Earlier this summer we at Beringer Finance hosted a conference that took place at Iceland’s most beautiful fly fishing river, Norðurá. We had a number of entrepreneurs, investors, and venture capitalists attend this 3 day unique experience. Beside trying to catch the elusive Atlantic salmon, the participants used the time to discuss various aspects of the startup and venture environments.

One thing that inevitably happened was people seeing the analogy between fly fishing and raising capital for companies. Given our love for fly fishing, it is something we have talked about previously, but during our conference we truly expanded on this analogy and in this post I will try to summarize the analogies.

Fly-fishing is like raising capital for a company. There are numerous people who want to fish (companies), but only a limited number of fish (investments) in the river.

The river conditions (the market) will in great deal affect how many fish (deals) you will be able to land (closed deals) during your fishing trip (fundraising effort).

You will have to bring the right equipment (right product, team, etc.) on your fishing trip or you will not be able to fish (get investment). Then you have to know where you are going to fish (go where the investors are) and what kind of bait (investment criteria) the fish (investors) are interested in.

In particular you need to know what fly (pitch) works on the type of salmon (investor) that you are trying to catch (get investment from). The fly (pitch) depends a lot on timing (stage), location (geography), and conditions (market). If your fly is too shiny (hyped) or too dull (boring) then the salmon (investor) will not bite.

Knowing what area of the river to fish is also important and for this you commonly get fishing guides (advisors) who know the river like the back of their hand (with significant deal experience). They know which area to fish in (what investors to talk to) when the river is dry (markets are slow) and where to fish when the river is full of water (markets are fast moving).

The guides also know how the river (the market you are looking for investment in) may differ from the rivers you are used to fishing in (your local market) and you may often be surprised at how much difference there is (see my post on Cookie Cutter Venture Capital).

The fishing guides will not only tell you what area to fish, but they can also train (hone the pitch) a novice fisherman in how to get the fly out to the right area behind a rock where the fish are resting (how to gain access to the right investors).

Having the right fly (pitch), getting it right in front of the fish (investor), significantly increases your likelihood of catching the salmon (raising the funds), but sometimes conditions are such that the fish (investor) may not bite, even though you put the fly (pitch) right in front of their noses. They may have just eaten (no dry powder), be too lazy to move – often due to lack of oxygen in the river (bad market conditions).

Getting the salmon to bite (show interest) is only the first step in landing a salmon (closing the round). The salmon may be quite elusive (hard to get an answer from) and it may lodge itself behind a rock in the river making it impossible for you to land it (terms you cannot accept). The task of getting it to the banks of the river (money in the bank) may be take quite some time (long drawn out negotiations) or it may tire quickly (be very interested in funding your company).

Knowing how to land the fish (close the deal) requires knowledge of when to let it swim (when to give in to terms) and when to pull in the line (when to say no to certain terms). Your hook (pitch) may not be very big (strong) and as a result the salmon may tear himself loose (loose interest).

Even getting the fish towards the bank of the river (term sheet signed) is not a guarantee of catching it (closing the deal) as some of our attendees experienced when their fish got loose just as it came onto dry land (nothing is done until the money is in the bank).

Finally, fly fishing is an expensive sport, with no guarantee for success, just like raising capital from venture capital investors can be a difficult and time consuming effort.

Published August 9th 2016 at LinkedIn