Hey there, I’m Matthew Kee and I run Tundra Angels. In this newsletter, I write about what investors don’t tell you about fundraising, growth, and how startups win in the market.

Send me your questions or what’s bothering you about the startup journey and I’ll look to take on your questions with insights and real-life examples. Here is this week’s post!

✅ Startups often kick off their fundraise far too prematurely, long before they have their fundraise details and fundraising assets game-time ready. ✅

Don’t tell investors that you’re fundraising without having all of your fundraising assets in order.

Tundra Angels was once doing due diligence on a startup. On our due diligence team, I had pulled in one of our Tundra Angels’ investors who was strategic to the startup’s industry. The startup had a vague range of a raise amount, “We want to raise $500,000 to $750,000.” They also had not developed nor centralized any fundraising assets. I asked for their data room, and they told me they didn’t have one in place.

Thus, due diligence progressed, but slowly. The company would present us with our document requests in a jagged fashion. Our requests were standard documents that need to be reviewed in a fundraise, yet it felt like the startup was developing and releasing documents as we were asking for them.

I called up our Tundra Angels investor to chat about how the process was moving slowly. This investor, who didn’t come for the venture space and was new to the vetting and due diligence process, remarked to me,

This investor was saying, “If this startup isn’t game-time ready, then we shouldn’t engage.”

If you’re ever been to a Brazilian steakhouse, you’re missing out.

It’s a fun experience where the host or hostess seats you at your fancy white table-cloth table and gives instructions about the experience.

Once you flip your card to green, then almost like magic, servers approach your table with long skewers of meat, ribs, pork, pitching you on the meat they are offering you and asking if you’d like some.

When you don’t want to be approached with any more food or take a break, you flip your card to the red side. Servers then stop approaching you and pass you by.

It’s a very binary decision - “I’m ready,” or, “I'm not ready” for this.

Similarly, I see startup fundraising in a very binary way:

✅ The caution is that often, startups kick off their fundraise far too prematurely, long before they are game-time ready to fundraise. ✅

✅ Investors either build confidence and conviction in the founding team over time, or lose confidence and conviction in the founding team, and make their decision accordingly. ✅

The impressions that founders give investors about the way that founders handle the fundraising process make a big difference.

It’s a favorable impression to an investor when the founders are tightly organized about the fundraising assets that they have in place and there is little document creation or updating needed when the investor requests it.

On the other hand, the investor loses confidence in the team’s ability to manage the fundraise process and/or the business as a whole when the founders have to come up with net new documents or fundraising assets that are standard for a fundraise.

Investors are already inundated with startup opportunities to begin with. When a startup don’t have its fundraising assets in place, it’s a pretty straightforward pass decision because they are not ready for investor funds, as there are many other startups that are buttoned up and have their stuff together that could be invested in now.

Founders need to understand that investors tend to have a different approach for a startup that is fundraising and a startup that is not fundraising.

Founders can actually use these different mindsets to their advantage.

When a founder says “I’m fundraising,” an investor thinks about the deal and assesses if it’s an immediate opportunity in the short-term, and they immediately work towards a “next” or “pass” decision.

Yet, when a founder says, “I’m not fundraising,” then the investor tends to not analyze the startup with the same level of rigor because the investor knows the startup is in the off-season, as it were, and so the investor is not actively working towards a “next” or “pass” decision.

✅ Startups should assume that they will only get one shot with an investor.

Don’t waste your one impression making the wrong impression by telling investors you are fundraising when you are not “game-time ready” to bring in investor funds. ✅

In 2021, Tundra Angels invested in a startup called Blue Line Battery. They have developed a modular lithium-ion battery for forklifts and AGVs (automated guided vehicles). When Phil Fonfara, the CEO of Blue Line Battery, sent me his data room link in due diligence, I was very impressed.

My and our investors’ confidence level in the Blue Line Battery team and their execution ability went up dramatically.

It’s impressions that this that the founder needs to control.

This is not an exhaustive list, but here are items off the top of my head that communicate a readiness to fundraise.

Of course, there are more items to include but they are beyond the scope of this single post!

✅ Investors either build confidence and conviction in the founding team over time, or lose confidence and conviction in the founding team, and make their decision accordingly. ✅

Startups need to control the variables to the investor impression.

In my observation, much of the investor impression starts with very binary language in three to four simple words.

When the servers (investors) come out and see your green table card, you better be showing up hungry… and game-time ready.