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How to raise a seed round
Hadley Harris
Founding General Partner
@hadley
Topics
1. What is your target raise?
2. Building target investor group
3. Fundraise timeline
4. Investor reach outs
5. Deck & data room
6. Initial pitches
7. Diligence process
8. Getting a term sheet
9. Term sheet through close
What is your target raise?
● Is a venture seed round right for your business?
○ The answer for most companies is no. Do you want to be $1B or bust?
● Seed rounds have become heterogeneous
○ Angel $25K-$250K
○ Preseed $150K-$1.25M
○ Seed $1.5M-$4M
○ Mango seed $4M-$6M
● Many different types of seed investors - angels, pressed funds, seed funds
and multistage funds
● Target should be money needed (with a buffer) to achieve your milestones in
with around 24 months of runway
● To get investors in the door, your “ask” should be minimum amount needed
● Understand pro’s & con’s of note vs priced round
Building target investor group
● Build large list of potential investors who are a fit - stage/sector/geo
● Create a google doc so teammates/friends/advisors/angels/preseed
investors can add/comment
● Categorize high/medium/low based on fit and desirability
● Should have at least 30 targets. Constantly be adding additional ones
● Line up warm intros for each - portfolio companies, angels, friends, lawyers
○ If you don’t have warm intros, try to network with people who you think could help
○ If that doesn’t work, try approaching them directly in a highly customized way
● Focus on getting a lead first and understand which of your targets lead*
● Who at a firm can be as/more important than the firm itself
*we do!
Fundraise timeline
● To extent possible you want to align timing of investor processes
● Don’t start pitching until you have your shit together
● First pitch to TS/offer with each investor tends to take 2-6 weeks if
successful
Build list of target
investors
Prepare deck/materials and do
practice pitches
Initial reach outs
First pitches
Additional meetings &
diligence
Term sheets
Negotiate and sign
Legal & post TS
diligence
Close 🥳💰🥳
Investor reach outs
● Leverage your network to make warm intros 2 weeks in advance
● Create blurb or teaser deck they can share with prospective investors
○ Highlight what's special, don’t need to tell whole story
● Warm up with a couple medium/low on your list
● Then try and set up 10-15 high/medium 1st pitches for same 1-2 weeks
● Optimize for in person, if not zoom
● If in person group by geography (Bay area, NYC...)
Deck & data room
● Keep it short (5-13 slides plus appentex) with as few words as possible
● A good example deck is:
○ Title slide
○ Team (include relevant experience)
○ Clearly state the problem you are solving
○ Your solution to said problem (if possible have slick demo ready)
○ Traction (if you have it)
○ Why are you special?
○ Explain your business model (or at least how you’re thinking about it)
○ Market size. How big can you get?
○ Your ask 💰 (have clear answer on what money buys you in terms of time/milestones)
● If you have other documents, put them in a data room for easy access
● Use docsend or other solution so you can control and track content
Initial pitches
● Practice at least a few times before first pitch
○ 1-2 founders for first pitch is usually the right number
○ Have a deck handy but often best making first meeting conversational
● Be ready to for investor to drive order of topics you cover...
○ ..but make sure you cover most important points
● Don’t be too salesy.
○ You’re trying to find mutual fit
○ Don’t BS, be very transparent about what you know and what you don’t
● At the end and follow ups:
○ Make sure you understand how they would fit into round. Lead/not lead?
○ At end make sure you’re clear on their decision making process
○ Always write a follow up note. Include any materials & requested info
○ Constantly iterate your pitch based on feedback and where investors focus
Diligence Process
● Diligence process may include
○ Meeting additional members of their team. Often culminating with a partner pitch
○ Meeting with their portfolio companies or other experts in your space
○ Conversations with your customers (make sure they are far along before providing)
○ Deep dives on certain areas like the product roadmap or financial plan
○ Meeting your cofounders and/or team
○ Referencing you by talking to past employers/teammates
○ Introduce you to potential customers to get their feedback
● In parallel investors will often be doing work in the background
● The most important thing for you to do during fund raising is collect
feedback and iterate. Your pitch is a living thing
Getting a term sheet
● Don’t rely on small number of investors converting. They’re all long
shots until they actually convert
● As you get passes (you’ll get many) add additional ones to top
process
● Don't’ be rigid around terms until you get an offer
● Don’t be overly pushy on timing until you have an offer. Otherwise
many will self-select out
● That said keep some pressure on them. FOMO is your friend
Term sheet through close
● Once you have offer, communicate that to others and give them
timeframe to decide (usually around 1 week)
● Do references on investors (including some blind) especially lead.
● Know what you’re optimizing for: dilution, partner, amount raised...
● Once you sign lead work with them to fill out the rest of round
● Get through post TS diligence as quickly as possible
● Once the money hits your bank account:
a. Celebrate! 🥳🎉💥
b. Get back to work! Now comes the hard part, finding product market fit
Questions? Hit me up at @hadley
Resources
https://blog.ycombinator.com/intro-to-the-yc-seed-deck/
https://about.crunchbase.com/blog/pitch-deck-slide-examples/
https://www.sequoiacap.com/article/writing-a-business-plan/
https://www.plugandplaytechcenter.com/resources/perfect-startup-pitch-deck/
https://blog.ycombinator.com/how-to-raise-a-seed-round/
https://avc.com/2010/06/six-slides/
https://blog.ycombinator.com/how-to-design-a-better-pitch-deck/
https://www.thinklions.com/blog/the-best-pitch-decks-weve-ever-seen/
https://docs.google.com/spreadsheets/d/1ebGZ6-ivf_3woBGC4Kz_3217DhjGsefoRu_5iP3nuFQ/edit#gid=0

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How to Raise a Seed Round in Less Than 40 Steps

  • 1. How to raise a seed round Hadley Harris Founding General Partner @hadley
  • 2. Topics 1. What is your target raise? 2. Building target investor group 3. Fundraise timeline 4. Investor reach outs 5. Deck & data room 6. Initial pitches 7. Diligence process 8. Getting a term sheet 9. Term sheet through close
  • 3. What is your target raise? ● Is a venture seed round right for your business? ○ The answer for most companies is no. Do you want to be $1B or bust? ● Seed rounds have become heterogeneous ○ Angel $25K-$250K ○ Preseed $150K-$1.25M ○ Seed $1.5M-$4M ○ Mango seed $4M-$6M ● Many different types of seed investors - angels, pressed funds, seed funds and multistage funds ● Target should be money needed (with a buffer) to achieve your milestones in with around 24 months of runway ● To get investors in the door, your “ask” should be minimum amount needed ● Understand pro’s & con’s of note vs priced round
  • 4. Building target investor group ● Build large list of potential investors who are a fit - stage/sector/geo ● Create a google doc so teammates/friends/advisors/angels/preseed investors can add/comment ● Categorize high/medium/low based on fit and desirability ● Should have at least 30 targets. Constantly be adding additional ones ● Line up warm intros for each - portfolio companies, angels, friends, lawyers ○ If you don’t have warm intros, try to network with people who you think could help ○ If that doesn’t work, try approaching them directly in a highly customized way ● Focus on getting a lead first and understand which of your targets lead* ● Who at a firm can be as/more important than the firm itself *we do!
  • 5. Fundraise timeline ● To extent possible you want to align timing of investor processes ● Don’t start pitching until you have your shit together ● First pitch to TS/offer with each investor tends to take 2-6 weeks if successful Build list of target investors Prepare deck/materials and do practice pitches Initial reach outs First pitches Additional meetings & diligence Term sheets Negotiate and sign Legal & post TS diligence Close 🥳💰🥳
  • 6. Investor reach outs ● Leverage your network to make warm intros 2 weeks in advance ● Create blurb or teaser deck they can share with prospective investors ○ Highlight what's special, don’t need to tell whole story ● Warm up with a couple medium/low on your list ● Then try and set up 10-15 high/medium 1st pitches for same 1-2 weeks ● Optimize for in person, if not zoom ● If in person group by geography (Bay area, NYC...)
  • 7. Deck & data room ● Keep it short (5-13 slides plus appentex) with as few words as possible ● A good example deck is: ○ Title slide ○ Team (include relevant experience) ○ Clearly state the problem you are solving ○ Your solution to said problem (if possible have slick demo ready) ○ Traction (if you have it) ○ Why are you special? ○ Explain your business model (or at least how you’re thinking about it) ○ Market size. How big can you get? ○ Your ask 💰 (have clear answer on what money buys you in terms of time/milestones) ● If you have other documents, put them in a data room for easy access ● Use docsend or other solution so you can control and track content
  • 8. Initial pitches ● Practice at least a few times before first pitch ○ 1-2 founders for first pitch is usually the right number ○ Have a deck handy but often best making first meeting conversational ● Be ready to for investor to drive order of topics you cover... ○ ..but make sure you cover most important points ● Don’t be too salesy. ○ You’re trying to find mutual fit ○ Don’t BS, be very transparent about what you know and what you don’t ● At the end and follow ups: ○ Make sure you understand how they would fit into round. Lead/not lead? ○ At end make sure you’re clear on their decision making process ○ Always write a follow up note. Include any materials & requested info ○ Constantly iterate your pitch based on feedback and where investors focus
  • 9. Diligence Process ● Diligence process may include ○ Meeting additional members of their team. Often culminating with a partner pitch ○ Meeting with their portfolio companies or other experts in your space ○ Conversations with your customers (make sure they are far along before providing) ○ Deep dives on certain areas like the product roadmap or financial plan ○ Meeting your cofounders and/or team ○ Referencing you by talking to past employers/teammates ○ Introduce you to potential customers to get their feedback ● In parallel investors will often be doing work in the background ● The most important thing for you to do during fund raising is collect feedback and iterate. Your pitch is a living thing
  • 10. Getting a term sheet ● Don’t rely on small number of investors converting. They’re all long shots until they actually convert ● As you get passes (you’ll get many) add additional ones to top process ● Don't’ be rigid around terms until you get an offer ● Don’t be overly pushy on timing until you have an offer. Otherwise many will self-select out ● That said keep some pressure on them. FOMO is your friend
  • 11. Term sheet through close ● Once you have offer, communicate that to others and give them timeframe to decide (usually around 1 week) ● Do references on investors (including some blind) especially lead. ● Know what you’re optimizing for: dilution, partner, amount raised... ● Once you sign lead work with them to fill out the rest of round ● Get through post TS diligence as quickly as possible ● Once the money hits your bank account: a. Celebrate! 🥳🎉💥 b. Get back to work! Now comes the hard part, finding product market fit
  • 12. Questions? Hit me up at @hadley