By Nathan Beckord
Getting investors to commit in a short period of time takes a lot of preparation and homework.
Jennifer Smith needed to raise a seed round for her tech company Scribe. But she didn’t have two months to get away from her co-founding duties to do it, so she did it in less than two weeks.
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Having raised an earlier round to launch Scribe’s MVP, Jennifer targeted $8 million to take the company to the next level. Then, he did his homework and got on the floor.
Jennifer told me about her quick two-week fundraiser and how you can replicate these steps to fund your own company.
The search criteria for investors
When she set out to raise funds, Jennifer had three guiding principles. And first, he wanted his investor to do no harm.
“You might smile and laugh at this as a low bar, but I’ve seen a lot of investors do a lot of damage to companies,” says Jennifer. The biggest downside to watch out for? VCs who invest in your first round but won’t do a second round. This creates a signaling risk for potential future investors.
His next criteria was that the investor had to be someone he wanted to work with for the long term. Investor relationships are akin to marriages, and it’s best to avoid marrying someone you don’t even like.
Finally, Jennifer wanted Scribe’s then-investors to have connections or expertise in areas relevant to the company. Investors can help round out a founder’s skill set and network.
5 steps to raise $8 million
Jennifer had previous experience in the corporate world, so she had seen the range of offerings. While two-week raises were relatively unheard of before the pandemic, the heat of the market meant that many financing projects were done quickly. He took advantage of this market change and declared that he would make a two-week increase. Not all investors were in favor of this.
“It was about being transparent,” he admits. “Two weeks is very aggressive. It may not be enough time for some.” But Jennifer stays in touch with those who were unable to invest on such short notice. They may be a good fit for future rounds.
So how did he get investors to commit $8 million in two weeks? With a lot of preparation and homework.
1. Make a short list
First, Jennifer made a list of potential investors. He called business associates and friends in the industry to find out which investors might be receptive to his pitch.
Another thing to consider: the industries in which each VC regularly invests. Go with those who align with what you do.
How many investors should be on your list? Jennifer says she’s seen up to 200, which is too high. But five to ten is too low. She recommends increasing this list by 30% to 50%. It took 15 initial meetings to raise Scribe’s initial round.
2. Get warm introductions
Sometimes you don’t have much choice but to cold call a VC. Ideally, Jennifer recommends that someone introduce you. Leverage your network to help you with this.
3. Set up your meetings well in advance
You might want your raise to take place over two weeks, but VCs often schedule meetings with longer lead times. If you have a target date to start your raise, reach out to put meetings on the calendar at least a month in advance.
4. Have your data ready to go
Due diligence is a necessary part of the fundraising process, but it can be time-consuming. Save time and deliberation by keeping everything a VC might need ready to ship. This also includes preparing clients who are willing to give testimonials or talk to investors.
5. Sequencing is everything
The batch is a popular concept in productivity and works like a charm for fundraising.
“You want to schedule meetings together so they all have a similar cadence,” explains Jennifer. “Have all your first conversations Monday through Wednesday of the first week. Then you can start doing the second and third conversations toward the end of the week. You want to be preparing for partner meetings the following Monday “, explain.
All of these factors combined allowed him to close the Scribe round in just nine business days.
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The series A surprise
After the whirlwind seed round, Jennifer still wasn’t looking for a Series A. For one, it was only six months after her seed round closed. And the other part? She was eight months pregnant.
“We didn’t plan to propose, but we had an opportunistic conversation. My thought was, Is it a good time to grow up? I am about to have my first baby. And I had never seen a pregnant founder before. I’ve been around VCs who literally can’t say the word pregnancy because it makes them feel uncomfortable,” she says.
It all worked, though. By being open to an unplanned Series A, Scribe’s total fundraising soared to $30 million and allowed the company to accelerate its growth.
Leave the theater
Jennifer has some great advice for pitching to VCs: Don’t think of it as a performance. Investors see several pitches a day, all of which are well-rehearsed and polished. While it’s best to put a professional foot forward when pitching your company, it’s also good to connect with the people in the room.
Think about it: VCs have been on the inside of many companies as they weathered various storms. Who better to help you solve some of your obstacles?
If, as an investor, “you’re sitting through five pitches a day, and… everybody [is] trying to impress you every time, it’s very boring,” Jennifer points out. “But if you have a founder coming in asking for help with a problem, it’s probably more interesting to you.”
Be vulnerable to the challenges your business faces. An investor is likely to have an idea that sparks a creative new solution.
The article is based on an interview between Nathan Beckord and Jennifer Smith in an episode of the As I proposed podcast
About the author
Nathan Beckord is the CEO of Foundersuite.com, which makes software to raise capital. Foundersuite has helped entrepreneurs raise more than $9.7 billion in seed and venture capital since 2016.
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Raising an $8 million seed round in less than two weeks can be a daunting challenge, but with the right preparation and a strong team, it can be done. Ikaroa, a full-stack tech company, is here to offer the following tips and support on how to make that goal a reality.
1. Have a well-defined strategy – Before you start raising money, it is paramount to have a clear and well-defined strategy. Make sure you understand what you want to accomplish, your motivations, and how much money you need to reach your goals. Having a concise story of where you plan to take your business should be sharpened in order to communicate it to potential investors.
2. Reach out to investors – Once your strategy is ready to be shared, you need to start building your list of potential investors. Reach out to venture capitalists and angel investors who may be interested in your mission and make sure to provide them with a detailed pitch.
3. Establish trustworthiness – Contact potential investors in person or via email, schedule meetings, and make sure to be professional and courteous. It is vital to be trustworthy in the eyes of potential investors. Make sure to establish yourself as a business person who can deliver what they’re promising.
4. Prepare to make your pitch – After securing meetings with your potential investors, make sure you are fully prepared to make your pitch. Having a well-constructed presentation and/or storyboard will be especially helpful as it will set the tone for your meeting.
5. Follow up – After you’ve done all the preparation and finished making your pitch, it’s important to follow up with your potential investors. Send thank you emails, follow up on answers, and stay updated with any changes.
With dedication and hard work, it is possible to raise an $8 million seed round in two weeks or less. With the right team and the right resources, you can position yourself to succeed. Ikaroa is here to offer their expertise and provide a complete suite of suite of software development, product design, engineering and analytics services to support entrepreneurs and startups in their efforts to launch and scale their businesses. Contact them now to get started.
