Early Stage Fundraising Process
WRITTEN BY: UPSIDE PARTNERSHIP
Fundraising Process
Elad Gil has a helpful blog post outlining the process around early stage fundraising and what to expect from it. Generally, it’s safe to assume that each round of funding will take 2-3 months from start to close. He has detailed what does into the process over that period of time. We have elaborated on this below:
Honing Your Pitch: Practice, practice, practice. Get the pitch just right by doing multiple revs of the deck and pitching to advisors, founder friends, or individuals you’re not hoping to sell. Word to the wise, reiterated from the commandments above: aside from these practice sessions, don’t set up a formal fundraising process without having a polished deck that you’re ready to send out. If an investor is interested in your business and asks for a deck, you want to be ready to share it and keep the momentum going.
Scheduling: “It can take 1 to 3 weeks from an intro to actually meeting someone in person. For a seed round you will get rolling intros over many weeks or months.” The speed at which scheduling happens may vary throughout the year, depending on what else is happening. Holidays, school breaks, demo days, and world events can have an impact on a VC’s calendar.
Follow Ups: Anticipate requests from investors you’re speaking with. They may ask you to share insights, data, references- or they may come back with additional questions to work through. Have extra resources ready to go in an appendix. Elad warns, “if an investor asks for too much follow up with little investment on their side, cut them loose.”
Putting Together the Syndicate: Once you have a lead or your first commitment, who else do you want on board? Read more on this from Elad here.
Rolling In the Stragglers and Late-Comers: “Sometimes it is wise to leave a small amount available at the end of the round to roll in a few really valuable investors you meet in the end. Alternatively, collecting wires from everyone may take a week or two.”
Series A Fundraising
Y Combinator has put together a comprehensive guide on running a Series A fundraising process. We’ve included part of their quick tactical guide here, but you can find the complete guide here. They cover: preparation, investment materials, process, closing, and info for after the A.
6-12 Months Before Raise
Know your metrics.
Draft your story.
Build relationships with investors.
2 Months Before Raise
Figure out how much to raise and a backup plan.
Workshop your investment materials.
Perfect your pitch.
1 Month Before Raise
Pick one person to pitch and delegate their responsibilities.
Close hiring offers and create a hiring plan.
Align with current investors.
Calculate your pro-ratas.
Create a diligence pack.
Prepare documents for post-term sheet diligence.
Schedule your pitches tightly.
When You Launch Your Fundraise
Create a sense of urgency.
Share information prudently.
Repeat as needed.
Term Sheet & Closing
Notify all other investors.
Make sure you understand the terms of the offer.
Pick the right partner.
Complete post-term sheet diligence.
Kick-off post-closing administrative items.
Consider raising venture debt.
Originally Published:
October 2019, Upside Partnership Onboarding
September 26, 2012, Fundraising Will Take You 3 Months, Elad Gil
February 2020, Series A Guide, YC