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How to Successfully Raise a $3M Seed Round from Top VCs

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.

Fundraising in 2020 was tough for many founders. Read Brent Franson's story and process of how he successfully raised a seed round for Most Days, during the pandemic.  How to Successfully Raise $3M Seed Round from Top Silicon Valley VCs

Guest post by Brent Franson, Founder and CEO of Most Days

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.

Pre-seed

This is a prototype or alpha, with little to no actual users, with a typical raise of $250K to $1.5M.

Seed

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:

  1. Top tier seed specialist
  2. Top tier multi-stage
  3. Mediocre seed specialist
  4. 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.

Image by Firmbee from Pixabay.

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