I wrote this thread on twitter yesterday, hopefully it will help some others to avoid the same mistakes:
1. We started fundraising after completing DD.
We thought this was the most responsible thing to do, but we way underestimated the time it would take the bank.
We should have also been talking to investors from day 1 teasing the deal, rather than waiting for DD to finish.
- We used VC fundraising structures in microPE.
These are not the same investors, return profiles, or markets.
I thought our experience, infrastructure, and skin in the game would permit self funded search economics.
I was wrong and we burned some investors early.
- Investors don't count past success in other arenas.
Having a successful SaaS company, an agency, and a brand is not the same as acquiring a SaaS company and growing it.
We found that out the hard way. @girdley wasn't built in a day, but the next one should be easier.
- Bank debt takes a LONG TIME if you come in cold.
We had all documentation prepared prior to reaching out to any bank.
No follow up requests were made, but they are still taking months to underwrite.
We should have been warming up these relationships prior to the deal.
- Does the deal matter more, or the relationship.
I'm still not clear on this one. Does the deal matter more, or the relationship.
We got a lot of no's from people we know well. We also should have been building more relationships prior to having a deal.
We have seen others like @n_evans work hard to build a network and keep them in the loop prior to having a deal in hand.
We decided to let the deal and our resume speak for itself.
I think we might have been wrong, still up for debate.
- Find your sweet spot investor
Overly technical investors were getting lost in the weeds.
They wanted a perfect product.
We are buying at a 1x Multiple, there are warts here.
People that understood SaaS as a business felt comfortable, and saw the opportunity.
- Find a story beyond price.
We thought that a slam dunk price would be enough to complete fundraising in no time.
Because we are in SaaS people wanted to see a growth story, not just limited downside.
We had to dig deeper into the market mid fundraising to find it.
- Interest is not commitment.
We had four investors that wanted to invest max checks. We thought we were OVER subscribed.
After a few weeks they all passed on the deal. They hadn't really read the deck, once they did they didn't like the economics.
- Horizontal SaaS is a tough sell.
We have a great deal, great multiple, and a growing market. The deal is opportunistic.
Most investors preferred a bigger player in a smaller market.
Many worried about taking a knife to a gun fight.
They might be right, time will tell.
- An opportunity to network
Not a mistake. We learned a lot from the people we met, even the noes.
Some great feedback the helped improve the deal from: @steveressler @Sam_Rosati @tsludwig @Dan_Tamkin @SkolCapital @TaylorPearsonMe
Now if the bank would just give us a date!