of running away and people want you more and it's a whole like psychological version of it.
Closing
Ceci [37:57]
I
Bea [37:57]
Okay, so that was the honest version of fundraising & M&A. I thought this was like an overdue episode because we've just seen so many and we worked on so many. So a process is, an operational exercise with a very short fuse and like it lands on a very small amount of people, including the chief of staff.
Ceci [38:17]
And a termsheet doesn't magically happen or materialize. And so there's a lot of work that goes behind it. And we wanted to share what goes on behind the scenes.
Bea [38:26]
Awesome. Well, this has been Top of the Ops true convos about what happens behind the scenes of startups and VCs in this case. So you can find us on YouTube, Spotify, and Instagram and TikTok as well these days. We're trying to do some content. So subscribe and see you next time.