Written By: Kelly Bryant
Tis the season of New Year’s Resolutions! In my world, that looks like founders telling me they have a goal to raise capital in 2022 after putting in some hard yards over the past 12 months. In fact, I was asked recently by a team of founders what they should be doing now to prepare for a Series Seed round of financing in the new year. While the answer certainly varies depending on the business, there’s 5 key questions every founder should ask themselves before hitting the ground running January 1st.
1) Are you Full Time?
There’s no ambiguity here. You’re either all in on your business, or you’re not. This fundamental question can be a deal-breaker for many VCs. Investors see going full time as a big step towards showing you are 110% committed to the success of your business. If you and/or your co-founders aren’t quite ready to make the leap, use the rest of the year to plan out when each of you will make the ‘jump’, likely based on business performance and compensation expectations.
2) Are you Post-Revenue?
I see you rolling your eyes! Hear me out. I know there’s crazy stories popping up all over Silicon Valley where magical startups are getting multi-million dollar valuations with no revenue. The reality is, demonstrating traction will dramatically increase your chances of getting funded (with favorable terms). If you’ve got some pilot customers or proof of concepts in the works, that’s a great start. Shift your attention to getting some paying customers across the line and then focus on the raise – order of operations matters here.
3) Do you have Support?
Having a strong team of advisors and professionals around you going into the fundraising process is important. Start by engaging a lawyer (ideally someone who supports other venture-backed companies) that can help ensure your business is properly incorporated and can provide the correct legal documents necessary down the road during diligence. Similarly, engage fundraising experts who can provide “warm” intros into the VC community (cough cough – Kerosene!). But seriously, know who in your network you can lean on to get you in front of the right people when the time comes.
4) Do you know your Story?
Fundraising is largely story telling. For a venture capitalist, a story is told through two key documents: a 1-page executive summary (to be sent ahead of a meeting) and a 10-14 page pitch deck. These documents need to be clear, concensie and – most importantly – compelling. I’m not telling you to crank all of this out before the ball drops at midnight. In fact, telling the right story should take time. Rather, I want you to start putting pen to paper and thinking about your business in terms of chapters: Problem, Solution, Vision, etc. Leave the rest to us!
5) Do you have a Target List?
I’m not talking about your Christmas list for Santa. Venture capital firms come in all shapes and sizes, so knowing what you’re looking for is half the battle. Spend some time over the holidays doing some research on which firms are able to provide the network and resources you need to take your startup to the next level. Focus on the key elements like check size and fund focus to make sure you know who you want to get in front of.
So there you have it. Before you add ‘Raising Capital’ to your New Year’s Resolution list, make sure you’ve answered ‘yes’ to the questions above. Most importantly, make sure you use at least some of the holiday season for some well-deserved RnR – you’ll need it if you’re planning a capital raise in 2022! 🙂
Kerosene Ventures – Helping Great Founders Raise Capital