VC Funding Season Ends Next Week

Posted on Nov 8, 2009 | 40 comments


This is part of my series on Raising Venture Capital.

huntingI’m sure I’ll spark the ire of some VC’s for saying so, but there is certainly such a thing as black-out days in venture capital.  It’s worth you knowing this so you don’t waste your time.  It’s also very important to understand so that you can properly plan when you raise money.

Let me first tell you the black-out periods and then I’ll explain why.  It is very difficult to raising venture capital between November 15 – January 7th.  It is also very hard to raise VC from July 15 – September 7th.  (you need to have had your first meeting even earlier.)  If you’re thinking about raising VC and have not yet started the process, you’ve probably already missed the boat for 2009.

If you’ve had your first partner meeting but haven’t had the full partner meeting then you had better schedule it for Monday, November 23rd.  Full partner meetings are almost always on Mondays and if it isn’t already booked yet for Monday, November 16th (e.g. this coming Monday) obviously that’s not going to happen.  If your VC is reluctant to schedule the partner meeting by the 23rd it’s a clear signal that they want to wait until the new year (or they aren’t committed to your deal).

So why is Funding Season over for the rest of the year?  The VC process is almost universal in how it works across firms.  You meet an initial person from a firm – an associate, a principal or a partner.  If it’s one of the first two you’ll probably meet a single partner before coming into a full partner meeting where (by definition) all of the partners will be in attendance.

turkeyIt’s true that some VC’s will work a few days of Thanksgiving week and many will work the first 2 weeks of December.  But the problem is that trying to get enough of the partners to be at a full partners meeting during  Thanksgiving week or in December is very difficult.  Because almost all VC’s know this, many are reluctant to even start the process with you.

The same thing happens beginning in the middle of July.  Many VC partners take 2-3 (4?) weeks off in August.  I know that many VCs also work in August so I’m not making any commentary about work ethics.  But enough take vacation that organizing full partner meetings proves difficult.

Maybe it’s partially because many entrepreneurs are pre-kids and many VC’s are post kids that VCs take off large blocks of time in the Summer?  Who knows – but trust me (regardless of what anyone tells you) it’s a true phenomenon.

Note that Jeff Bussgang says that VC’s work in August and he’s right.  VC’s are never really “off.”  Just like entrepreneurs they take calls from vacations, do board calls, handle company emergencies and urgent financings.  Jeff argues that his firm has done the most deals in August in the 7 years since he’s been a VC.  I’m betting these processes started much earlier and his firm was just finalizing what had been previously agreed during Funding Season.  Maybe I’m wrong but if I am I’m telling you in my experience his firm is the exception.

One carve out to the “Funding Season” rule – if you’re raising money from angels or small VCs (2-3 partners) maybe you can get something done as you don’t have the same scheduling conflicts.

But by and large I encourage entrepreneurs who are raising money to focus on the following time periods to START your process:

redlight- January 6 – May 15th (green zone)

– May 16th – June 30th (yellow zone)

– July 1st – September 7th (red zone)

– September 8th – October 15th (green zone)

– October 16th – October 31st (yellow zone)

– November 1st – January 7th (red zone)

Please don’t shoot the messenger in the comments, I’m just tellin’ it how it is.  And if VC’s are telling you otherwise, when they’re done with your funding documents I’m sure they’ll also tell you, “the check is in the mail.”

UPDATE: As accurately pointed out in the comments, I advocate building relationships with VCs year round.  It is always best to know your VC well before you really need money (in the same way you’d historically want to know your local banker).  My guide to VC relationships if you haven’t read it.

UPDATE 2: Yes, this is US centric.  In Europe funding season is longer into November but much, much shorter in the Summer! (I know, I lived there for 11 years).  Any views on funding season in Asia?

  • http://www.twitter.com/socialmedia411 Jeff Pester

    Good to know. Having said that…… as a company going out for it's seed round, we're really hoping your post convinces less enthusiastic entrepreneurs looking for funding to pack it in until the mid-January :)

    “Things may come to those who wait…but only the things left by those who hustle.” – Abraham Lincoln

  • http://www.facesforce.com rokhayakebe

    Well, we hope the time off does not include this blog :) .

  • http://bit.ly/19kduZ Greg4

    Mark, how does this data point fit with the idea you mentioned earlier that entrepreneurs should start building relationships with VCs before they actually want to go for funding? I'm assuming you would still recommend that people go for “relationship” meetings during the black-out periods?

  • http://arnoldwaldstein.com awaldstein

    Good data points. Maps to hiring as well for job seekers. Few hire late in the year or deep in the summer as a general rule (w/exceptions of course).

  • http://uniquevisitor.net Jeff Pester

    Good to know. Having said that…… as the founder of a company going out for it's seed round, we're really hoping your post convinces less enthusiastic entrepreneurs looking for funding to pack it in until mid-January :)

    “Things may come to those who wait…but only the things left by those who hustle.” – Abraham Lincoln

  • Roko

    Well, we hope the time off does not include this blog :) .

  • http://www.brekiri.com/blog/ Greg4

    Mark, how does this data point fit with the idea you mentioned earlier that entrepreneurs should start building relationships with VCs before they actually want to go for funding? I'm assuming you would still recommend that people go for “relationship” meetings during the black-out periods?

  • http://bothsidesofthetable.com msuster

    well, for a seed round you should be OK. For a VC round I generally advise against it despite your fantastic quote. The reality is that fundings, like all sales processes, have a certain momentum to them. I think it's fine to take a partner meeting with a VC but wouldn't push the process too quickly.

  • http://bothsidesofthetable.com msuster

    ;-) thanks. actually, I only took 1 week off this Summer and I blogged more, not less.

  • http://bothsidesofthetable.com msuster

    Yes, I should have made that more clear in this posting so thanks for pointing it out. Relationship building is a year-round sport. Just had a conversation yesterday with an early-stage entrepreneur I really like. He's just finishing his seed round but is already telling me that next year he'll do a more “institutional” round so he wants to stop by sooner rather than later. This is good.

  • http://bothsidesofthetable.com msuster

    Yes, you're right about this. VC Season = Recruiting Season.

  • timpearson

    Mark, we would never shoot the messenger. In fact, we all thank you for your honesty and valuable information. For first time entrepreneurs, these are the kind of things we fail to think about.

    Thanks Mark.

  • http://bothsidesofthetable.com msuster

    Thanks, Tim. But … sometimes as the messenger you do get shot ;-)

  • http://arnoldwaldstein.com awaldstein

    Good data points. Maps to hiring as well for job seekers. Few hire late in the year or deep in the summer as a general rule (w/exceptions of course).

  • http://bothsidesofthetable.com msuster

    well, for a seed round you should be OK. For a VC round I generally advise against it despite your fantastic quote. The reality is that fundings, like all sales processes, have a certain momentum to them. I think it's fine to take a partner meeting with a VC but wouldn't push the process too quickly.

  • http://bothsidesofthetable.com msuster

    ;-) thanks. actually, I only took 1 week off this Summer and I blogged more, not less.

  • http://bothsidesofthetable.com msuster

    Yes, I should have made that more clear in this posting so thanks for pointing it out. Relationship building is a year-round sport. Just had a conversation yesterday with an early-stage entrepreneur I really like. He's just finishing his seed round but is already telling me that next year he'll do a more “institutional” round so he wants to stop by sooner rather than later. This is good.

  • http://bothsidesofthetable.com msuster

    Yes, you're right about this. VC Season = Recruiting Season.

  • timpearson

    Mark, we would never shoot the messenger. In fact, we all thank you for your honesty and valuable information. For first time entrepreneurs, these are the kind of things we fail to think about.

    Thanks Mark.

  • http://bothsidesofthetable.com msuster

    Thanks, Tim. But … sometimes as the messenger you do get shot ;-)

  • http://www.seeingbothsides.com bussgang

    Yes, Mark – you are right. Deals have a way of flowing through the calendar and to get a closing done this year, you better be in front of partners meetings in the next week or so. Nothin wrong with January closings!

  • http://bothsidesofthetable.com msuster

    The only problem I perceive is that deals have a certain momentum to them (rightly or wrongly). If I were an entrepreneur and if I had a choice (e.g. long enough runway) I would try to do the single partner relationship thing right now with a full partner meeting in January. Just me.

  • http://www.seeingbothsides.com bussgang

    Yes, Mark – you are right. Deals have a way of flowing through the calendar and to get a closing done this year, you better be in front of partners meetings in the next week or so. Nothin wrong with January closings!

  • http://bothsidesofthetable.com msuster

    The only problem I perceive is that deals have a certain momentum to them (rightly or wrongly). If I were an entrepreneur and if I had a choice (e.g. long enough runway) I would try to do the single partner relationship thing right now with a full partner meeting in January. Just me.

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  • KenSingh

    Mark,
    In Asia the VC season runs much longer compared to both U.S. & Europe, their downtown is usually during summer months (e.g. june-Aug).

  • KenSingh

    Mark,
    In Asia the VC season runs much longer compared to both U.S. & Europe, their downtown is usually during summer months (e.g. june-Aug).

  • abirbhattacharyya

    Hey Mark:
    Great one. Minor correction= First Green zone should start @January 8th because the last red zone ends January 7th + it is consistent with your previous date logic.

    Thanks,
    Abir
    http://www.linkedin.com/in/abirb

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  • Webcastr

    A valuable post. I am printing it for my files. Thx and have a good turkey-day! – TD

  • Webcastr

    A valuable post. I am printing it for my files. Thx and have a good turkey-day! – TD

  • http://bothsidesofthetable.com msuster

    Thanks, Tim. You, too. Now you know why I said a January meeting made more sense! Hope to see you then.

  • http://bothsidesofthetable.com msuster

    Thanks, Tim. You, too. Now you know why I said a January meeting made more sense! Hope to see you then.

  • http://bothsidesofthetable.com msuster

    Thanks, Tim. You, too. Now you know why I said a January meeting made more sense! Hope to see you then.

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  • http://twitter.com/cmfryer Christopher Fryer

    Mark, I am starting an event in Seattle called “BS w/a VC” where I am planning on getting VCs at tables and giving entrepreneurs 10 minutes at each table to ask advice on a problem they’re facing in the start-up process.  I was shooting for early December but this post has me worried.  I have one major VC firm committed but should I reconsider my scheduling?

  • http://www.instahype.it Peter Kadas, Dr.

    Mark, if I caught up correctly, we’re already in the red zone for this year. If an entrepreneur from Europe happens to spend some time during this period in the States anyhow, is there any activity you’d suggest to do, or VCs simply don’t want to see entrepreneurs these days?

  • Marktarasov

     

     Dear sirs

     

    We have a project a long life.
    This project is a development based on proven scientific medicine that can
    prolong human life by 30-40 years. And his physical condition will
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    Once again I pay your attention.
    We can and we will create medicine for life prolongation. It wasn’t possible to
    anybody.

    The project implements a team of scientists who deal with longevity of 30
    years.

    Scientific-practical project. Time frame for implementation of the drug 5-6 years.
    For standard tests should be about 6 years. Therefore, we first register
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    If the person achieved success, it would like
    that it proceeded as it is possible long.

    And it is natural when to it will offer
    medicine for increase in life expectancy for 30-40 years. it will purchase it.

    And in this cases the price won’t have value.

    On Earth, is home to around 7 billion people.
    5 percent is 350 million people.
    That is, profits can be enormous.

    You perfectly understand that company cost in
    case of an exit to the market. that is in 6-7 years will promptly grow. Also
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    Therefore we offer you option. which seems to
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    We understand that you risk. but risk
    reasonable. As our previous work clearly specifies success.

     

    Therefore, we consider investors as partners
    and offer them the following conditions:

    To implement our plan must be 10 years.
    The required amount of 9,3 million euro(US$ 14000000.)
    Interest on the loan is not more than 5 percent a year.
    Return on investment from 7 to 10 year.
    The percentage of participation in profits for investors 25 percent.

    We yours faithfully treat the investor. But we
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    There is a business plan,
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    I ask you to report.

    Whether the offered idea interests you. Whether there can be you
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    Mark Tarasov

     

    Sia The energy of
    the planet “Earth”

    Riga, Latvia

    mark_tarasov@inbox.lv

     

  • Marian Rosca

    Can you recomend an angel investor or a VC in Europe ? I have an interesting project here. marianrosca.email[at]gmail.com . Thank you .

  • Guest

    The blackout here in Asia (south and southeast asia) happens in February… Chinese New Year is a multi-day event that changes dates every year, but is celebrated by nearly every country out here. If you are trying to do business in Singapore, Hong Kong, Malaysia, Thailand, or China proper, you’ll probably get lots of “let’s connect after CNY” responses ;)

  • http://www.playbasis.com/ robzepeda

    BTW, here in Thailand they celebrate both the Chinese New Year in February -AND- Thai New Year in April – both essentially week-long events :p

  • Thomas Stone

    CrunchBase data seems to tell a different story with a New Year’s spike – http://info.crunchbase.com/2013/08/19/analysis-of-investment-activity-by-season/

  • Steve Myers

    what about launch day for SaaS what time might be best or better than……….?