Ep. 69 — Jeff Grabow: You're Not Raising Capital. You're Picking a Partner for Ten Years

4 min read

Subscribe: Apple Podcasts · Spotify · YouTube · Amazon Music · iHeartRadio · Pandora · RSS

Episode Summary

You’re staring at a term sheet and the bigger check is starting to look like the easy answer, until you remember you’re about to marry this partner for ten years. Most owners don’t get walked through that part. Your CPA does taxes. Your banker manages the line. Nobody is at the table asking who actually belongs on your cap table and why. Jeff Grabow has been at EY for 30 years, 25 of them inside the venture world, and we got into the stuff most owners don’t get to ask. Where the capital actually comes from (endowments, insurance companies, family offices). Why VCs reserve capital for follow-on rounds and why a $5M raise rarely gets you to the finish line. Why a VC who already funded your competitor will eat your entire pitch. What makes a board member actually useful versus a name on a slide. And the line every owner should write inside the term sheet folder: it always takes more time and more money than you planned.

Watch on YouTube

## Top 10 Takeaways
  1. The money is the easy part. Picking who sits on your board for ten years is the hard part.
  2. Not every deal is a venture deal. A great coffee shop isn’t venture. A global coffee chain might be.
  3. VCs reserve capital for follow-on rounds because the first $5M almost never gets you to the finish line.
  4. If a VC has funded your competitor, you’ll spend the whole pitch defending overlap instead of selling your story.
  5. Cold emails get ignored. A warm intro from someone the VC already trusts is the only door that actually opens.
  6. Your board never wants to be surprised. Telling them bad news early is rewarded. Telling them late isn’t.
  7. Limited partners commit illiquid capital for ten years, which is why VCs need outsized returns to justify the risk.
  8. The CEO seat at a startup is lonely. Pick partners who can recruit, open doors, and stay through the dark stretches.
  9. It always takes more time and more money than you planned. Build the cushion into your runway and your communication.
  10. Tech enablement is the long tail. Whoever drops cost or expands margin with software owns the next decade.

Sound Bites

“Nothing ventured, nothing gained. That’s why it’s called Venture Capital.” (@00:17:52) — Jeff Grabow

“Time is the one resource that we all get an equal amount of. 168 hours a week. And it’s nonregenerative. Once it’s gone, it’s gone.” (@00:16:06) — Jeff Grabow

“It always takes more time and more money than anyone ever anticipates.” (@00:24:38) — Jeff Grabow

“You’re just as married with them as you are with your spouse.” (@00:18:52) — Ryan Tansom

About This Episode

Jeff Grabow is EY’s US Venture Capital Leader, based in Silicon Valley. He’s been at EY for 30 years, the last 25 of them immersed in the venture and entrepreneurial world. His seat covers three things at EY: identifying which high-growth companies the firm invests its time to serve, building relationships across the VC ecosystem, and helping large enterprise clients tap into innovation happening outside their four walls. Ryan met Jeff at the EY Entrepreneur of the Year event in Palm Springs. This early iBD-era conversation (2018) is a working primer on how venture capital actually functions, written for owners weighing whether to take outside capital and what to look for in the partner attached to the check.

Resources Mentioned

  • EY Entrepreneur of the Year — Where Ryan and Jeff connected in Palm Springs.
  • Dave Hornick — Referenced for a piece on what makes a good board member.
  • Peter Diamandis — exponential organizations — Referenced for how large corporations build innovation outside the mothership.
  • Platform Revolution — Referenced by Ryan on where value lives in digital and platform businesses.

Connections

Phase + Module:

Milestones:

Concepts referenced:

Graph View