Stop Wasting Time - Close Your Round Faster

This post originally appeared in INC.

Founders everywhere are wasting time in their financing rounds without even realizing it. Rounds that drag on for months drain founders' time and pull attention away from pursuing major partnerships, supercharging growth and getting products to market.

Here are the best no-stress methods to speed up your round so you can get back to growth:

1. In the first meeting with an investor, get what you came for.

You approached the investor. You agreed to do the first meeting. You've discussed the business together, and asked your questions in the initial meeting. But did you come out of it not knowing whether they would potentially invest - and if so, what range of potential commitment? Could they be a candidate to co-invest, or maybe even lead the round? Or are they maybe-tentatively-interested-if-another-investor-leads?

If you don't know the answer to these questions by the end of end of your first meeting with a Venture Capital (VC) fund, it's probably because you didn't ask.

From now on, you always ask for an indicative range at the end of the first meeting. Here's some inspiration on asking in a very casual, noncommittal way:

"We're not asking for a check today and we're not going to hold you to it, but assuming we brought in a great lead [investor] that I think you'll really like, the terms are fine and everything lines up in Due Diligence, what kind of range would you want to come in on as a co-investment? Are we talking $200-500k, $1-2 million, $5-10 million? Again - not going to hold you to it, but we're having more conversations right now and if there's someone that's a great fit that wants to co-invest, we don't want to shut the door if a lead steps up and wants to take the full ticket."

If you don't ask, you'll never know.

2. Agree next steps in the room.

The same principle applies for establishing next steps, particularly with your lead investor. Every firm has its own process and path to the finish line. The onus is on YOU to ask the questions, understand that process and work within it. Once you've established interest to move forward, here are some of the specific questions you should be asking:

• Who runs point from the VC's side? Who is typically involved in the process, that I should CC on emails?
• How frequently should we expect to communicate? Weekly, biweekly? Calls or emails?
• What does your Investment Committee (IC) process look like? Will there be partners we haven't met, receiving information about us in isolation? Is there a designated red-team at IC?
• What's your process surrounding due diligence, and are there ways we can optimize?

And about that due diligence process...

3. When you receive a Due Diligence Questionnaire, discuss it.

A formal due diligence process often starts with a 3- to 8-page questionnaire that will cause you to unintentionally make a face reminiscent of a confused dog.

You will see questions on there that make you think:

I thought we already answered this...?,

Does this question even apply to us...?, and

Was this questionnaire was meant for another firm entirely?

While great VCs customize their Due Diligence questionnaire (DDQ) for each investment they're considering, many investors use boilerplate DDQ templates. In either case, don't feel you have to answer every single question.

When you receive the DDQ, here are your next steps:

1. Stoplight Markup: Green for "crystal clear what we need to deliver," yellow for "not sure / have questions / need more clarity," red for "doesn't apply to us"
2. Speak with the investor. Before running ahead answering questions, ask if they've given you a standard DDQ, and what's best to do when a question does not apply to you.
3. Discuss information exchange. In earlier-stage deals that don't require a virtual data room, more founders are using tools such as Notion to collaborate.
4. Set up a system with your investor to ensure that you haven't just provided information, but that they've confirmed they're satisfied. The double-stoplight works well: if the VC shaded it green, that means they're satisfied. Yellow means "to clarify," and red means "let's discuss in our next meeting"

4. If you're not exclusive, you're approaching.

Rounds sputter out when founders lay all their eggs on a single initial indication of interest from an investor. Time drags on, there's dialog but no meaningful movement. Unfortunately, sometimes the words "let's move forward" can be interpreted in the same way as "the check's in the mail."

Don't be the founder who waits around hoping for the term sheet to come - you have a business to keep growing! Every second you spend on your financing round takes away from your focus on moving your business forward.

As early on in your round as possible, resolve to be transparent with all investors on this:

Until we've gone exclusive, we will be having conversations with other investors - I'm sure you understand.

Even if you really like that investor, your business cannot afford to sit on its hands waiting for slowpoke investors to get over the line.

Remember: you can always maintain a good relationship. If they didn't get to invest in this round, there's always next round - even though it'll probably be at a higher valuation.