Many CE Os will seek out assistance from experienced fundraisers to help them with tuning the presentation materials, making investor introductions, and reviewing term sheets, among other items. Often there is a temptation to the let the outside fundraiser run the process and tightly control content and follow-up efforts. In general, this is a mistake because heavy outside management of the process will quickly be picked up by savvy investors and they will conclude that they are dealing with a weak or disinterested CE O.

 

If you choose to work with an outside fundraiser (and there are many good ones, as well as not-so-good ones), it is even more critical that you study everything, and ask questions and challenge inputs if you are given guidance that takes you off course from the basic principles that are outlined. There are many out-of-work or semiretired executives that moonlight as fundraisers. They are often compensated in stock options for offering assistance. There is a strong tendency to take more control than appropriate since they want to justify larger compensation. These fundraisers will often come to the investor presentations (a red flag for investors) and then weigh in during the presentation to endorse the CEO/ company.

 

This is a big mistake, and it often leads to a bad outcome. These presentation meetings are not the place to have a big brother standing in. Investors are not investing in the intermediary—and they know that comments by intermediaries will be biased due to the compensation they are receiving. Their presence wastes time and creates a very poor first impression.