Why is Summer a Bad Time to Fundraise?
Conventional wisdom holds that the summer months of July and August are a bad time to fundraise. Is that really true? And if so, why?
Let’s start with the basics: the vast majority of VCs work through the summer months. Nobody I know is taking a 6-week holiday or shutting down the firm for two months. But almost everyone who works in VC does take some form of vacation during the summer.
Just like everyone else in North America.
Because the weather is nice and their kids are out of school.
Last week, I took my kids camping in northern BC. The park we stayed at had no cell service.
I previously wrote about how deals get done at VC firms. As a founder, understanding this is key to understanding why it’s harder to fundraise during the summer.
Most firms have a standardized investment process in which a certain number of partners need to meet the founders of a prospective investment, votes have to happen in a certain way, etc. If, in any given summer week, one or more partners is on vacation, that process will take longer. Some of the practical impacts from the perspective of a founder include:
It takes longer to schedule an initial meeting with a VC
The time between meetings increases
The amount of time needed for a VC to complete their diligence takes longer (as analysts and others at the firm also take vacations)
There is more inertia when it comes to building the type of excitement/momentum that leads to FOMO (see this post on the adrenaline of deal flow for more)
As a result, a process that might typically take one week stretches into two. Or two stretches into three.
Now map those delays across the majority of funds that you’re talking to.
(Of course, every VC will claim otherwise — just check out the investors hilariously tripping over themselves to disagree with Eric’s tweet from above here.)
One of the less serious responses 🤣
Why does this matter? What’s the issue if fundraising takes a little longer?
Because you’re trying to build momentum.
If you’re running a high-velocity fundraising process, your goal is to align as many VCs as you can into an efficient, effective timeline. That’s unequivocally harder to do if you can’t start with the baseline assumption that everyone you need to interact with at a firm is actually available when you need them to be.
To be clear: this doesn’t mean that it’s impossible to fundraise in the summer. Most funds do deals in the summer months (we certainly do). But as a founder, it’s much more difficult to coordinate multiple VCs in a way that drives competitive dynamics. Which means it’s more difficult for you to orchestrate an oversubscribed round (and the benefits that come from one).
So what should you do during summer months?
Prepare for your fundraising round by building your fully-researched pipeline of potential investors
Practice and perfect your pitch
Build out your data room and all of the supplementary materials you think will be necessary (so you don’t have to do this while you’re fundraising)
Consider reaching out to a small number of investors to get feedback as a dotted line (you can often get more quality time with prospective investors in the summer, as their schedules aren’t nearly as packed)
Focus your team on driving the key metrics you believe will be critical to your fundraise (revenue, users, etc.) in order to show strong month-over-month growth going into your fundraise
In terms of when you should start fundraising, there are three key dates to know:
The third week of August is when most Bay Area schools start (San Francisco/Silicon Valley VCs with kids are back home and in the office)
The fourth week of August is when Burning Man happens (many VCs without kids - any some with - are off running around in the desert)
The first Tuesday in September is when most Canadian schools start (at this point, every VC in North America is back to full capacity)
Assuming that your process includes “practice meetings” with investors that are lower down your target list, the third week of August is a great time to start. You can then ramp up initial meetings in the fourth week of August and into September. By the time you’re on to second and third meetings and into diligence, all of the VCs you engage with should be at full capacity.
Have questions on fundraising? Feel free to reach out! I’ll be here all summer.
Unless, I’m not 😉.
