March 18, 2024

202. Lessons From Leading My First Round: Relationships & Lawyers

202. Lessons From Leading My First Round: Relationships & Lawyers
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Season 4

Text your thoughts directly to Rich.

This past December, SpringTime Ventures led a complicated priced equity round. It was the first round that I ever led and I learned a ton of lessons. The first two are that the relationship between the lead VC and the founder is the single most important thing. Second, have great lawyers who know the unknowns. 

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About SpringTime Ventures
SpringTime Ventures seeds high-growth startups in healthcare, fintech & insurtech, and logistics & supply chain. We look for founders with domain expertise, forging a path with a truly transformative technology. We only invest in software-based businesses in the USA. We bring a people-focused approach, work quickly, and reach conviction independently. Our initial check size is $600k. You can learn more about us and our approach.     

Transcript
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This is Rich Maloy with SpringTime Ventures, bringing you the VC Minute, quick advice to help startup founders fundraise better.

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In December of last year, we wrapped up the first round that SpringTime led by itself.

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We're one of many venture funds that doesn't normally lead.

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We've co-led on a few rounds before, all of which were on SAFEs, and all were very straightforward.

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This small round in Moxey was complicated and required a lot of cleanup to make it venture ready.

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Our team had deep conviction in the business.

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I was leading the process internally and I was the one really pounding the table.

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I wanted to do the work to bring this round together.

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Through the process I learned some important lessons that I want to share with my fellow seed investors who are leaning into leading.

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It's also equally applicable to startup CEOs embarking on their first fundraise.

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Particularly if you're raising a price round.

00:01:00.537 --> 00:01:05.058
But first I want to thank AVL Growth Partners for supporting the VC minute.

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When I decided it was time to bring a sponsor on, I had a very short list of organizations that I wanted to work with.

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And thankfully, my first choice agreed to support the work we're doing here at the VC Minute.

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I can confidently say that our sponsor is a financial game changer.

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They've been a trusted financial ally providing invaluable insights to several of our portfolio companies.

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I've known them through the startup community for over a decade and they have a stellar reputation.

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AVL provides fractional finance and accounting services to companies pivoting from growth to scale.

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Head to AVLgrowth.com and explore how they can be pivotal to your growth.

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Diving into the things that I learned leading my first venture round.

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The number one thing is the power of relationships.

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The relationship between the founder and the lead VC is the single most important thing.

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This cannot be overstated.

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Because I spent months working on this round with the CEO, Charlie, we had built up a deep pool of trust.

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This was critical, especially at the end when we needed to move fast.

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In the last few days.

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It was almost like the sides of the negotiating table had changed, with Charlie and I on the same side, trying to get the deal done, and the lawyers on their own sides trying to continuously negotiate for things.

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Now I'll temper that analogy with the understanding that my second learning is that you need experienced lawyers.

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To be fair to our counsel, we could not have done this without them.

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We worked with Matt Hyde and his team at Catalyst; and they have years of experience negotiating deal docs for priced equity seed rounds.

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I didn't know what I didn't know, but they knew and through that knowledge, they're able to help me navigate through this process.

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Only work with a law firm that has supported exactly these types of deals, hundreds of times.

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And by exactly.

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I mean exactly.

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Find out how many rounds they've done for the same stage, financial instrument, and level of complexity.