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What they mean
If you have already started raising and investors know this they will very much want to know where in the process you are.
The real reason investors are asking this question is to understand how fast they need to move. Are they late or early in the fundraising process? If you’re looking to close in three weeks, as you have been raising for two months, and only just got the introduction to Khaki Capital, then they may be concerned that they may not be able to move fast enough to close the deal.
There may also be a scenario where you’re running out of money so closing this is a necessity. It’s best not to show desperation here, as you lose negotiating leverage. Under no circumstances look desperate.
You need to be reasonable about deadlines. You don’t get an equity round done with money wired into your bank account in a week. That just doesn’t happen. It’s maybe possible with a convertible note. If you are just starting raising then there isn’t a need to pick a date- it will take as long as it takes. Just make sure you started raising early enough to have enough runway to not be desperate.
What you need to say
“We are in the middle of our fundraising process so you are a little bit behind. Fortunately, we have taken the time to create a proper data room (Note: use this check list!), have a model done and various material that other investors have asked us. This should help you get up to speed quite rapidly. How long does it take you to typically get a deal done? We would, of course, love to work with you, so would like to have you in the process. If you are serious I can manage others’ progression.”
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