The silver lining of pausing your fundraise

The market sucks and you paused your fundraise last week. You’re not alone and for many founders like you, guess what? It might end up being a blessing in disguise.

In the last couple weeks, founders everywhere have either been forced to abandon fundraises or proactively “pause” fundraising activities. Pausing was one recommendation I gave in my article summarizing the current mess and possible paths forward.

As painful as it might feel in the short term, for many founders this is better than OK. It’s for the best.

Independent of market conditions, starting a fundraise that might run into the beginning of summer vacation is not ideal. In pre-pandemic times, VC activity would begin to slow in June as kids got off from school and vacation travel began ramping up. VCs are already highly distractible creatures, so throw the summer dynamics in there and good luck driving that process to a close! There were 2 COVID summers where it seemed like VCs plowed through June - August processing deals, but 2022 looks to be the first return to (new) normal with more normal vacations. Even if the market hadn’t tanked, your timing would not have been opportune.

If you paused your fundraise in favor of running a process in 3 to 6 months when VCs will have regrouped, you have set up perhaps the most productive sprint of your company’s life. Up till now, maybe you were following a few possible plans. If XYZ product hit an inflection point you’d raise a month sooner. If ABC partner signed a contract, you’d raise a month later. You had some flexibility. But now? Those “choose your own adventure” plans are out the door. The market has forced you into a singularly focused mission: Take the next few months to manage cash and execute your brains out. This is what some people call a “creative constraint” and it might produce some of the most exceptional months of work from your company to date.

A common sight for me is the founder who lightly understands the concept of fundraising. To them it’s just the act of asking people with money, for money. With that dangerously light bit of knowledge in hand, they quickly throw together a deck, pick a handful of investors to start conversations with, and let ‘er rip. This under preparation is the most common mistake in fundraising. A mistake I would guess that many of you were about to commit.

But the universe acts in mysterious ways. The market seizure that you thought was a slap in the face was in fact a gift. It’s like your startup teacher assigned a 1000-word essay due Monday on “why you deserve millions in funding” that you had barely written a paragraph for…AND JUST GAVE YOU AN EXTENSION (praise the lahd!)

Besides doing as much as you can to push your business forward, you now get a chance to really focus on REALLY preparing for the fundraise.