A Thought Leader Guest Post from Nick Frost of DocSend:
I Just Raised a $3M Seed Round from Top Silicon Valley VCs. This Was My Step-by-Step Process.
In March of this year, as shelter in place orders kicked in, I started my pitch deck and brought together my founding team.
Even for someone with experience raising money, that timing was…not great. Nevertheless, we went for it.
I started pitching June 24th, signed a term sheet on July 17th, and by August, I closed a $3M seed round for my new company, Most Days, a social app for healthy behaviors and community support. The round was led by Freestyle.VC, with participation from Harrison Metal, Village Global, and Correlation Ventures.
Like many founders, I was a little apprehensive about fundraising in the middle of a pandemic – but what was most remarkable was how similar the process was to pre-pandemic days. All of the same elements are still there: the importance of telling a great story, targeting the right investors, anticipating hard questions.
I won’t pretend to be an expert so treat this like you would a buffet (remember those?): take what looks right, leave the rest.
Step-by-step, here’s what I did that worked for me.
Step One: Get smart about the landscape
What’s the difference between pre-seed and seed? I’ve been an angel investor in a number of seed rounds, mostly betting on friends and former colleagues. But the “pre-seed” designation was a new one for me – and it was equally surprising to see how high the bar for a seed is.
Think of the differences between the two in terms of capital raised and early traction.
This is a prototype or alpha, with little to no actual users, with a typical raise of $250K to $1.5M.
This is when you hit beta with actual users and/or revenue with a typical raise of $1.5M+.
In some cases, as it was for us, if the founders’ backgrounds are compelling, you can raise a seed-sized round with a pre-seed traction profile.
Then you get to make a decision about the type of investor firms to target: seed specialists or multi-stage. Some only lead seed rounds; others focus on As or seeds and A rounds. Seed-only firms include Freestyle, Harrison Metal, First Round and numerous others. Multi-stage firms lead at every level of pre-IPO financing, from pre-seed through D+. Think Sequoia, General Catalyst, Kleiner and Accel here.
If you’re pursuing seed capital, your goal is to generate enough business momentum during the Seed stage to raise an A with a high-quality investor, such as a Benchmark or Sequoia. This is exactly why I prioritized a stellar seed specialist over a multi-stage.
My stack rank is:
- Top tier seed specialist
- Top tier multi-stage
- Mediocre seed specialist
- Mediocre multi-stage
Step Two: Draft your deck
I’ll keep this short: a pitch deck is, first and foremost, your opportunity to...
Read the rest of this article at docsend.com...
Thanks for this article excerpt to Nick Frost of DocSend.
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