Fundraising Insights from VC Office Hours with Jonah Midanik of Forum Ventures

Jonah Midanik of Forum Ventures joined Finta's April VC Office Hours to provide a deep dive into the challenges and strategies of early-stage B2B SaaS fundraising. During this engaging AMA Jonah demystified the venture capital process. Offering actionable advice to budding entrepreneurs.

The Fast-Paced World of Venture Reviews:

‍Decks are often skimmed rather than studied, with an average viewing time of just 92 seconds. This statistic underlines the necessity for founders to craft pitches that are not only succinct but also strikingly compelling to make an immediate impact.

The Importance of Warm Introductions:

In venture capital, personal connections are significantly important. There's no real shortcut around warm introductions; they remain a critical step in getting your foot in the door with potential investors.

Comfort with Discomfort:

‍"Get very comfortable with being uncomfortable,"

advised Jonah during the session. This mantra is critical for entrepreneurs navigating the unpredictable waves of startup funding. Feedback will often be conflicting and important but must be balanced with your gut intuition.

Standing Out in a Crowded Market:

Forum sees about 700 deals per month. So how can a company stand out in a crowded market at pre-seed and seed stage? It requires a clear demonstration of potential venture scale, envisioning how you can scale to $100M+ in annual revenue. Focus on founder strengths by highlighting backgrounds and unique unfair advantages the team have to play in this space. And share tangible proof points of the teams execution capability. Make sure your pitch includes and emphasis how big the opportunity is. Take time to prepare your deal materials to ensure everything is not just good, but great—across your pitch deck, story, and copywriting.

The Full-Time Job of Fundraising:

Fundraising is not a side task—it's a full-time commitment. Treating it as a partnership with potential investors can shift your approach from a mere financial transaction to finding people who are mutually aligned with your mission.

Early Stage Valuations:

Navigating the financial landscape of early-stage startups, it's noteworthy that valuations are experiencing a gradual increase over last year. Off the cuff, Jonah cited that ballpark valuations for seed rounds tend to be around approximately $13 million, with pre-seed rounds hovering around $8 million. More checks are being written compared to the previous year, along with a resurgence of bridge rounds, suggesting that investors are becoming more willing to engage. This dynamic presents both opportunities and challenges for founders seeking to position their startups advantageously in a competitive market.

You Can't Outsource or Delegate Fundraising

"Trying to outsource fundraising in early stage is like sending a friend on a first date."

While enlisting help with your raise sometimes works after Series A, at the earliest stages you are selling yourself and the team. Nobody know your company, industry, and what your doing as well as the founder. As a result trying to outsource or delegate your fundraising rarely works. It can also hurt your initial efforts at building real enduring relationships with prospective investors as well.

The Shift from Convertible Notes to SAFEs:

‍The session highlighted a significant trend in funding instruments: a shift from convertible notes to SAFEs (Simple Agreement for Future Equity), which trade ease of use for slightly higher dilution, but are favored for their simplicity.

Generating Heat Through Perceived Value:

In the early stages, the perceived value of a business often outweighs the actual value. Entrepreneurs need to master the art of generating excitement and interest around their ventures to attract investment.

AI and Future Trends:

‍The integration of AI into business strategies is inevitable. Jonah emphasized the need for startups to communicate a clear strategy for integrating AI into their business, or a real rationale for its irrelevance to their business model. Which ever direction your company is going in, have a strong AI answer.

How Many Investor Meetings to Close A Round:

"Forum portfolio data shows that on average companies are taking 83 meetings with different investors to close their round."

Fundraising is a numbers game. If you need 83 meetings on average to close your round, then you need a few hundred target investors at the top of your funnel.

Challenges of Closing Investments:

Converting commitments into actual funds can be challenging. Setting a clear timeline for closing rounds, as discussed, can help streamline this process and push investors to finalize their commitments.

Investor Engagement and Feedback:

Genuine feedback is gold in venture capital. Jonah's advice on seeking straightforward critiques rather than placating comments can significantly refine your fundraising strategy. We also cover how to respond when someone tells you, "Let me know when you have a lead investor."

Practical Tips for Pitching:

Effective pitching is more about storytelling than slide making. Jonah advised that your deck should narrate how you're building a billion-dollar business, with each slide meticulously supporting this narrative.

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Today's VC Office Hours peeled back the curtain on venture capital, offering a plethora of insights and strategies directly applicable to your fundraising endeavors. As you navigate this complex landscape, remember that preparation, perception, and persistence are your best tools. Are you prepared to take your fundraising to the next level? Join us at Finta for continued support through our platform tools, Fundraising AI, and community.