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VCs famously love to say, “Let me know how I can be helpful.”
One key way they can deliver value is helping you raise your next round of funding.
This thread breaks down how you can get the maximum benefit from your earliest backers!
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One key way they can deliver value is helping you raise your next round of funding.
This thread breaks down how you can get the maximum benefit from your earliest backers!
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Create a spreadsheet (or Airtable base) of potential investorsFirst, make a list of all your targets and keep them in a single database. It should track:
Fund
Partner
Do they lead (Y/N)
Notes
Who can make an intro?
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Fill it in with people you knowBefore sharing this list with your VCs make a pass at deciding who you want to work with. These might be people you’ve met previously who expressed interest, or folks in the industry you admire.
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Expand the list with firms who fund stuff in your spaceMake a list of all the VCs who have backed startups in your market and those with a similar business model in another space. These investors are the most likely to be prepared minds. Aim for ~20 names to start.
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Think hard about what *you* value (& have conviction!)Are you maximizing for valuation? A partner with specific domain expertise? Do you want to maintain ownership? Have a clear goal for what you want out of the process and ask your VCs for suggestions.
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Cast a wide netShare the list widely with your cap table. Be willing to consider unorthodox investors that you may not be familiar with. You want as many names as you can get at the start – you may not get your first, second, or even tenth choice!
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Create a no pitch listIn addition to the firms you’d like to work with, also highlight firms that have funded your direct competitors. Don’t waste time pitching these folks and be sure to alert your investors not to socialize your company with them.
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Once you have a list, spend time with one or two inside or “friendly” investors to really dial it in. This is where your VC should be able to add the most value.
Their understanding of the market and firm/partner dynamics should be helpful.
They’ll help answer questions:
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Their understanding of the market and firm/partner dynamics should be helpful.
They’ll help answer questions:
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+Does this VC write checks at our stage?
+What is their real reputation in the industry?
+Is this partner being phased out of the firm?
+Should you talk to another partner/principal at this same firm?
+Have you spoken to good/bad references?
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+What is their real reputation in the industry?
+Is this partner being phased out of the firm?
+Should you talk to another partner/principal at this same firm?
+Have you spoken to good/bad references?
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Coordinate introsWith the list in hand, start planning intros. A good intro can come, be crystal clear *who* you want to make the intro and *when.* Keep a running list of notes in a doc so all the investors know where things stand.
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Plan supportive emailsThe opinions of your earlier VCs will have some influence on potential investors. You should get them ready to send a supportive note to your prospective VCs at a key point in the process. Sometimes that’s after meeting one, or during diligence.
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Fish for infoIf a desired VC decides not to invest, ask a current investor to see if they can get some info as to why. You likely won’t get the unvarnished truth, but there will likely be some learnings that you can apply to future pitches.
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I’d also highly recommend reading this post by my partner @epaley which covers even more of the tactical aspects of running a fundraising process.
https://medium.com/swlh/a-ridiculously-detailed-fundraising-guide-dec6f4f33790
Helping to raise the next round is one of the key ways a VC can be helpful – use yours well!
/End
https://medium.com/swlh/a-ridiculously-detailed-fundraising-guide-dec6f4f33790
Helping to raise the next round is one of the key ways a VC can be helpful – use yours well!
/End
