Welcome to a new part of the Fundraising Playbook for Founders, a series about how to prepare and run an optimised fundraising process from deep tech VC Main Sequence.
At Main Sequence, we work with founders to model out what we call Slam Dunk Financing (SDF) every time we invest. This enables us all to align on what needs to come next to ensure the company can continue accessing the capital it needs to grow.
With many founders looking at bridging rounds until valuations pick back up, SDF is a great way to demonstrate with confidence that you are thinking about how the funding will lead to the next value inflection point.
If this is the first time you've heard of SDF take a look at this intro and this worked example with deeptech food companies to get you started.
Slam Dunk Finance (review)
Who’s it for (audience)
Founders. Investors.
What’s it for:
Modelling what needs to be true for your company to hit a value inflection point so that you can raise the next round successfully.
What’s the value:
Enables founders to think about, plan for, and review the proof points needed by the market to successfully secure the next round of capital at the desired valuation and dilution.
What is in it:
1. Progress review: Take a look at the SDF done in the last round. Based on where you are today, what was achieved v not?
2. Is it a slam dunk: Workshop the current market conditions, what needs to be true to raise now (i.e. has the SDF bar shifted)? Does your progress match that? If yes, great! If no, go 👇
3. Future SDF: Based on the current market conditions, what needs to be true for your next raise?
4. Planning fit: How can you work to achieve ☝️ given the runway you have?
Considerations
Bridge to somewhere: Securing a great bridging round can be linked to demonstrating that the investment will lead to a value inflection point within the bridge time horizon. SDF enables you to model what needs to be true to achieve that value inflection.
(don’t let it be a) roadmap to nowhere: SDF is not a set-and-forget exercise. We recommend reviewing your SDF every quarter and in this market, perhaps even more regularly.
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