What's some useful tips for VC funding in 2018?
My tips are not specific to 2018, specific things will need to be obtained from investors.
1. Build bridges with investors before you may need to cross them, ie. Don’t go to them when you need the money. There are a multitude of angles to use, but each angle has to come from a core place of self-less and selfish interest. Know what they want and need, know what you want and need. Each angle will also dictate the how early you can get on their radar.
If you are introducing your startup to them, then around 6 months.
If your angle is to aid startups in their portfolio, introduce startups to them (filter them, don’t send them any and all), or family offices looking to put funds into a pool; then you can contact them a lot earlier.
2. There is another way that you can connect with investors, “get an intro to us via someone in our network”. I don’t do it this way, for a number of reasons, which I won’t really go into here. To summarise those reasons: inefficient ways that cause unnecessary hurdles, and exclusionary methods of connecting with investors need to be dropped. We can’t control investors, but we can control ourselves, so it is down to us to make sure we come correct. Those filters have been put up because a lot of us are not.
3. Note the investor landscape, find out their investment thesis. See if their portfolio has any competitors, any synergies, etc.
4. Find out the required milestones (for your current stage and the next one). This is a difficult one to find out, for it can pin some of them down a bit too much.
5. Find out more about the appropriate partner at the VC firm whom is involved in your niche. If you can't find the appropriate partner, aim for the top, and have them point you in the right direction.
Acquire information about the partner and use it to formulate an email that is about them. I will typically provide a few of my thoughts on something they said in an article. They will be genuine thoughts. No brown-nosing, no compliments for the sake of it, etc, etc.
6. If the investors portfolio has competitors and/or synergies find out where they stand on this. Some will be open to funding competitors, some won’t. If so, find out how things are kept ethical and above board.
7. Contact the partner and find out the firms current position in the fund life-cycle: are they open to new investments, only open to portfolio synergies, only follow-on funds left, etc.
8. Find out what their investment approval process is; stages, length, etc.
9. Ask them for their due diligence (DD) checklist, and work on that organically. Until then, use this one: https://seraf-investor.com/compass/article/seraf-toolbox-due-diligence-checklist
10. DD goes both ways, so find out what you can about them, what they are like after investment. Is it just money, or smart money?
11. Prepare a presentation deck, not a pitch deck, and present it to your team. Let your team know beforehand, and to attempt to trap and flummox you.
12. Update the deck and send it to a few of the investors, and use them as data points. The reason it’s not a pitch deck is because the deck should explicitly state that you’re not looking for funding at this moment in time.
Send it to ones you either have good relations with, and ones that do not fund in your geographical area. There are some gems out there who will go out of their way to aid you and to give you feedback. Granted they may not know the launch country market, but they will know the startup niche. Basically work your way inwards to the set of investors you are targeting, using the feedback to hone and refine startup / deck.
13. Once you get to the set of investors you are interested in, same thing, not looking for funding yet. If it’s a decent startup / deck you could be asked to come in for a chat
14. All of the above is done before the MVP is built, investor pre-validation is vital.
15. Keep them informed as to your progress, monthly update is fine. Keep it short and to the point. Be brutally honest, so good and bad, hits and misses.
Even if your angle of approach is for your own startup, keep an eye out for any startups that you think they would be interested in. Same thing with investors and family offices, some of them go solo (or dedicated fund manager), some want to put their funds into a pool.
16. When you are ready, send the pitch deck.
Same as always. Team, technology, and traction. Nobody funds "ideas" and nobody funds a plan you have not committed your entire life to making succeed. Finally, the adage in SV is that 9 of 10 startups do not get funded. If that is true, 5 of those 9 cannot get funding, not because of the company, but because they cannot actually tell an investor 1) what they make or do, 2) who it helps and why, 3) who is, and why you are different than, the competition, 4) what your secret sauce is, and 5) why you will be successful. Oh, and do that articulately in 30 seconds.
You can find some VCs and accelerators on f6s.com
It depends on the size round you're looking for. The bar continues to go up for pre-seed, seed and series A financings. For Series A, for example, I've heard you need to be at $3-$4m in ARR. A few years ago, that was the bar for Series B rounds.