Series A Funding

It started out as an nothing more than an idea, then slowly came to life with the first office space in your garage or spare bedroom. Next, you attracted local awareness and seed funding from friends and family, and finally your idea is coming to life and starting to see some real growth.  So, what’s next?

Getting Series A Funding is a major milestone for any startup company that says you are on to a great business venture.  The question is, what are the steps to get your Series A funding? How do you attract the attention of venture capitalists to have interest in giving your company a chance with their money?

In short, attracting a major investment from venture capitalists takes proof of concept backed up by research, recent growth and a logical plan for accelerated future growth.  Here are the basic steps to getting investors to believe in your idea and provide you with Series A funding.

Securing Series A Funding

The reality is that thousands of other startups are seeking the same Series A funding that you are.  Following these steps will give you a slight edge over the rest of the competition and will further ensure that you don’t leave any stones unturned.

Leveraging Your Network

Perhaps one of the most important pieces to getting your foot in the door with a major venture capital company is networking.  I’m sure you’re at least somewhat familiar with sales (seeing that you’re to the point of raising money for your growing startup), and we both know that a mutual connection is the quickest way to establish trust and start a relationship with someone you seek to do business with.

Your network includes people you know very well – former work associates, acquaintances, and other connections in which you can say you know more about the person than their just their name and professional title.

What exactly are you searching for from your current network? People whom you know well enough that you can seek an endorsement and/or an introduction.  Seeking an endorsement or introduction from a trusted source such as a VP of a company, a well-known CPA partner, lawyer or anyone with a credible background whom you know very well, will warm up the trust aspect of your pitch to future VC investors.

As you sift through your network, make a list of those you think will provide the most value to you and your goal of raising funds for your startup.

Setting Up Your Pitch

A well prepared pitch is something that can make or break your presentation.  Included in your pitch to potential VC investors, make sure you do your research and include the following:

·         Problem & Solution Statement: VC companies want to know what the problem is, and how your company is solving that problem. 

·         Current Market Opportunity: This section of your pitch should include stats of how much market opportunity there is.  If your product only serves certain age groups with certain interests - they want to know what those are and how large that market is.

·         Value Proposition / Competitive Advantage: Your value proposition is where you explain what sets your company apart from the rest.  How are you different? And why would a customer choose you over what is already available?

·         Competition: Is there competition? What’s wrong with the competing products that your product will have? How large are your competing companies? What proof do you have that their product doesn’t solve the real problem customers are facing?

·         Risks Evaluation: Be transparent in the risks that are involved.  Are there legal risks? Health risks? Competition risks? There are always risks, however small they may be, and it’s worth mentioning them in your pitch. 

Each pitch deck will be different depending on your business, product, service business model and industry.  Regardless of your product or service, including the above points are must-haves to be included.

Once you’ve written out your investor pitch and business plan, your next task is practice, practice, practice! Present your pitch to family, friends, your network, and anyone who you feel would have great feedback value, then adjust accordingly. 

Getting A First Meeting

Remember that list we made from the first step of your warm network? Now is the time to begin setting up meetings with those on that list of your current network and seek opportunities to get an introduction or an endorsement. 

The goal of reaching out to your warm network is to seek mutual connections that are acquainted with potential VC firms you wish to present to.  After you’ve filtered through your network, utilize the closest acquaintances for introductions to VC companies to set up your first meeting.

What if you don’t have any mutual relationships with VC firms and your warm network? In this case, seek the endorsements of highly respected people in your network, and then simply start reaching out to your target VC companies you wish to speak with.  Be sure to do your research on the VC company.  Know who they have funded in the past, why you think they are a great partner to work with, and how you will help them build their portfolio by investing in your company.

Have a list of the top priority VC companies you wish to work with, and your least priorities.  The more meetings you have the better, as it will give you added practice and know which questions to anticipate and how to approach each.  It’s been said that scheduling all your meetings in the same two to three weeks is ideal and more efficient for both you and VC companies that may invest in your company.

Attention To Detail During Your Pitch

Your first meeting should have an objective to first, capture their attention and get them excited about your product or service, and second, to win a scheduled appointment for a second meeting to meet more of the VC partners.

As you pitch your company, having an assistant taking detailed notes is ideal, so that you ensure you capture feedback, notate the sentiment of the meeting, jot down follow up and to do tasks, and ultimately meet every request they may make for the follow-up meeting.

Practice Makes Perfect

Not only does practice make perfect for preparing for your meeting but being persistent and meeting with VC companies as often as you can until you have perfected the company and receive funding is all a part of the process.  Chances are you will be turned down by a few companies, and the best companies take these as learning experiences to be that much better for the next VC meeting.

Following these steps will ensure you cover the most important pieces of raising a series A financing with a VC company, and will no doubt put you ahead of the thousands of other entrepreneurs seeking the same funding.