Good news: if you’re reading this, you’re likely preparing to raise your Series A round of financing: that means that you’ve created something people want and need, you’ve gained some good traction and you’re ready to scale. The next step is to become Series A-ready, with a thorough strategy that will set up you for success. At TMV we’re here to help make the process — full of nuances — a little more digestible, especially if you’re a first-time founder.
This is part two of a series, following an earlier article on the essential steps to navigating your way to a solid Series A. In this follow-up piece, we’ll dive deeper into how to build out your Series A strategy, from identifying your dream investors to developing your CRM. Let’s get into it.
This Way to a Solid Series A
Quick refresher for everyone reading: the Series A is the first time you’re raising money to really start to scale, which is why you need to make it clear to investors that something has “clicked.” While the Series A may not be defined by a particular size or valuation — fundraising titles have become increasingly ambiguous — reaching a Series A is a key indicator that you’ve demonstrated a solid product market fit, demonstrable traction (~$1M+ in annual revenue) and readiness to scale.
In Part I, we discuss the different elements that need to be included in your Series A positioning. In this Part II, we’ll guide you through a complete list of musts, plus all the details you’ll need to be 1000% ready.
1) TELL YOUR STORY
Engage. Differentiate. Share your narrative. Why did you build this company? What problem were you trying to solve? For whom? How did you solve it? What progress have you made? How big can this get? What’s differentiated and defensible about the company? Why will your team win? Before you even start to work on a deck, nail down the story that you want to tell and identify the key metrics you’ll need to include. Now actually tell that story — out loud: it should be clear and captivating.
2) BUILD YOUR DECK
A compelling, thoughtful deck is the most effective vehicle for telling your story to prospective investors within the context of the pitch. In short, your deck matters — a lot. You’ll want two versions: a teaser deck that can go out to prospective investors and a longer version that includes a deep dive into your company’s data and other more tactical elements.
A tip: invest in a graphic designer to organize and present your information in a way that packs a punch. Your key takeaways for investors should be apparent even in a quick flip-through of the deck. While the design may seem trivial, a clean, easy-to-grasp, visually appealing document can make a tremendous difference; not only is it easier to follow, but it signals a level of professionalism that investors are looking for at the A. Remember, the deck very well could represent your first introduction to a dream investor.
3) NAIL THE PITCH
Presentation is hyper-important. Make sure to practice multiple versions of your pitch: the 60-second elevator speech, the 10-minute overview, the 30-minute explanation and the 60-minute deep dive. Get comfortable with or without notes and visual references.
4) GET ORGANIZED
Assemble your team. When fundraising at any stage, your executive team should know and be prepared to jump into diligence calls to answer specific technical questions. But, it’s not unusual for many members of the team to be unaware of all the details so they don’t get distracted or unnecessarily stressed. Figure out who needs to know what and inform them.
5) BUILD YOUR CRM
Yes, a CRM. You can build it in Excel or Google Sheets. This will be your source of truth to track who you’re contacting, who is responsible for initial outreach (i.e. if you don’t have an existing relationship, who is supplying the warm intro?), whether they take a meeting, where they are in your process and next steps. A meaningful component of a successful fundraise is creating and sustaining momentum: don’t let the conversation go cold (and use your CRM as a tool to ensure that doesn’t happen).
6) CREATE STRUCTURE
Take the time to establish a clear and consistent process. Set a target timeline for when you’d like to complete the raise, and leave buffer if you’re coming up against runway constraints. We recommend a minimum of two months (more on that in a second), noting that legal diligence can take a month or longer on top of that. Communicate clearly with investors what date you’d like to receive terms and when you want the entire process to be complete. Doing this demonstrates to investors that your process is razor-sharp — and creates an overall sense of urgency.
For a fast process, we recommend leaving at least two weeks for early conversations, several more for partner conversations and deeper due diligence. But, be prepared for the process to take much longer if early conversations don’t result in a lead or you encounter complex questions / challenges to the viability of your plan. Create space in your calendar for this uncertain range of time. You’re going to be taking a lot of meetings, so make sure your team has what they need to keep operating. If you don’t have an Executive Assistant, it could be worth investing in a part-time EA or a scheduling tool to keep up.
7) PREPARE FOR DILIGENCE
Have your data room ready before you start to meet with investors, so you may offer them a clear and organized set of deep-dive materials (pro forma, financial statements, cap table, IP overview and other supporting items) as soon as they request them. And, make sure you have the right support on your team to help on diligence requests that aren’t included in your data room. Diligence questions will likely go beyond what’s in your deck, so you should be prepared to cut and /or pull data and answer detailed questions about your sales, economics, forecasts, operations, team, vision and more. Depending on the length of your fundraise, you may also need to update KPIs midway, so track all of them to make this as easy as possible.
8) MAKE THE LIST
This is a list of your ideal investors, best developed as you’re completing your pitch deck. Building a clear list of potential investors for your next funding round is critical to the fundraising process, as well as a tool you can use to develop relationships. Gather as much information as you can, on as many potential investors that seem relevant. And then, bucket them into tranches in order of priority: the first tranche is your limited outreach, the second includes high potential investors and the third is to ensure you have a wide enough top-of-funnel in case the raise is more difficult than you anticipated. To get a picture of the landscape and collect preliminary data, we like Crunchbase and other similar platforms, any number of startup accelerators, and of course, your own network, including who you know of as well as who you know. The key is identifying the right investors for your company.
9) ASK QUESTIONS, GET ALIGNED
Funds: Some are industry-agnostic, others focus on specific sectors. Make sure these investors are willing to back your startup’s product or service (e.g., hardware vs. software, B2B vs. B2C, service vs. product). Check size: Needless to say, you’ll want to seek investors who can write checks big enough to fill your needs for growth, but not so big that you’re too early for their fund. Overall vision: Remember that an investor’s fund size or years of experience don’t necessarily mean they’re aligned with the vision you have for your startup. It’s important that you share the same nuanced understanding of the business and that you have common goals. Be intentional: do your diligence on investors’ willingness to collaborate with founders, successful exits and potential participation in follow-on rounds. Ask yourself what you’re really seeking: capital only? A strategic partner? Industry expertise? Which investor(s) can best help you reach your company’s next milestone, and with whom will you collaborate with most effectively? Finally, make sure to get a sense of your investors’ style in the context of what you’re seeking: are they hands on or hands off? Do you want guidance on product? Go-to-market strategy? These are all important factors to consider.
Remember, your lead investor will likely sit on your board, so you’ll want to make sure that you are aligned on all fronts. (And if you’re looking for more guidance on building your board, check out our article.)
10) MEET FACE-TO-FACE (if you can)
The upside of a pandemic-triggered increase in virtual connections: broader reach and wider accessibility to people across the globe. That said, when it comes to fundraising, there is simply nothing that can replace a face-to-face dialogue and the spontaneous ideas and connections that arise from an in-person meeting. While not an absolute must, these meetings can make a significant difference in solidifying your connection. Remember, when you work with Series A investors, you’re looking to build long-term relationships. If you live outside of a VC hub, it might be worth planning a short trip to meet with investors. (We’re biased, but we’re big fans of the NYC VC community.)
11) INVOLVE YOUR INVESTORS
Your existing investors should get involved throughout the process. Get input on materials and storyline: they’re close enough to your business to help you craft the narrative, but may also give you an outside perspective that can be remarkably insightful. Ask them if there are any investors missing on your list, and get their help with outreach. At TMV we are extremely involved when our companies are fundraising, and have prepared templates for them to leverage for many of these steps. Ask your investors what they can do to help.
A Little Perspective
While the Series A journey may feel daunting and even a bit chaotic, if you plan thoroughly and consider all the details with a clear purpose and POV, you’ll likely find that the entire process will run quite smoothly. Parting advice: raising a Series A, no matter what the number, is a victory, but it’s not the end goal; the capital you raise in any round is a tool for growing and sustaining your business — a vehicle for reaching your next stage, and your next, and your next.
Written by Emma Silverman, Principal at TMV