On raising a Series A

One of the main questions I get asked from other founders is how they should approach raising a Series A.

Instead of saying the same thing every time I have attempted writing down my thoughts in notes/bullet points in an attempt to pass on what we did in a more scalable way.

On series A funding: 

  • Make sure you have 6 months of runway
  • Get series A metrics and see how you benchmark in terms of growth 
  • If below benchmark see if it makes sense to get a bridge funding 
    • Only makes sense if you have an event imminent that will change your trajectory Or you can try raising on a good story 
  • For an A you want 
    • Some product market fit A metric that’s representative of your cos success growing at startup rate (check the benchmarks for your industry) 
  • Get your deck ready
  • Get a data room in place 
  • Show deck and data room to existing investors for feedback and review 
  • Deck content 
    • Growth chart Show them that your space is big Show them that currently there is a problem in how your customers do what they are doing Show them that your solution does it better (that’s best shown by traction) And if you have network effects or economies of scale or any other moat 
  • Make a spreadsheet with firm, partner, who can introduce you to these partners and to track progress 
  • Figure out who out of your existing investors can introduce you to the partner 
  • You want the right partner at the firm who understands your business, not just any partner
  • Define a fundraising timeline of 5-7 weeks 
  • Get introduced to everyone at the same time 
    • For that you need a blurb with what your co does and a growth metric
  • Define one week for 1st meetings, take all your first meetings in that week, tell investors that this is the week you are starting to meet investors 
  • Tell the investors you meet about your timeline 
  • 2nd week is for 2nd meetings, typically they’ll want you to meet with another partner. Maybe they directly get you a partner meeting 
  • 3rd week is for partner meetings 
    • You meet with the entire partnership 
  • 4th week and after is for due diligence 
    • Have your data room ready Have references ready Every customer you name on your deck and website is likely to get a call from the investors Don’t make too many exceptions about custom data requests 
  • Say you expect term sheets in week 5-7 
  • Have the person who introed you backchannel for you to understand what’s going on. Ideally you get introduced by current investors who have skin in the game 
  • For an A you are going to give up a board seat
    • Do backchannel references on the VC
    • Talk to founders that have had a suboptimal outcome while working with this partner, you want to know how they act when things aren’t going well
    • You are bringing someone on board who will stay a part of your business for the next 10 years, make sure you can see yourself working with them long term

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