The checklist for series A funding

Raising series A funding. That’s the stuff founder dreams are made of: VC money that brings validation and gets them one step closer to joining the big leagues. That’s when they are no longer asking friends and family for seed investment, and when they can actually think about setting up that funky office.

Series A is all that, but it is also another thing. For a founder, it is the litmus test affirming that they have potential, and proof that they and their company have passed the background checks and scrutiny of a VC.

As any entrepreneur worth their salt will tell you, the journey from seed-funded to series A is fraught with meetings, rejections, and often, cold shoulders, leaving young founders confused about how to approach investors, how to prep, and even when to knock on their doors.

At TIA Jakarta 2016, our conference that took place on November 16 and 17, investors from Venturra Capital and Monk’s Hill Ventures shared a no-BS approach to raising series A funding.

1. They are in it for money

Chances are high that your seed investor is the nice guy – the mentor who has given you some money to try out your idea, and will offer a long rope for you to experiment. The VC has a different agenda. “It is very important to understand that VCs invest in startups to make money.

The lights in our eyes twinkle when we see a total addressable market of $1 billion.

We need to generate capital gains to return the money at least 3 to 4 times of what we manage back to our investors. Sometimes people forget we are an institutional investor that aims to have a financial gain,” said Raditya Pramana of Ventura.

This translates to: do your homework, know your projections, and be prepared to be asked about returns.

The typical fund structure is either a 4+4 or a 5+5. The first four years we invest, but the last four years we wait for the money to come in. That’s the liquidation period.

2. Getting noticed

Cold emails NEVER work, and neither does jumping investors at crowded restaurants to pitch your company.

“The best way to get us to talk to you is always through referrals. Cold emails barely work because the inbox is always full and it’s hard to see. On the other hand, if you got introduced by one of our portfolio companies the trust level is so much higher,” Raditya said.

3. Are you series-A ready?

4. The three-ass rule

5. Background checks

6. Founder’s mettle

7. Spectrum of crazy

8. Ideal deal size