1/ Shared some notes with a portfolio company about raising a seed round and thought I’d share them here too:
2/ Approach going into it:
a) Fundraise should be your #1 priority and it will be a distraction. Other things will fall to the way side.
b) You need to run and own the process — you can’t “kind of” fundraise. All or nothing. Drive to close or else VCs will string you along.
a) Fundraise should be your #1 priority and it will be a distraction. Other things will fall to the way side.
b) You need to run and own the process — you can’t “kind of” fundraise. All or nothing. Drive to close or else VCs will string you along.
c) Fundraising takes an emotional toll — people you thought were in will back out (definitely), people you thought you had a bad pitch will surprise you (maybe).
3/ Signs you are ready to fundraise:
a) Pitch — You’ve locked in story about what you’re building, why it’s a huge market, and why now.
b) Traction — You have early signals around usage or engagement that indicate a modicum of PM fit.
a) Pitch — You’ve locked in story about what you’re building, why it’s a huge market, and why now.
b) Traction — You have early signals around usage or engagement that indicate a modicum of PM fit.
4/ Signs you are ready to fundraise (cont):
c) Go-to-market — You know who your customer is, how to reach them, and validated that someone is willing to pay for it.
d) Fundraise — You know your milestones and how the money will help you get there
c) Go-to-market — You know who your customer is, how to reach them, and validated that someone is willing to pay for it.
d) Fundraise — You know your milestones and how the money will help you get there
5/ Other things to think about:
Money should last to 18-24 months and enable you to reach meaningful milestones
Seed rounds typically result in 15-25% dilution for founders.
Know whether existing investors are following-on, and how much of the round is already spoken for.
Money should last to 18-24 months and enable you to reach meaningful milestones
Seed rounds typically result in 15-25% dilution for founders.
Know whether existing investors are following-on, and how much of the round is already spoken for.
Other things to think about (cont):
Don’t get strung along — Make sure you understand the VC process, and, if they’re waffling or stalling, ask them what needs to be true for them to have conviction
Confirm that venture capital is appropriate for your biz (reduces optionality)
Don’t get strung along — Make sure you understand the VC process, and, if they’re waffling or stalling, ask them what needs to be true for them to have conviction
Confirm that venture capital is appropriate for your biz (reduces optionality)
7/ Good ways to get investor referrals :
a) introductions from other founders or strong deal sources
b) introductions from existing investors
Bad ways to get investor referrals:
a) introduction from investors who aren’t investing
b) cold outreach
a) introductions from other founders or strong deal sources
b) introductions from existing investors
Bad ways to get investor referrals:
a) introduction from investors who aren’t investing
b) cold outreach
8/ Red Flags in pitches
— Don’t know metrics
— No vision on how company will take over the world
— Ignore the competition or say that there is 0 competition.
— Don’t know metrics
— No vision on how company will take over the world
— Ignore the competition or say that there is 0 competition.
9/ Maintain a cognitive dissonance -- go in with the confidence that you'll hear yes in the meeting, but also have the humility that you'll probably hear no, and that the decision is more about them than it is about you.
OK. Share your non-obvious fundraising tips :-)
OK. Share your non-obvious fundraising tips :-)
