A VC analyst’s guide to preparing for your fundraise

Photo credit: Nordwood Themes.

This is a five-part series by Clement Vouillon with help from those at Point Nine Capital.

Here’s the outline for our series:

• Part 1: Before working with VCs
• Part 2: Preparing your fundraising
• Part 3: First contact and assessment phase
• Part 4: From term sheet to signed deal
• Part 5: Post-investment

Now that you’ve decided to raise with VCs (from part one), let’s get our hands dirty and:

• Shortlist the relevant VCs
• Do your first light reference checks
• Create your fundraising material
• Contact them

The 2-minute TL;DR video

Shortlisting the relevant VCs

Although the core concept of the VC model is quite simple—giving money in exchange for company ownership to generate an ROI—there are many variations:

• Large vs micro VCs
• Early-stage vs late-stage
• Specialized vs general
• Hands-on vs hands-off

This is the reason why, rather than contacting every VC you’ll find, you need to shortlist the ones which are relevant for your startup and for which your startup is relevant for. In that perspective, be sure to check each VC firm for:

• The stage they invest in (seed, series A, B, or C): The first thing to check is whether a fund invests in companies at your stage. If you’re an early-stage company looking for a seed round, there is no need to contact funds investing in series B and more. You can usually find this information on their website.
• Their investment scope: The majority of VC firms limit their investments to specific types of companies and geographies. At Point Nine, for example, we only invest in SaaS and marketplaces and don’t invest in social or gaming apps. We also mostly focus on Europe and North America, even if we have some exceptions. Before contacting a VC, you need to check whether you fit their scope or not.
• Their investment thesis: Most VCs have what they call an investment thesis, which details precisely what they’re looking for. These could be the characteristics of the founding teams they like to back, the technologies they find exciting, the markets they think are promising, and so on. This document is the hardest to find, as it’s not often accessible on their website. USV is an excellent example of a thesis-driven fund.
• Their support and added value: If you’ve concluded in part one that a particular added value will be critical to your success, you need to find the investors who offer that. It’s key when you operate in specific industries or verticals, as industry-focused VCs can help tremendously. For example, funds specializing in healthcare tech or government tech can provide operational support, a network, and knowledge that non-specialized firms can’t.

Where do I find a list of VCs?

• Network: First, ask fellow founders in your city. If they’ve already raised, it’s very likely that they have such a list.
• Incubators and accelerators: If you’re part of an incubator, don’t forget to ask them for a list of investors. If they don’t have one, it’s a huge warning.
• A Google search: This is a simple but effective method. Just Google “VC in [your area]” and you’ll probably find a spreadsheet created by a local investor or a founder. This is what I found by Googling “VC in Paris” or “VC in New York.”
• Startup directories: Whether it’s on Crunchbase, AngelList, Dealroom, or other directories, you can find a list of VCs here and can even filter them by geography.

How do I understand an investment scope and thesis?

Do your first light reference checks

Creating your fundraising material

Contacting your first VCs