This is the fourth instalment of Entrepreneur First’s tactical fundraising series. Previous posts have covered Preparation, Trial & Error, and Execution.
The weeks of sleepless nights, endless coffees and bruised egos seem to evaporate with a term sheet in hand. “Active Fundraising” is behind you and now you can get back to building product, right? Wrong. Celebration is certainly in order so take the night off—but tomorrow it’s back to work. Getting a term sheet is far from the end of your fundraise. Now is the time you get out of tactical execution and start thinking big picture.
Not all term sheets are created equal, and it’s all on you to figure out if your offer is a tool for growth or a bill of goods. I’ll be the first to admit, this stuff is confusing and hotly debated. Raise too little and you’ve stunted your growth (#wantrepreneur). Raise too much and you’ll never escape over-inflated expectations (#hasbeen). Mix in a bunch of confusing legal terms and add the mental stress of negotiation. It’s enough to make anyone question why they started a company in the first place!
Take a breath, you’ll be fine. Trust in your preparation. In this post we’ll cover a range of contradictory aspects you’ll need to consider before signing a term sheet. Focus on the drivers of long term. Ignore vanity metrics. Your work isn’t done yet, but you’re getting close. If you can keep a cool head this will be really fun.