I’ve been on the receiving end of many many pitches by this point both via email and in person. One of the patterns that I have seen is that for pre-seed and seed stage companies (could be for later stages like Series A and B as well, but once a company is mature, some CFOs can handle the pitching as well if not better than the CEO) if the CEO is not the primary person pitching the company, then that’s a bad signal. If the primary pitch person is someone other than the person holding the role and title of the CEO, it can indicate a couple of different things:
First, it is a signal that the CEO doesn’t believe that the fundraising is an important enough activity to do herself. Fundraising is an integral part of being a founder and especially of being a CEO. Too many founders believe that fundraising is a waste of their time and that they want to get back to building the product or building the business. I’m sorry to say that that is a myth and utter nonsense (that is also unfortunately propagated into popularity by some accelerators as well).
If you’re planning on building a venture scale business, you will most likely have to raise capital for it. The process of raising capital is essential for the growth of a CEO. It forces the CEO to think about their business strategically. To articulate the company’s vision concisely and clearly. To communicate with others about how the company is going to become a big business. A CEO who can tell the story of the company well to investors will then be able to tell the story credibly to current and future employees, to customers, to partners and more.
If you’re going to fundraise, then spend the time to prepare for it and execute it as if you would execute on building a product. Have a plan. Have a timeline. Work the network. Do at least 2-3 pitch meetings a day. Listen. Learn. Iterate. Do it right. Doing a half-assed attempt at fundraising is not going to get your anywhere and just wastes everyone’s time in the process.
Choosing who you raise money from is an important part of fundraising. While it’s true that money is a commodity and everyone’s money is green, CEOs should personally take the time to do references on potential investors. The references shouldn’t include only the references you’re given, but even calling companies that didn’t work out as it’s only in times of adversity that the true colors show through.
While the process of fundraising can often be frustrating as many investors don’t clearly articulate their reasons for passing. That is an industry wide issue and not one that’s easy to address — and not one I intend to address in this post. However, the process of fundraising can also be instructive and enlightening. Founders get bombarded by a range of questions and while some of them may feel like a waste of time, every once in a while someone will ask a question that can truly change your way of thinking or make you realize that there is a whole other market or different positioning for your product that you may not have even explored.
Second, if the founding CEO is not the person who is fundraising, then it can also signal some friction amongst the founding team around who should and who wants to be CEO. Having two people in a company who want to be CEO can lead to founders disagreeing with each other and butting heads. As an investor dealing with founder fights is a pain in the rear (been there, done that). So who takes the lead on a pitch is a good signal for investors to look at to understand the founder dynamics.
Of course if a seed stage company is relying on a intermediary like a consultant or an investment bank to do their fundraising for them, that’s a clear signal that the company is not worth spending time on. Believe it or not this does happen on a fairly regular basis.
Bottomline: If you’re a founding CEO accept and embrace that fundraising is a part of your job. It may not be fun, but it’s a necessary evil and you have to spend the time on it. If you do it well and do it right, then it can prove to be an immensely valuable process not only for actually bringing capital into the company, but also for helping to set the vision and future direction of the company.