Summary:
The market has shifted from VCs holding all power to founders gaining leverage in dealmaking.
VCs like Leslie Feinzaig emphasize building authentic relationships over traditional pitch methods.
Ross Fubini advises founders to evaluate VCs based on person, firm, and terms for long-term success.
The current environment allows for faster dealmaking compared to previous bear markets.
Both VCs and founders must focus on execution and strategic partnerships to capitalize on this power shift.
The Market Has 'Switched' – Founders Now Hold the Power, According to VCs
Venture capital fundraising has often been seen as a black box, but today's fast-paced dealmaking environment is changing the game. In a recent episode of Build Mode, hosts explored how VCs are now marketing themselves to founders and LPs, with insights from Leslie Feinzaig of Graham & Walker and Ross Fubini of XYZ Venture.
From Outsider to Trusted Advisor: The VC Journey
Leslie Feinzaig entered venture capital with few industry connections, raising her first fund through hundreds of pitches to individuals, resulting in 105 LPs. She compares it to "raising a gigantic angel round with no lead," emphasizing that without a track record, investors are betting on the person. This outsider perspective has allowed her to position herself as a strategic partner for founders, helping them prepare for board meetings and refine their approaches.
Ross Fubini highlights the importance of choosing the right VC partner, using a rubric based on person, firm, and terms. He stresses that founders should consider if a VC is fun, trustworthy, and capable of getting deals done, as this partnership lasts forever.
The Thrilling Shift in Market Dynamics
Both VCs note a significant change from the 2022-23 bear market, where VCs held all the cards, to the current environment where founders have more power. Fubini describes this shift as "thrilling," allowing for faster dealmaking compared to cautious periods. This makes selecting the right VC even more critical for founders looking to build successful cap tables.
Tactical Advice for Founders and VCs
Feinzaig and Fubini offer practical strategies:
- For VCs: Move beyond traditional pitch decks and cold emails; focus on authentic relationships and proving execution to attract top founders.
- For Founders: Diligently evaluate potential investors based on personal fit, firm reputation, and deal terms to ensure a mutually beneficial partnership.
Key Takeaways
The era of power dynamics favoring VCs is over. Today, founders can leverage this shift by building genuine connections and making informed choices. As the market evolves, both sides must adapt to thrive in this new landscape of opportunity.
New episodes of Build Mode are released every Thursday. Subscribe to the podcast or watch on YouTube for more insights.
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