Fundraising Insights From an Expert

An article we liked from the Founder Institute:

5 Fundraising Lessons from Mighty Capital GP Jennifer Vancini

Mighty Capital General Partner Jennifer Vancini joined Founder Institute live for an interactive online AMA (‘Ask Me Anything’) event, where she answered founders’ questions about the fundraising process, shedding light on the perspective of the venture-stage investor.

5 Fundraising Lessons from Mighty Capital GP Jennifer VanciniMighty Capital invests in ‘early growth’ companies, at Series A and Series B stages—that is, after companies have already achieved some level of product-market fit, and are looking to scale through a strategic capital raise.

The following are 5 top fundraising takeaways for founders from the AMA event:

1. The Anatomy of a Great Deal 

  • Unique team (skills, ability, connection); passion 
  • Solve a real problem (or delivering on a need people are excited about, an opportunity)
  • Differentiated Solution (can be technology, or can be your market segment or ecosystem)
  • Traction (people want to pay you for your solution)
  • Big enough market for venture capital
  • How much funding you’ve ready raised, and what you’ve been able to do with that capital
  • Have a vision to scale in such a way that you have a plan to generate returns for investors

Vancini’s slide deck included the following general template statement, which if a founder presented to an investor, would theoretically tick ALL the possible boxes on the investor’s side of the equation for what constitutes a great deal: 

We are a unique team, excited to solve a big and hard problem. We came up with a sustainable differentiated solution. As a result, we are gaining solid traction, which we monetize fairly. So our financials look extremely promising, but to get there we need a reasonable amount of funding. We have a credible plan to generate significant returns for our investors.

2. Investors have their own Objectives & Considerations, discrete from those of founders.

  • Venture Capitalists are seeking extraordinary returns—they want at minimum 3-5x cash-in/cash-out; a fractional % increase return over some number of years simply isn’t enough to be attractive. 
  • Time-to-Return matters - How long will it take to get this liquidity from the investment? 
  • Risk/Return Ratios - Every company and industry is different - a safer bet is easier to make; but if the potential return is enormous, investors can be willing to saddle some more risk. 
  • Portfolio Construction - This is something often not visible to the founder, but always present in the...

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