Top VC firm Kleiner Perkins says it signed the first term sheet of the 'work from home' era. Here's how it came together.

Kleiner Perkins Partner Mamoon Hamid

  • On Thursday, Kleiner Perkins partner Mamoon Hamid tweeted that the Silicon Valley firm had just landed a Series A funding deal, its first completely with an entirely remote team.
  • According to principal Bucky Moore, the Kleiner Perkins team conducted the pitch meeting and follow-ups on Zoom video conferencing, and that the deal took roughly the same time as traditional in-person meetings.
  • Moore told Business Insider that he has been advising startups that are able to avoid fundraising for the near term as the uncertain climate may make investors slower to act and less likely to invest.
  • Moore, who was part of the deal team for Kleiner Perkins, clarified that he had known the entrepreneur in question for several months, and had already met in person prior to the remote work directives set in place earlier this week.
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Tucked in between news of markets in turmoil and growing US coronavirus cases on Thursday was a healthy dose of venture capitalist optimism.

Mamoon Hamid, partner at Silicon Valley venture stalwart Kleiner Perkins, tweeted that he and his team had signed a Series A term sheet for a as of yet undisclosed startup. The deal, he claimed, was the first of its kind since many VC firms have chosen to go entirely remote, ditching the glass-walled conference rooms in Silicon Valley and San Francisco.

“Our first signed term sheet for a Series A investment in our new ‘WFH’ world,” Hamid tweeted. “From partner meeting pitch to investment decision — all done remotely and completely distributed. While we crave in-person interaction, this can and will work. Perhaps ‘remote work’ is the new platform.”

The deal isn’t entirely closed yet, according to Kleiner Perkins principal Bucky Moore. He was part of the original deal team that scouted the company in question, and told Business Insider that he had been following the entrepreneur in question for roughly nine months prior to the signed term sheet Thursday. He said he had met the entrepreneur in person before the remotely finalized deal, but several partners had not.

“They didn’t have plans to raise a Series A because they were achieving milestones that had been set at the seed round,” Moore told Business Insider. “Things started to heat up in that respect at the same time this new way of working became commonplace.”

Moore said that the deal team had initially planned to bring the entrepreneur in to meet the firm’s partners, a common final step in securing funding, on Monday. But once it was clear the partners would be working remotely, Moore said he was able to get the entrepreneur on board with pitching the firm remotely via Zoom. Just four days and several negotiations over the phone later, the term sheet was signed and the process will begin moving forward with both parties’ legal counsels, which also relies on email and phone communication instead of in-person meetings.

“I think it’s unchanged, which is why this is interesting,” Moore said of the deal’s timeline. “When a partner meeting happens, we decide what we want to do from there, communicate that to the team, and then we start negotiations and make an offer. Usually that all happens over a week.”

By Friday, several other early-stage investors had gone to Twitter to similarly trumpet term sheets signed and deals closed in Silicon Valley’s new reality as a show of confidence to worried founders. Moore said that it is likely that “business will continue” — he said that he has been advising startups that need to fundraise to be cautious and well aware of the financing situation of the entire ecosystem.

“If you have the resources to do so, it’s prudent to take a step back,” Moore said. “In any seed company’s case, they are inherently under-resourced and three are a lot of those companies that need to raise and have to do that now. That’s the group of companies that are going to have to bear the brunt of what I expect to be indecisiveness while people are trying to figure out what’s going on.”

Firms like Kleiner Perkins, however, have plenty of dry powder at their disposal and aren’t going to hold back on funding entirely. That won’t be true at every VC firm, he said, and desperate founders should think long and hard about taking on unvetted investments or debt financing if they can avoid it. 

“Otherwise, just tighten your belts and keep your heads down building the company,” he said.

SEE ALSO: Silicon Valley’s startups are facing the biggest crisis in a generation. Here’s what venture capital investors are telling founders they need to do to survive.

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