Fundraising checklist (suggestions curated by wiseocean.g-l.ventures)

  • Do or Do Not, there is No Try (in fundraising), usually a CXO needs to commit to it for several months, and at times the whole executive team needs to meet investors. 
  • When is the “right” time to fundraise? The answer is when you can show that you NEED capital to continue growing, or to accelerate your growth (to win larger portions of your Serviceable Obtainable Market), and you know exactly how to do it. Fundraise when your business is demonstrating early growth traction + has clear plans for how you will invest the new funding to reach your next growth milestones.
  • Structured as a C Corporation registered in Delaware is strongly recommended for raising from US investors (let us know if you have registered elsewhere in the US, for international startups, we’ll also help suggest how to flip your company into a US company)
  • Data Room preparation:
    • Copy of Certificate of Incorporation, ByLaws, all board and shareholder actions and minutes
    • Documentation related to its capital stock: a list of every person or entity who owns or has rights to any of the company’s securities, any agreements that grant stockholders preemptive or preferential rights
    • Capitalization Table, including all funding history and associated funding documents (Cap table template)
    • Copies of financial reports and models (historical, current, projection), budgets/burns, employment agreements
    • Any sort of backup to prove the sales pipeline and revenue projection (especially for the current year, which is usually used to claim valuation), which can take many forms such as; LOIs, pilot agreements, meeting notes from prospective clients, major customer lists, etc.
    • Intellectual property (IP): patents, copyrights, trademarks(of the brand), trade secrets
    • Every person who comes in contact with your company’s IP should sign confidentiality and assignment agreements 
    • Ideally, a Proprietary Inventions and Assignment Agreement is included in every employment offer
    • All service providers or advisors sign agreements clearly assigning any IP created from their relationship to the company
  • How much you need to raise
    • It determines the choice of investors
    • Focus on the length of time you want to fund your company to get to the next meaningful milestone
    • Set a conservative target and create a “limited amount available” feel, it’s even better if there are already some investors committing
    • Set a number (for example, $3 million), not a range
  • Fundraising preparation
    • One sentence about what you do
    • A short description of your business: 
      • An elevator pitch, one to three paragraphs that describes the product, the team, and the business directly
      • A summary that you can email (often used in the bulk of emails, after the introductory opening, you send out)
    • An executive summary is great: (will be sent to investors before the first pitch meeting)
      • Concise and well-written description of your idea, product, team, and business, it’s your first impression for VCs and will be shared around if there is interest 
      • The more substance you can pack into this short (up to 3 pages) document, the more VCs will believe you have thought critically about your business
      • Include: 
        • the problem you are solving, 
        • why it’s important to solve, 
        • why your product is awesome, 
        • why it’s better than what currently exists, 
        • why your team is the right one to pursue it
        • End with some high-level financial data for great expectation
    • A presentation:
      • Usually 10-20 pages PPT
      • Same message as the executive summary but with more examples and visual presentation
      • Investors only care about these:
        • The problem you’re solving (your TA)
        • The size of the opportunity
        • The strength of the team and advisory board
        • The level of competition
        • Competition advantage you have
        • Your plan of attack and current status (business strategy/model)
        • Your traction & proof of ladder (see later at the end)
        • Summary of financials, and use of proceeds
        • Milestones and business projection in 5 years
        • Your partnerships
    • A prototype/demo is good for an early-stage company
    • In later rounds, your company’s historical financial performance, underlying unit economics, cost structure, key metrics, and future financial plan will matter to VCs. Investors would like to know your assumption underlying your revenue forecast and your monthly burn rate/cash consumption.
    • Numbers matter!
      • Every sentence with numbers, investors like numbers of your company
      • Show the milestones you’ve accomplished without funding – Prove your traction with internal KPIs, and your KPI dashboard/report can show how you analyze your business, it’s important to investors, if no statistics for early companies, qualitative data such as customer testimonials are good as well
      • Show customer traction – whether that be beta non-paying or paying, you want to show signs of life and your customers find the product delightful
      • S3 Ventures: Different metrics apply to different types of businesses, but in general, we want to understand unit economics, customer acquisition costs, sales models, product pricing, and product margins. In addition to the future plan, we also want to understand where the business is today. Data such as your current revenue and gross margin, number of customers, how those customers were acquired, and your sales pipeline are typically very helpful. 
      • Choosing your North Star metric
      • 5 Core Startup Metrics
      • How to calculate CAC
  • Notes:
    • The goal of the first meeting is to get the second meeting opportunity, there is a whole process going forward.
    • Final goal: get several term sheets, since competition drives better terms. (P.S. Along your growth journey, you will need a lot of investors.)
    • Every meeting is an opp. To get feedback from investors (like free consultancy), you might need to talk to 10 or 20 investors down the road, every meeting is an opp. to learn, but not necessarily move forward with that investor at that moment, it might happen in the future.
    • You can ask questions to investors in investor meetings! (prepare your questions), examples:
      • What’s your concern? What will your partners’ objections be?
      • What do you think about my business plan? My team?
      • How do you see companies in my marketplace? Why haven’t you invested in any of my competitors?
    • Ideally, pitch decks should be different for different investors (they care about different things, and learn about them before meeting them – what they believe, what they are interested in, …).
    • When you are approaching investors, their mindset is going to be about reducing risk, team makeup, and how much return they think your company can return to them and the LPs. Here are some basic things you can do to reduce risk with investors:
    • When entering a new market, you might need to find/pivot your “product-market-fit”, business model, and operation model, so it’s suggested to identify and unbundle your core technology capabilities from the products or services you are selling in your current market. Investors can/might imagine new possibilities in the new market, and even make introductions for you. Also, building new partnerships in the new market is a great plus for investors to feel more confident about you in the new market.

Other useful resources:

 

 

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