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182: What To Do When Your Financing Falls Through In The Last Minute

In this episode, Steli and Hiten teach you what to do when your financing falls through in the last minute. Every business plan includes a heavily researched and projected financial plan. However, there are a lot of internal and external factors that can directly affect whether or not you’ll be able to reach your goals. Worst case scenario, your projections may even fail at some point. Tune in to know what to do when the unexpected happens.

Time Stamped Show Notes:

00:04 – Today’s episode teaches you what to do when your financing falls through

00:35 – In the past 2 weeks, Steli had conversations with founders regarding this financial matter

00:59 – Different reasons for investments falling through will vary, it could be cash flow problems

02:25 – These problems have been more common now

03:15 – “Don’t count on it”—in regards to the investment

03:34 – “You have raised shit, if the money is not in the bank yet”

03:53 – Have options for your finances

04:31 – You’re never fully in control of the outcomes

04:59 – The real issue in financing problems happens way before the worst moment you’re in

06:02 – Be preemptive and do NOT put all your eggs in one basket

06:48 – Most scenarios Hiten have seen have all been very specific

07:30 – “Figure out what you did wrong”

07:37 – Pitch to new investors

07:54 – Steli shares a story about a founder being honest

10:20 – Steli told the founder that he cannot speak for them and that they need to weigh their own decisions

11:20 – Be transparent with your investors

12:49 – Be mindful of not imposing your own moral compass

13:30 – Do NOT lie to your investors – you don’t win that way

14:06 – Don’t talk shit and don’t wear your emotions

14:20 – Founders do wrong by wearing their emotions and talking shit about other investors

15:57 – Talk to your co-founders to get the negativity out of your system

16:18 – Be rational when talking with investors

17:52 – Steli talks about short term actions founders should take

19:19 – In some scenarios, it’s better to just close down the business

19:51 – You don’t want founders to work on a company that’s just not going to profit

20:51 – Listen to Episode 143 when you consider shutting down your business

21:41 – Do everything and anything possible for something that’s worth it

22:21 – End of today’s episode!

3 Key Points:

Investor money is NOT the only option you have—be proactive in finding those other solutions.

You’re never fully in control of the outcomes, but having control over your company is better than investors directing where you should go.

Transparency regarding your finances is key.


Steli: All right, you start.



Hiten: Check. Hi, this is Hiten Shah.



Steli: And this is Steli Efti, and in today's episode of the The Startup Chat, I want to talk to you about what to do when your financing is falling through in the last minute. So, the reason I want to chat about this with you today is that in the past two weeks, I had four different conversations with founders where the basic theme was that they were just about to close a financing round, and it has either fallen through completely, or the round or the financing is some kind of in a crisis. There have been different reasons why. For two of them, it was the main investor that ... The lead investor pulling out and in two other cases there are slightly different reasons for why financing has become much much harder. One is that the lead investor all of a sudden has brought up a lot of terms that are just incredibly aggressive and were never agreed to.



Hiten: Yep.




Key Smash Notes In This Episode

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