An investor’s roadmap for seed-stage fundraising

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A friend of mine just completed a very successful fundraise for an institutionally led seed round. What’s interesting is that while he had already raised US$30 million+ several years ago, he remarked to me that “this process is completely different from every other fundraise I’ve been a part of.”

It was different for a few reasons:

• The level of traction that seed investors often look for is substantially greater than it was several years ago.
• Although companies may seem more mature, the way seed rounds come together is still different from a classic VC-led series A or B round. Even with institutional seed VCs involved, it is likely that no one investor will make up over 75 percent of your capital.

Because of these moving parts, these rounds are more unpredictable than you would think. That said, I wanted to lay out one basic roadmap for pursuing and managing a seed round raise.

How to raise seed capital

Before we start, we’re assuming that:

• You are “ready” for the round to happen. Figuring that out is the subject of another post.
• You have a reasonable “ask” in terms of dollars, valuation expectation, etc.
• You’ve done some pre-work over the past six to 12 months to keep investors warm and aware of what you’ve been doing.

Keep in mind that even though I’m proposing a sequence of steps, the reality is that it should feel a lot more like a parallel process.

A broad process

1. Line up support

Know who you’re going to call as a reference — your prior bosses, obvious people in the ecosystem that would have a strong POV on you or your idea, existing investors, early customers, etc.

Pre-wire them so that when the calls come, they are ready and/or you at least know what they are likely to think.

2. Get commitments from those who know you

These are the angels that are your closest with, mentors/references, or individuals that you want to have affiliated with the company. The idea is to get a small but solid commitment from these people, so that when you have your first conversation with a lead, it doesn’t feel like you are starting from scratch.

Get these individuals to feel comfortable with at least an investment of x dollars, and then remind them to only say yes if they are willing to have people ask them about it. There is nothing more damaging than having a VC call an angel and have them say, “Actually, I’m not really committed.”