Want to learn the best business insights from remarkable speakers at Slush 2023, but don’t have the time to watch the full speeches on YouTube?
You’ve come to the right place. Below is a summary of a speech by Jessica Schultz, Partner of Northzone.
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<p class="h1-rich">🤏 TL;DR</p>
TL;DR - When raising a seed round, start early, have traction, and determine the right size based on capital needs, dilution, investor interest, and time available. Mentally prepare for the fundraising process, find the right investors who align with your vision, and execute on the next milestones to increase chances of raising subsequent rounds of funding while protecting your runway.
<p class="h1-rich">✨ Summary</p>
Raising a Seed Round
- The right time to start thinking about raising a seed round is when you have achieved your MVP and want to raise money for product-market fit.
- It is important to have some traction and be able to talk to customers before raising a seed round.
- It is advisable not to wait too long to raise a seed round as it may take 3 to 6 months in the current economic environment.
Size of the Seed Round
- The size of the seed round should be determined by the capital required to reach the next fundable milestones, dilution considerations, investor interest, and available time.
- The average seed round size is around $2-5 million, with a median of $3 million.
- Start with a lower range and scale up if there is strong investor demand.
Preparing for Fundraising
- Mentally prepare for the fundraising process and expect a lot of rejection.
- Prepare the team to help with the fundraising process and the additional stress it may bring.
- Create a compelling pitch that focuses on storytelling and why your company matters.
Finding the Right Investors
- Use the fundraising process as a due diligence process to find investors who believe in your company, align with your vision, and can provide support.
- Talk to portfolio companies and other founders to get references on investors.
- Research investors' track records, sector experience, and personalities to find the right fit.
Reaching Out to Investors
- A warm introduction is helpful but not necessary. A well-crafted cold email can also be effective.
- Reach out to angels who are more open to early-stage meetings and can help connect with other investors.
- Do your homework and target investors who are active in your sector and stage.
First Meeting with Investors
- Expect a lot of rejection and use each meeting as an opportunity for feedback and brainstorming.
- Be prepared to answer tough questions and adjust your pitch based on feedback.
- Build strong relationships and maintain momentum throughout the fundraising process.
After Raising a Seed Round
- Don't spend the money too quickly and be mindful of protecting your runway.
- Map out the next milestones and execute on them to increase the chances of raising a Series A round.
- Extend your runway to at least 2 years and leave space for proper preparation for the next funding round.
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