Are there any successful bankers for late stage venture businesses?

This segment of the market feels underbanked. Why don't Series C, D, or E+ companies hire bankers to represent them during fundraising processes? I am certain they could field better terms from investors than founders could on their own, thereby immediately earning their fees.

7 Comments
 

I've only interned in late-stage so take it with a grain of salt, but some venture firms see a banker-led process as an indicator that a company was struggling to fill the round. Since venture has a huge component of kingmaking, in the sense that firms will invest in companies because of a "blue chip cap table" aka cuz other good VCs invested in the company, firms generally like to see that rounds are competitive and that the startup has no need to bring in bankers to find investors. They don't like when deals are shopped around to everyone in the valley.

And/or they get better terms on non-banker-led deals. The partner didn't tell me that part though.

 

Great points here. Additionally, many co's will end up bringing on someone in-house to run fundraising post-Series C / growth round, or roll the responsibilities into a head of corp dev / strategic finance role. These folks are usually someone who was VP+ in growth / PE / banking and know how to run a tight, targeted cap raise process - having operational involvement in a business helps with having an intimate understanding and crafting the best possible story. 

 

A few things:

  • this does exist and is something many firms are beginning to do. MM’s and EB’s are starting to try and foster VC relationships and serve the lower end of the market exactly as you are describing. That said, the main reason they do this is to catch the business selling later. The actual VC raise itself is usually too small to make a meaningful fee/ justify the firm resources. 
  • Just as a point of reference, there are way way more 100m businesses selling than 100m VC raises. Bankers usually make money through a % of the transaction. The market isn’t THAT underserved, there just aren’t that many large raises that would justify the services of a bank.
 

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