The streets are empty in NYC this July 4th weekend and it seems like everyone is at the beach. The Gotham Gal and I are getting ready to head to Italy for a week on Sunday night. Summer is here and I can feel the pace of work life and city life slow down.
Many of our companies experience a slow third quarter because people aren't working at quite the same pace in July and August and it is hard to get it all back in September. And many entrepreneurs and investors I work with assume for the same reasons that the summer months are a bad time to be raising money.
I don't think the summer months are a bad time to be raising money. It's a different time to be sure, but not necessarily worse. We see a lot less incoming activity in the summer months so it may be the best time to get a VC's attention. If everyone else thinks it is a bad time, then the contrarian in me says it is a good time.
I just did a quick query on our portfolio and we made our first investments in eight of our twenty-seven active portfolio companies during the third quarter. Three of our investments were closed in July. Three of our investments were closed in August. And two of our investments were closed in the first couple weeks of September.
Eight out of twenty-seven is thirty percent of our portfolio, and that is north of the twenty-five percent of the year that the summer represents. So our firm has been more active on new investments during the summer than we are on average.
I suspect that if you look at the VC industry as a whole, and there are plenty of services you can use to do that, you will find that there really isn't a summer slowdown in investing activity.
But as I said a bit earlier in this post, the summer is different. And if you plan to be raising money this summer, you need to plan for some things. First and foremost, people will be on vacation, as I will be next week. So you it will not be as easy to get meetings in the summer. You will need to plan ahead a bit more. And when you do get meetings, there will not be as many partners in attendance. So you may need to visit the most engaged venture firms in your process a bit more than you would other times of the year. It may take longer to get a full partner meeting scheduled and when you show up, some of the partners may be on the phone from vacation spots around the world. It may be harder to get them engaged.
Due diligence is also a bit harder to do in the summer months. The people the VCs need to talk to to understand the investment and the people are more likely to be away. So anything you can do to help schedule those calls and meetings will be much appreciated by the VCs.
The bottom line is it takes a bit more work on your part to run a fundraising process in the summer months. But the benefit is you may well find that you are seeing a more relaxed set of investors, who are spending a bit more time on the golf course, and have clearer heads. If you extend your timeline by a month or so, dedicate a bit more effort to scheduling and quarterbacking the process, you will find a receptive audience with their checkbooks open.
The thing to remember about VCs, and all sorts of professional investors, is that we get paid to invest capital. It is what we do. So just because it's a slower time of the year, doesn't mean we aren't still doing our job.
If your company will be running out of money at or before year end, you should be raising money now. Do not let anyone convince you to wait until "everyone is back from the beach in September." That is too late. Do it now.
