Ideally, entrepreneurs can plan their fundraising in what I call “2+2+2 fundraising”:
2 years – Build relationships with investors. Doesn’t have to be 2 years; can be 6 months, or 4 months, whatever. The point is, it takes a long time to build a good relationship, and the best time to build a relationship with investors is when you don’t have to sell anything. Bring value (or be the value) to them first – introduce cool companies (as Alex Kwon does well with his “tl;dr intro”), produce quality content and establish yourself as an expert in your field, etc. If you start a new project, keep the potential investors updated regularly with progress.
2 months – Engage with investors. But you’re not opening the round yet (make sure to tell that to the investors – this is very important.) Schedule casual coffee chats. “Hi David, wanted to let you know that we’ll be raising our pre-seed in about 2 months. Would love to catch up and share the latest.”
2 weeks – Open the round. This is when you actually pitch your company formally to VCs and their investment committee. It’s always good to have a very narrow window for this phase. You’re either investable or not; having a 6 month window doesn’t necessarily increase your chance of getting funding compared to having a 2 weeks window. Create back to back meetings (which would require advance planning). Clearly communicate the timeline. If your company is really good, hopefully there will be some FOMO generated. The goal for your 2 weeks is not to close the round, but to get as many yes’s – a verbal commitment, or better yet, a term sheet. Actual close would be 2-4 months down the road.