I often chat with first time founders who are raising their seed round. Fundraising is an interesting beast and it has many parts than are odd or unintuitive if you are doing this for the first time.
I wrote this series to lay out some things that I have learned that, hopefully, will be helpful for you too.
The foundation of a great fundraise is to create a business that venture capitalists want to invest in. As Parker Conrad put it, “figure out how to be the Twitter guys”.
Yet it’s quite common to be a first-time founder, watch VCs fund companies similar to yours with astoundingly large sums of money, and wonder: “how do I get VCs to write me a multi-million dollar check?”
The answer is that fundamentally, fundraising is a sales process. Emphasis on process. All processes can be optimized.
This is a series on how to optimize a seed round of fundraising — or more properly your first round of “institutional” capital (which could be either the seed or the A).
Identify Potential Buyers & Creating A Narrative
This is the first step of any sales process. We tackle this in three parts: identifying specific people to target, understanding how to rank the firms they belong to, and creating a pitch deck and narrative.
- Raising A Seed Round Part 2: Targeting Specific Venture Capitalists And Angel Investors
- Raising A Seed Round Part 3: Ranking and Evaluating VC Firms
- Raising A Seed Round Part 4: Creating a Pitch Deck and Narrative
Running the sales process
Once you’ve identified your targets, it’s time to run the process. Raising venture capital is an extended, multi-stage sales process; across a number of prospective investors, as well as within each firm. Along the way, you’ll learn more about your targets, may meet new ones, and can encounter some interesting social dynamics between VCs.
- Raising A Seed Round Part 5: Navigating Each Firm’s Investment Process
- Raising A Seed Round Part 6: Managing Your Process Across All Prospective Investors
- Raising A Seed Round Part 7: Evaluating Investors In-Process & Handling Herd Dynamics
After you’ve gotten the term sheets, it’s time to evaluate term sheets against each other, and choosing a “winner”. There’s no one right way to do this, but there are some good heuristics.
- Raising A Seed Round Part 8: Choosing Winner(s) and Structuring the Round