Emotionally Surviving the Fundraising Process
Introduction
Fundraising is hard. It is strategically demanding to plan and execute an effective raise. Even more, it can be an emotionally grueling endeavor. For a leader to successfully navigate the raise, the emotional rigor of this process must be taken seriously. While a company needs a fundraise to survive, it also needs the leader to survive the fundraise.
While investors, advisors, and written resources can help you to refine your strategic approach to fundraising, this article outlines key considerations for how to deal with the emotional demands of a fundraise process—before, during, and after. This article will help you navigate the psychological and personal demands of the fundraise, and support you in taking care of yourself in the process.
Your company needs a fundraise to survive, but it also needs you to survive the fundraise.
The Developmental Arc
Founders can develop their ability to fundraise in three primary ways: refining their strategy, developing skills, and growing as a person. Growth as a person is instrumental for two reasons: First, personal growth helps a founder to develop the emotional resilience necessary during a fundraise. Second, strategic execution often interacts with and depends upon the self-awareness and maturity of the founder. The ability to cultivate the skills needed to navigate the fundraise rests upon the emotional development process of the founder. Well-intentioned advice from advisors like “focus only on the fundraise” and “don’t take rejections personally” may fall short in our emotional world and are dependent upon emotional resilience.
The following are some high-level personal development areas that appear in the context of fundraising:
Stop Riding the Wave. Any founder who has executed a fundraise can attest to the high amplitude nature of the process. Things can change quickly, curveballs can come in unexpectedly, and it is easy to get emotionally swept away. A founder has to develop the capacity to stay away from the peaks and valleys of the wave. In the language of our inner world, a founder has to develop equanimity. Equanimity is developing persistent mental calmness despite the changing tide of life.
Holding Paradox. The ability to mentally and emotionally embrace two conflicting ideas is a mark of human maturity. Seasoned founders rely on this capacity as they move through a process like fundraising, which is filled with concepts that require us to be of two minds at once. Founders may recognize this in concepts like “make a plan but expect the unexpected” and “get the fundraise done as fast as possible while knowing that it will take longer than you want.”
Awareness of their Motivation. As a founder grows, they become increasingly aware of what drove them to found the company. This growing self-awareness allows them to sort through their reactions to external events more effectively. By knowing their inner world better, they can more easily distinguish which responses are productive and which will distract them from their ultimate goals.
Skin in the Game. Investing in the fundraising process isn’t just about having skin in the game; it is about having skin in the game in the right way. A founder needs to progress from being invested in the process as an individual to being invested in the process as a company leader. Engaging the fundraising process as if our value as a person might be on the line is exhausting and, over time, becomes counterproductive.
The Fundraise Timeline
Key considerations for each stage of your fundraise process.
“If a founder had several investors interested in a seed round or raised funds quickly, it’s easy to believe that history will repeat itself. The reality is that nearly every variable may have changed: the market, the investors, the capital available — even the founder’s ability. A Series A fundraise is a different mountain to summit.” - First Round
BEFORE
Know yourself. Before you begin your fundraise, it is a good practice to reflect on your inner world and your understanding of yourself and your capacities. Consider the following:
Identify your level of stress and energy heading into the fundraise. What is your baseline or starting point?
Articulate your motivation for founding the company and leading the team through the process of fundraising. What is driving you?
Recognize the internal resources, supportive relationships, and values that will help to sustain you through the fundraise process. What practices will you rely on in stressful times?
Understand why you are fundraising. Knowing why the company is fundraising will shape the landscape of navigating the process. Is the company trying to bolster reserves, increase speed, or fundamentally survive? The reason behind the fundraise will shape the process. Fundamental survival is easily the most demanding path, and acknowledging this will help frame your perspective on the experience.
Start with the end in mind. Think about what it will mean to execute and finish the process well. When the fundraise is complete, how will you follow through, and what commitments will you deliver on? For instance, you may set intentions to follow up with interested investors who passed on this opportunity, to close the loop on relevant conversations, or to check in with current investors in a specific way. What will your next steps be once you complete the fundraise? Think about yourself, your team, and your investors and begin with an understanding of what the end will look like.
Recognize that each round raises the bar to a new level. Each stage of the fundraise will make unique demands on the founder, and these demands will increase exponentially from stage to stage. Moving to the next stage in a fundraise can feel like a league of its own. The further you progress in the fundraise, the more rigor and scrutiny you will face. The largest gap exists between the seed stage and the Series A fundraise. Many founders are blindsided by the increase in diligence as they move from seed to Series A. Being prepared for each stage of the fundraise will allow you to approach the process with more equanimity.
Listen for signal. Throughout the process, patiently listen for the signal amidst the noise. It is easy for people to speculate about what your valuation will be, how competitive your round will be, or how quickly you can raise. This is all noise. And this noise contributes to volatility in our inner world when we are not diligent about filtering it. Throughout the process, it is important to listen for signal and quiet the noise. What is resonating about your pitch? What feedback are you receiving from investors? Are there common elements to what is drawing interest and what is contributing to people saying no? All of these will be helpful indicators, and ultimately, you are waiting for the strongest signal in the process - term sheets.
Prepare your team. It is essential to set expectations about the fundraise process so that the team is aligned. In particular, the team needs to be aligned on the reality that the fundraise will be the top priority of the founder. The team may need to be prepared to shift focus quickly in order to respond to an investor visit or request for information. Finally, one of the most frequent points of stress that founders express is feeling like they are neglecting their team in order to focus on the fundraise.
Embrace the paradox of fundraising. On one hand, a founder is always in the process of fundraising. On the other hand, a formal fundraise process requires total attention from the founder. Founders must be prepared to recognize when they are shifting into a dedicated fundraise process. First Round speaks to this: “As a founder, you should either be fundraising or not — and if you are, it should be done with great intention.” Here are a few areas to pay attention to:
Support. What do you need from the team as you execute the fundraise? Clarifying expectations and explaining the demands of the fundraise will help your team be patient when your attention is focused elsewhere, be responsive to founder requests, and be prepared to supply information and materials quickly and accurately.
Availability. Prepare your team for a decreased amount of availability. More importantly, align with your team on the critical areas where you need to be available so they will feel supported throughout the fundraise process.
Communication. Let the team know what they can expect from you regarding updates about the fundraise. Stress the importance of patience and waiting for a signal rather than getting distracted by noise. This is also a good time to identify communication priorities with the team. During the fundraise, a founder lacks the flexibility to address non-priority issues. Simply put, some things are a waste of time and attention for a founder at this juncture. The founder needs to trust that critical items will be raised to their attention while noncritical items will be handled. Founders cannot assume the team will naturally do this. Instead, it is best to talk through projected scenarios and the corresponding communication expectations so all team members know what to expect and what is expected.
It can also be helpful to level set expectations about changes to the team after the fundraise. This could include new hires, new titles, and changes in compensation. It is important to keep the team focused on execution rather than speculating what the fundraise might mean regarding future organizational structure or personal compensation.
“I advise approaching fundraising as if it were always going badly. The reason is that between your ability to delude yourself and the wildly unstable nature of the system you’re dealing with, things probably either already are or could easily become much worse than they seem.” - Paul Graham
Plan time to recharge. Planning a successful fundraise is not just about strategy and execution: it’s equally important to plan a time to recharge before you start the fundraise. This includes designated time to recharge along the way as well as a time to stop and reflect after the fundraise is completed. There is a strong current pulling you forward when you come out of a fundraise, with pressure to execute the plan laid out during the fundraise. Without planning for a period of rest and reflection, the founder may miss out on this crucial step in the process. An exhausted founder will not be able to maximize the results of a successful fundraise effectively. Prepare yourself, your team, and your investors by carving out time for you to recharge before jumping back in.
DURING
Consider the worst that can happen. Because a fundraise requires us to set a target that we are aiming for, it is incredibly easy to become emotionally attached to that target. Anything short of a bullseye can feel like a failure. However, stepping back and evaluating the progress apart from our emotions can help us level-set. A dispassionate review allows us to assess how things are actually going and how various outcomes might impact the company’s future. It is important to be mindful of what you communicate to team members and other investors about how much you plan to raise, what valuation you are aiming for, and how long you expect the process to take because all parties will likely form some emotional attachment to the target metrics.
Recognize the high amplitude environment of fundraising. The fundraise process is full of ups and downs. When our emotional world is as turbulent as the practical process of leading a fundraise, it is easy to become exhausted. There are several factors in our inner world that can contribute to these peaks and valleys.
Realize that feedback hurts (your ego). Founders typically know *the right* things to say about the feedback they get. Internally digesting it is another process. Pay attention to any defensiveness, hurt feelings, or discouragement along the way, and have a trusted other to process these reactions with. These emotions are gateways you must pass through in order to develop as a fundraiser and build the equanimity to succeed in this task. Paul Graham: “Don’t let rejections pile up as a depressing, undifferentiated heap. Sort them and analyze them, and then instead of thinking ‘no one likes us,’ you’ll know precisely how big a problem you have, and what to do about it.”
Get comfortable being questioned and critiqued. Take it to heart, but don’t take it personally. It is easy and very human to take criticism personally. Part of the reason you have been effective as a founder is because you are so personally invested in your company and vision. Suddenly, you have to develop the ability to do both — be deeply personally invested while not taking criticism so much to heart.
Recognize that “oversell, underdeliver” is not something people intentionally set out to do. Typically when this situation occurs, it’s a trap that people find themselves in because their blindspots have gotten the best of them. Assume that you might fall into the trap and find perspective on how you would respond. Ask yourself: three months after the fundraise, what will I have done during the process that turns out to be an oversell? How can I adjust my approach to reduce or prevent this?
Deal with the high amplitude. Fortunately, many strategies exist for dealing with the high amplitude generated by our inner world. These include:
Recognize the paradox of fundraising time. Many advisors will tell you to move intentionally and aggressively toward completing the fundraise. There is truth to the idea that you need to push the process forward. However, emotionally surviving the fundraise requires us to be of two minds at once. First, Parkinson’s Law tells us that a work task will expand to fill the time we allot for it. Therefore, we should set an aggressive timeline for completion. However, experience tells us that unexpected things always arise during the fundraise. Emotionally, a founder has to paradoxically hold both of these realities simultaneously. Push for the fundraise to be completed on time; know it will take longer than expected.
Stay connected to what grounds you. Remember why you founded your company and why this work aligns with your passion. This can be a crucial internal lifeline during the emotional turbulence of a fundraise.
Schedule times to reflect and recharge along the way. Identify personal practices that help you rest and recharge. These will be unique for everyone but might look like a Saturday morning with no cell service, a good book, or a long walk. You may also benefit from a more intentional or structured break part way through the fundraise process. Founders are understandably reluctant to schedule this time because the fundraise can require an intense amount of availability. However, time on the weekend and evenings is often safe to step away for a few hours and intentionally recharge. Crucially, without these periods of intentional disconnection, founders may be unable to show up for the fundraise with the total energy and attention required.
Tame the mind. It is easy to confuse rumination for productivity. Compulsively thinking through scenarios may make you feel like you are working on the fundraise when, in reality, you are just drowning in anxiety. It is essential to ask yourself if your reflections are leading to identifiable action or if you are overthinking things that do not need more consideration. If you find yourself overthinking, deploy a practice to help tame your mind. Common practices include meditation, exercise, and time in nature.
Access your confidence. It is easy to be told that you must look, act, and sound confident. But how can you do this, especially when you may be feeling nervous about your fundraise? The important part here is to be the most confident version of yourself, not a version of someone else who is very confident. Confidence is most impactful when it is authentic.
Prepare to encounter and accept the unexpected. Founders have received all manner of curveballs in the fundraising process. Sometimes, these are minor disruptions, like a lengthy due diligence process; other times, they can be major disruptions, like the illness or death of a co-founder. Anything can happen. When the unexpected occurs, it is important to accept that this is part of the terrain you are navigating and that, in most cases, no action could have prevented the truly unexpected event.
AFTER
Time to rest. That plan you made to recharge before the fundraiser? Now is the time to execute it. A round of funding is emotionally demanding and time-consuming. Following a fundraise, it is vital to recharge and reflect on what is coming next for the company (and, sometimes, for the founder.)
There is much inertia coming out of a fundraise. You may feel anxious to return to the team or to begin executing the plan you have been pitching. It’s easy for your attention to quickly shift to the next task, the task after that, and the task after that. Before you know it, you’ve sprinted right past the close of the round and don’t stop until you are entirely out of gas. Your team doesn’t just need you to be physically available. They need you recharged, focused, and ready to engage. Take the time to rest.
Time to reflect. Closing a round of funding is a significant inflection point in the life
of a company. It is easy to push through without slowing down to consider what you have learned and internalize these lessons for the future. After the fundraise, set aside time to reflect on the following:
Yourself.
Your team.
The next chapter of the company.
Finish strong. Follow up, send thank you notes, show appreciation. Fatigue, resentment, and eagerness to move on can all contribute to not finishing the process well and dropping the ball at this final step. Return to the reflections you wrote before you began the fundraise, when you began with the end in mind. Be sure to follow through on your intentions or make necessary adjustments to close the fundraise on a positive note.
Recognize the fundraise as a transition in the life of the company. People may leave, titles will change, and the company will be in flux as it lives into the next chapter of its identity. This is a natural part of the process.
Communicate with the team. Align on anything that has been neglected from a strategy or team perspective. If a new board member is joining, be prepared to integrate their voice and perspective with the existing board and the broader team. Focus the team on the critical next steps that need execution, and revisit broader priorities that may have been set aside during the fundraise.
Be prepared for something to break. It’s not uncommon for an issue to arise right after a fundraise finishes. This may take the shape of hard feedback for the founder, increased conflict between team members, a key team member leaving, or intensifying disagreements about priorities. These types of issues tend to be put on hold as the fundraise unfolds and often pop back up once the fundraise is concluded. This is often born out of an earnest desire not to burden the founder as they focus on the fundraise, but it can result in disconnects or misunderstandings that can threaten team cohesion and future success if not promptly addressed.
Finally, practice gratitude. Founders are so focused on pushing forward to what is next that they fail to appreciate how far they have come. Gratitude is a critical practice that can help us recharge, stay centered, and gain clarity on what is meaningful. Take time to be grateful for your contributions, those of your team, external supporters, and everything you have achieved during the fundraise.
Closing
In addition to its potential to propel your company forward, the fundraise is also a significant opportunity for personal growth. The intensity of the process acts like a crucible for inner development. However, the potential development can be lost if there is no space made to properly prepare for the fundraise and subsequently to reflect and internalize the learnings that have taken place along the way. When these learnings are intentionally identified, they can contribute significantly to the personal growth of the founder. Successfully navigating a fundraise is an experience that can transform you from a novice founder into a seasoned leader.