As an Investment Associate at OpenView leading our outbound team, I spend my days managing my own “sales funnel” to a certain extent. Through my work over the years, I’ve spoken with thousands of B2B software companies across a variety of stages, geographies and sectors as I search for OpenView’s next opportunity to partner with a generational software company.
At a high level, this prospecting process mirrors the sales pipeline of many of our portfolio companies. The vast majority of companies I speak with ultimately fall into the top of the funnel while only a handful filter down to the point of an extended term sheet and subsequent close — much like the process of acquiring a paying customer. And, as in a sales role, managing relationships throughout this journey takes time and effort, but the ultimate payoff can be huge. It’s always rewarding to watch a startup mature from a scrappy founding team to a revenue generating company that is seeing signs of product market fit and accelerating GTM momentum. We’re potentially entering long-term commitments with every single company we engage with and building a strong foundation for that working relationship early on positions both OpenView and the company for long-term success down the road.
I strongly feel that startup founders should take a similar approach when it comes to cultivating relationships with potential sources of expansion capital. Once the decision to raise funding has been made, a CEO has added yet another full time job to his or her daily routine and to be frank, the process can be quite manic. With the competing priorities of running a company and managing the raise process, it can be challenging for a CEO to fully acquaint him or herself with the venture fund sitting across the table. For this reason, I think it is hugely valuable for CEOs to proactively manage their own venture sales funnel well in advance of any financing event. Treat the fundraising process like prospecting — carve out time on a weekly or monthly basis to speak to or grab a coffee with various parties including founders and VCs. Find out which firm or partner is the best fit for your company and why. Speak with current portfolio founders and ask them difficult questions to really do your due diligence (after all, your potential investor is doing that same due diligence on your company).
I realize it’s easy to say all of this while I sit here with my investor hat on, but doing your homework over time versus cramming the night before an exam is well worth the effort on the back end. In the end, the fundraising process will not only be less stressful, but your outcomes are likely to improve.