Hey friends, it’s Jorian—welcome to Into the Ring. I’m a startup fundraising coach and have worked with 50+ founders who’ve raised over $190M.

One of the projects I’ve been working on recently is compiling a database of 120+ pitch decks that were funded by top Tier 1 VCs: a16z, Sequoia, Lightspeed, Khosla, Founders Fund, NEA, Benchmark, Index, and Accel. I’d love for this to be a helpful resource for founders & VCs, so I’m looking for a few volunteers from this newsletter to get an early sneak peek at the resource and give me your feedback.

Additionally, next week I’ll be co-hosting a live event with Jeff Schwartz, Founder & CEO of dataroomHQ, where we’ll talk through how to get your data room in order ahead of fundraising. It’s at 12:30pm ET on Thursday, April 23rd and you can RSVP here.

Today, I’ll write about raising a smaller round, share a recap of last week’s Tier 1 VC deals, recommend some VC essays & podcast episodes, and share a deep dive on why you should build two data rooms, not just one.

Last, thank you for being part of this Into the Ring tribe of 1.9K+ startup founders and operators/investors from OpenAI, Anthropic, a16z, Lightspeed, etc. If you think someone else might like this newsletter, they can sign up here.

Now onto today’s newsletter!

A quick note this week to say that sometimes it makes sense to raise a smaller round now, and hold off on raising a larger round. If you’re an early-stage startup and don’t think VCs will invest $2M in you today, then maybe it makes sense to raise a $500K angel / family & friends round first.

If you know you can raise $500K in the next two weeks, but the $2M round may take a few months and you’re not feeling confident in raising it, then taking the $500K could get you off the ground running faster. And hey, you can always raise the remaining $1.5M in six months once you’ve hit some additional milestones.

P.S. - often the best intros to VCs come from angels who invested in you early, so that’s an added benefit

Recently, I met two startup founders who were each raising a $5M Seed round. However, each of these two founders had very different approaches to their data rooms.

After initial calls with VCs, most of Founder A’s conversations stalled. But Founder B’s conversations accelerated, as VCs were energized by by the business overview data room.

Today’s essay is about why you should consider building two data rooms, and not just a single due diligence data room you treat as an afterthought.

Many founders don’t think much about putting together their data rooms. They cobble together some due diligence info and send it to VCs as part of the fundraising process.

Founders often include the following documents and information in a due diligence data room:

The problem is, these items are table stakes for early-stage startups. And they don’t help a VC build conviction in your deal.

Imagine you’re a VC, trying to find the next decacorn ($10B+) company. You have a compelling first meeting with a startup founder. And now you want to dive into the opportunity and see if you can get conviction.

The founder then sends you this due diligence data room, and you’re thinking “what in here is actually going to help me build conviction?”

I often recommend that founders think about data rooms in two ways:

This conviction data room is key. Think of it like a blank canvas you can use to get a VC excited about your deal. These are some of the items you might include in a conviction data room:

Not everything on this list belongs in every conviction room, and this list isn’t exhaustive. The question to ask is “what can I provide the VC that helps them gain conviction in my startup?” If it feels like you’re just adding volume, it’s likely better to leave it out.

PS - I highly recommend throwing in a table of contents to both your conviction & closing data rooms, to help investors navigate the documents and information you’re sharing with them.

Having a strong conviction data room, and not just a closing due diligence room, has two other benefits.

The first is that you can use this conviction data room as a carrot to move VCs along in the process. One of the key problems in fundraising from VCs is trying to get them from a first to a second meeting. So if you can leverage your conviction data room as a carrot - i.e., “let me know if you’re interested in a second meeting, if so I can open up our data room” - then that can help move VCs along.

The second benefit is that for a VC firm to give you a term sheet, likely multiple partners will need to agree to it during the firm’s IC (Investment Committee) process. And if your conviction data room is clear and gets partners even more excited, then it can be used within the firm to build their investment memo and build conviction across the VC.

So, my recommendation to you is not to let your data rooms be an afterthought - build two of them, one to build conviction and one to close.

The conviction, or business overview, data room is typically shared after the first meeting, giving the VC material to get excited and dig in further.

The closing, or due diligence, data room has all the documents and information you’ll need when the VC is doing its due diligence, typically in the period leading up to and right after a term sheet.

Most founders build one room, but the best founders build two: a conviction data room and a closing data room.

You’ve got this, founders.

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I’ve helped 50+ founders run high-quality fundraises and raise over $190M. Check out jorianhoover.com to read founder testimonials and learn more about my approach.