One of the organizations I work with just finished a Series A financing. This is the first time I’ve been on the receiving end of the money – my past lives have all had views from the investing end of the cash.
The one thing that has struck me during this process is how intensive the process really is. I am downright shocked and dismayed at the amount of resources a company uses in order to raise capital. The CEO’s cycles are on fundraising almost full time, in addition to myself, and the COO. This isn’t to mention the dollars spent on attorneys fees, and the cycles from our board members and advisors. I bet if we sat down and tracked the number of hours spent (excluding the opportunity loss from not focusing on things like sales) and added in all attorneys fees, it would be so disgustingly not worth the raise. In fact, I think if investors had any idea how much of a company’s resources went into fundraising as opposed to growing sales, launching product, gaining market, etc, they might not even invest under a certain dollar amount. I wonder what the magic investment number is to make this process worth it.
One thing that strikes me is that software could be used to somewhat automate this process, thereby DRASTICALLY reducing the adminstrative burden of a capital raise. Letters to investors, responses to letters, signatures, deposits, stock certificates, phone calls, faxes, etc all could benefit from automation. What a great product that would be.