As the talk of sky-high Y-Combinator (YC) valuations reached fever pitch, YC alums from all over the World gathered the day before Demo Day to see the pitches of the current batch. Although the companies change, the questions from founders are understandably focused on fundraising. You might be surprised how seldom valuations are discussed. Usually founders want to know how to get their round raised and closed ASAP.
During the excitement of Demo Day it’s easy to forget that a yes from an investor is not the same as having that money in the bank. After our Demo Day (2012) I recall being asked numerous times by @paulg if the money we’d raised was ‘in the bank’. I hated answering the question because the answer was ‘no’ and the reason was that it’s easier to sit on a yes from an Investor, rather than follow up and get the money closed.
As this is common problem, I made a handy flowchart to help you stop yourself from procrastinating on investor follows up. It’s the basic formula we used at SendHub to raise our seed round and was important during our A and B rounds too. Getting people to pay never gets easier, you just get better at asking.
- You only wait and do nothing in the red squares, nowhere else.
- You should not ask for a referral until the money is the bank.
- This is a deliberately simple framework, it’s not perfect.
-Ash Rust, CEO and Co-Founder