As we are meeting many early-stage startups that are raising funds (sometimes for the 1st time) we thought it might be useful to share content we’ve been curating for years on the fundraising process itself.
You’ll find below several tips, feedbacks and templates from entrepreneurs and VCs on how to get ready for that journey.
1) When do you need to raise fund
First thing first, don’t forget that raising fund is just a mean to accelerate your growth. Never consider it as an end in itself ! You need then to identify the right moment when raising money is relevant for your startup.
2) Sizing your round
When you know time has come for fundraising, you need to assess how much money is relevant for you. And it really depends on your stage of development and what you’d like to achieve. Raising too much too early to get shiny headlines never ends well ;)
3) Assess your valuation
Of course valuation is directly related to the amount you’re raising. Depending on your stage of development you’ll open 10%-30% of your company to external investors. Here you need to be careful to have a valuation consistent with your stage of development (and where you plan to be in 12–18 months from now) otherwise it might be tough to raise new rounds in the future if your valuation is too far from the results you’ve achieved. Remember Uber’s round with SoftBank ? It was done with a 30% discount on the previous round.
4) Getting ready for your fundraising
When you know it’s time to raise, when you’ve assessed how much you need to raise, you need to work hard to get ready for the fundraising process itself. The more you’ll work ahead the quicker and smoother you’ll manage it. Btw, to raise money the best path is to build great products, with a strong team and deliver amazing results ;)
(Btw, here are KPI you should set-up for your startup. The sooner you track them the better it is for your upcoming rounds)
5) Building your pitch deck
Your pitch deck will be the cornerstone of your fundraising. This is where you’ll share details on what you’ve achieved and where you’d like to go. As VCs are receiving thousands of decks every year, yours needs to fit with what they are expecting from it and deliver enough information. Don’t try to say everything in your deck, just go straight to the point !
Here are other templates detailing how you should structure your deck:
- Jean de la Rochebrochard’s template
- Peter Thiel’s template
- Point Nine Capital’s template
- RRE Ventures’ template
- Greylock Partners’ template
6) What a term sheet should look like
The main milestone of the process is the term sheet negotiation. Here you need to have in mind that terms & conditions are market practice so you should have a look at the template ahead of the process to avoid any surprise when VCs will mention them (bad/good leaver, ratchet, preferred shares, board seat, …). Though the template is standardized, terms are often different from a startup to another: several entrepreneurs would prefer better terms at a lower valuation, or the other way around.
And consider it twice before raising too much too early ;)
As mentioned at the beginning, fundraising is one way to accelerate your growth. At the end the only sustainable money is the one you get from your customers.
Finally, don’t forget that usually VCs invest in ~1% of the startups they have in their dealflow, meaning VCs say no 99% of the time. Ah, and don’t forget as well they make mistake ;)
Leveraging its own sourcing technology astorya.vc identifies promising startups, structures their growth through its extended network of mentors, and develops new business opportunities with its insurance investors.
Raised from insurance players, astorya.vc is the first early-stage investor in Europe, focused only on the insurance industry.
Learn more on http://www.astorya.vc