Venture Capital Update
What You Can Expect from our Pre-Seed Raise
- Over $500k in commitments
- Finalising a Lead Investor
- Serial Entrepreneur Raise Advisor onboard
- Areas cash will be used identified
As most of you will be aware from the previous two investor updates (Taco Tuesday’s) Lithium have begun raising capital for equity in the business. What we’re treating as our Pre-Seed round will bring a lot of changes for both the business internally and you, investors and users. In August (when all the investors are on holiday, classic timing) we began circulating our vision and business to investors across the globe, starting the search for the perfect partner to elevate Lithium and begin scaling the business.
As you all know we are strong believers of building in public so keeping you informed on the raise process should be no different. Below we’ll break down everything behind the decision, progress, and process of our Pre-Seed Round.
Who are we looking for?
Lithium are looking for the perfect partners to help scale, network, and drive our business forward. There are a myriad of VC’s and angels out there. Finding the perfect ones can often be a challenge. Our initial focus was of course on web3 centric investors, but the initial findings all leant towards SAFE investments for tokens. The concept of the token investment is misaligned with what we are looking for. On too many occasions these crypto VC’s masquerade as partners and proceed to dump tokens at every vesting point adding no tangible value to founding teams.
We’re looking for believers in our vision with a track record in scaling seed tech companies on a global scale. Equity investments, longer term, demonstrable skin in the game, and extensive networks of founders and Portcos is the sensible decision for a team looking to supercharge growth and focus on the longevity of the business. This decision also protects our Lithium Plus holders, with no risk of larger institutional players dumping tokens on them in future. Very quickly it became clear that these two areas of the business should be treated separately.
Currently, we are focusing on finding the best match for a lead investor. The lead investor fills a number of functions for the business during the raise process and after. A lead investor demonstrates that a VC has overwhelmingly bought into the team and vision, and is therefore willing to take the majority of the equity available in the round. What we want from our lead investor is proven track record within Marketplace and SaaS startups, with an extensive network we can leverage for collaboration, hires, and development. It is important a lead also has global reach with local expertise. Scaling geographically is difficult but in a world increasingly borderless absolutely crucial to a startups growth strategy.
Our discussions so far have been promising and there are currently a few funds that we view as potential leads. We hope to be able to decide on this in the coming few weeks which will set the precedent for the rest of the round. The lead will most likely set the pre-money valuation that Lithium will settle on.
A company’s pre-money value is simply the amount that an investor and the company agree to deem the company to be worth immediately prior to the investor’s investment, for the purpose of determining how much the investor will pay per share for the stock it is purchasing.
This pre-money valuation acts as an indicator to other funds we are speaking with who co-invest largely on frameworks impacted by this determination.
What’s the progress?
As mentioned earlier, the vast majority of funds (especially European based) take the ENTIRETY of August off. Nice for some, eh? However, as the date fluent amongst us will be able to tell we are now in September. This means traction is beginning to build. Lithium are in discussions with funds into the double digits, and in the final rounds on a few of them (including some of the lead candidates).
We have been fortunate enough to bring on board a dedicated raise advisor, who has personally raised over $30m for his London based start-up. He brings an incredible network and is facilitating invaluable warm intros to some of Europe's largest tech investors. This addition to the raise efforts has galvanised the team, helping us refine messaging, improve the deck, nail the pitch, and understand how to communicate the product and business model in simple terms.
To date, Lithium have roughly $400k of the $2m round target committed. This is made up from an Angel Syndicate and a European based VC Fund. We have an additional few hundred thousand in soft commitments which are dependent on certain criteria being met in the round. Equating to 20% of the round, the addition of one of our lead candidates would bring the round to at least 70% closed and $1.4m committed to Lithium.
What will the cash be used for?
So the burning question… What will this cash be used for? To date Lithium has raised minimal cash, only from the token sale at the beginning of our journey, split between LP and product development. Additionally, all the revenue we generate goes back into the business in order to keep building what we perceive to be one of the most innovative platforms in the space actively solving a problem no one else is looking at (alongside some seriously defensible tech).
There are numerous ways the capital raised will be deployed.
- Key Hires – roles such as CTO, ML Engineer, and Account Manager will all be hired post raise.
- User Acquisition – we have developed a number of ways we are going to scale user acquisition at Lithium which money will be used to build and utilise. (No not twitter give-aways, or influencers. Real innovative tech).
- Development – we will continue to develop the best platform in the space innovating in areas others haven’t. Yes we see you guys copying our Oversubscription raise logic. Good luck copying what we’ve got next.
- Marketing – we will be putting a portion of the capital raised into legitimate and geographically targeted marketing and PR to raise the exposure of the Lithium brand.
Additionally, the cash will allow us to bolster the LP, meaning $IONs will have deeper liquidity across more platforms resulting in more eyes on the project and making it even more accessible to a wider pool of users. Buybacks will also be utilised in order to accelerate the reduction of $IONs taken out of supply.
To summarise, this raise will allow the Lithium team to continue at an accelerated speed to deliver on the revised technical Roadmap. The bear market will cease to have an impact on operations at Lithium and we will keep working to ensure that when the cycle reverses we are in absolutely the prime position to capitalise on the best platform possible.
For any questions regarding the raise or anything mentioned in this blog post please reach out to @BD_Lithium on Telegram.
Team Lithium x