Tsh masterclass you've got seed... now what?
• What does a Series A mean? It is your first round with professional investors, with true financial targets and commitments. • How to get from seed to A: deliver an MVP, build out your team and get customer traction o MVP: the core of your business to prove the business o Committed team: working together full-time and covering the key bases of the business o Product/Market Fit: proving that you have built something that target clients will pay at a commercially viable rate • When do you need Series A o When you have proved the above o 3-6 months before you need the money o When you need to get to the next level • Investors matter o Money isn’t money... remember that you will be in a close relationship with these investors for years! They should be a resource to help grow your business. They should be people that you would really like to work with! o They will generally follow-up in subsequent funding rounds and will have influence over your future equity • Start early- start to casually network and pitch 3-6 months ahead of time. Investors will want loads of data, but try not to let it distract you from running your business (consider doing this ahead of time or appointing someone to focus on this) • Build a relationship- have trust for the road ahead & understand their firm (their investment thesis) • When pitching, be UNIQUE and put the vision in context of your competitors • Agree on milestones with your investors early. This is important to align the vision of success and motivate the team. Less direct milestones might be of equal importance. Examples can include: user conversion/engagement rates, team & product development. • You have series A- now what? o Know your runway- how much time do you have before you need to fundraise? o Start investing to grow the business o Communicate the milestones that you agreed with your investors with your team Set a communication schedule and keep to it Communicate loads! o Think about your own role (will you be the person who will lead the company into series B and beyond, or should you start specializing?) o In your board meetings, use it as a working session to problem solve and automate your data so that you don’t spend too much time generating data just before the meeting • After Series A, B/C is for expansion and team building, C/D/later is growth including expanding to new locales, product lines, etc.
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Tsh masterclass you've got seed... now what?
- 1. You’ve got seed funding…Now what? Ryan Kiskis January 2012
- 2. Who am I? VP Product at BaseKit Internet entrepreneur from California (Maybe too) often fundraiser
- 3. Why am I here? Series C $5M Apr ‘04 Seed $50k Sep ’07 Series A $2.6M Apr ‘10 Series D $5M Oct ‘05 Seed II $500k Apr ‘08 Series B $6.5M Apr ‘11 Sale $102M Apr ‘06 Series A $1.7M Sep ‘08 Series B $6.5M Jun ‘10 Fundraising 1.2 times per year, plus many more as advisor
- 4. What will Series A mean? First round with professional investors True financial targets and commitments Relationship that will last years
- 5. How to get from Seed to A Minimum Viable Product Committed team Product/Market Fit (Traction) All within your runway
- 6. Minimum Viable Product The core pieces to prove your business Xfire: an IM that shows me what game my friends are in Martini: 10 network sites and 2 advertising clients BaseKit: Massive array of design controls; limited UX Run this over and over again for each new development
- 7. Committed Team Worked together, in this full time Cover the key bases of the businesses
- 8. Product/Market Fit Proven that you have built something that your target clients will pay for at commercially viable rate
- 9. So when do you need Series A? When you’ve proved the above When you need money (actually, before) When you need to get to the next level
- 10. Investors matter Tempting to think money is money Exits now are often 5-7 years or more You interact with investors every week
- 11. They’re going to be following up
- 12. And they will have influence Founder 1 Founder 2 Seed Founder 1 Investor 1 Founder 2 Investor 2 Seed Employee After Series C funding, investors collectively own 55% of the company vs founders each having 13%
- 13. Some things to think about Timing Portfolio Relationship Story Milestones
- 14. Start Early 3-6 months Lots of networking as much as pitching Don’t let data swamp you
- 15. Portfolio Find a firm who might actually invest Understand their thesis or theme Look for competitors!
- 16. Build a relationship Have trust for the road ahead Understand their firm Fundraise in 48 hours
- 17. The story VC partners see over 1000 plans a year Be unique – not just a twist Put the vision in context
- 18. Agree on milestones Do it early! Your success rides on them Great motivators
- 19. Agree on milestones User counts, revenue, “traction” User conversion/engagement rates Team & product development
- 20. A – Now what? Know your runway Start investing Communicate
- 21. Team Management Probably need to expand Emphasize the upcoming goals Think about your own role(s)
- 22. Communication Might be first time formally reporting Set a schedule and keep to it Communicate, communicate, communicate
- 23. Board Meetings Get to the point concisely Use it as a working session Automate your data
- 24. YMMV but… Seed: Provide minimum viable product & market fit A: Prove traction. You have customers beyond those you can touch B/C: Expansion. You’re building a team, facing scaling C/D/later: Growth. You’ve got a good business and may be going to new locales, opening new product lines