When I raised Vungle's $17M Series B, I literally sent a term sheet to VCs with just two blanks: Amount & Valuation.
Now, I know that sounds cocky as hell but I got absolutely screwed in my pre-seed as I didn't know how to read a term sheet.
VC Games
VCs can be nasty. They can sneak in all these extra terms. Meanwhile, you get distracted focused on headline terms and neglect the small print.
So this time, I was going to do things my way.
My Approach
I wrote the term sheet and modified all the small terms to be exactly what I want and then let the VCs set the price.
My justification was simple: "We have so much interest, I need to compare Apples to Apples."
Unexpected Results
The crazy thing is, sending that TS to all these VCs was such an unexpected thing to do.
They sensed there must be competition and it turned into an all-out bidding war.
First TS came in at $7M on $30M. Within a few weeks, we had 7 VCs fighting. We ultimately went with the highest offer: $17M on $100M.
I did not feel we deserved such a high valuation but that's what running a good process does. This experience, along with how Jack and I turned a bad startup into a $780M exit, taught me that fundraising strategy matters just as much as the product itself.
The Takeaway
If we all raise our early rounds on YC SAFEs, why can't we also apply the same logic to late stage funding rounds?
Understanding term sheets is part of addressing founders financial blindness that costs so many startups in the long run.
Conclusion
Running a tight fundraising process can dramatically change your outcomes. By controlling the terms and creating real competition, you put yourself in the driver's seat.
Don't let VCs dictate every aspect of the deal. When you have leverage, use it wisely.
If you're lucky enough to have multiple VCs interested, this is something you could try.