“Make Sure You Have at Least Eighteen Months’ Worth of Runway in the Bank” Lessons I Can Share About My Series A Venture Financing Round

Jean Ginzburg
Jun 21, 2018 · 9 min read
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  • You Will Get What You Give
  • Celebrate Every Win
  • Do What You Say and Say What You Do
  • Be On Time
  • Display Bias for Action
  • Act With a Sense of Urgency
  • No HIPPOs (Highest Paid Person’s Opinion) Allowed
  • No Brilliant Jerks (Play Well with Others or Go Home)
  • Treat Others with Respect (Zero Tolerance for Gossip)
  1. Don’t take anything personally.
  2. Don’t make assumptions.
  3. Always do your best.
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  1. The second lesson is related to selecting a correct investor profile. It is tempting to cast a very wide net to maximize the opportunity. However, it is important to remember that approaching the wrong investors will only draw out the process without yielding desired results. As far as investors are concerned, every detail matters: investment strategy, investment industry, check size, existing portfolio, and board engagement style, all play an important role.
  2. The third lesson is connected to founder responsibilities. Job number one, number two, and number three for any founder is not to run out of money. Make sure you have at least eighteen months’ worth of runway in the bank before you need to hit the road to raise more funds. You never know how long it is going to take. Plan for unforeseen circumstances and possible need to go the distance. The worst position to be in is trying to negotiate the deal while running out of money.
  3. Lesson number four has to do with the company valuation and contract conditions. Not all money is created equal. Look at the fine print. It is easy to confuse valuation with effective valuation. Effective valuation takes into account liquidation preference, rate of return, and other elements of the deal. In this situation, a $30M valuation might be higher than $40M. It is better to get some legal advice when dealing with contract terms. The desire to remain frugal does not pay off in this particular case.
  4. Last but certainly not least, make sure you practice your pitch and you know numbers. It seems obvious, but many founders are less prepared than they should be when showing up at the investor meeting. Reasoning goes something like this, “We know our business well. We are not going to get stumped.” Nothing could be further from the truth. It is easy to get lost and get confused. It absolutely takes practice. Also, unless you are a single founder make sure that each of the co-founders knows his or her role. It is critical not to block each other. An investor pitch is no place for an ego. Be humble but be confident.

Authority Magazine

Leadership Lessons from Authorities in Business, Film…

Jean Ginzburg

Written by

#1 best-selling author, serial entrepreneur, digital marketing expert, founder of JeanGinzburg.com

Authority Magazine

Leadership Lessons from Authorities in Business, Film, Sports and Tech. Authority Mag is devoted primarily to sharing interesting feature interviews of people who are authorities in their industry. We use interviews to draw out stories that are both empowering and actionable.

Jean Ginzburg

Written by

#1 best-selling author, serial entrepreneur, digital marketing expert, founder of JeanGinzburg.com

Authority Magazine

Leadership Lessons from Authorities in Business, Film, Sports and Tech. Authority Mag is devoted primarily to sharing interesting feature interviews of people who are authorities in their industry. We use interviews to draw out stories that are both empowering and actionable.

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