seed funding gotchas
TRANSCRIPT
Alex Iskold, Managing Director
[email protected]@alexiskold alexiskold.net
Techstars NYC
Seed Funding Gotchas
1. Lack of Preparation
★ Under prepared for fundraising
★ Didn’t understand all the pieces
★ Didn’t think it all through & rushed in
It takes a lot of time, data, focus, research, strategy, etc.
2. Lack of Traction
★ Even if idea is good, there may not be enough progress
★ Traction is subjective (growth is more objective)
★ Founders typically think their traction is bigger than it really is (50% WoW growth from 2 customers isn’t initially impressive)
No traction means very difficult to raise, especially for 1st time
founders
3. Being pulled into fundraising
★ Other founders casually introducing you to investors
★ Investors reaching out, encouraging you to raise
★ Someone commits and you start raising
Don’t let others set the agenda. Fundraise on your timeline.
4. Chasing wrong people
★ Not every bag of money is your bag of money
★ Angels, Micro VCs, VC firms - are vastly different
★ Many investors are highly specialized
Understand who is who and what they are looking to invest in.
5. Not pitching VCs & Angels Correctly
★ Different investors write different check sizes
★ Different firms make money in different ways
★ Smaller checks happen faster, larger checks take time
Understand the process, check sizes, and motivation of investors
6. Not having an overall strategy
★ Who will you go to first? Angels/VC?
★ How much are you raising?
★ Whats your pipeline? How will you get the intros?
Mapping it all out is very important so you can run a
process
7. The I’am special problem
★ All of us feel that we are special
★ We tell ourselves only others loose in Las Vegas
★ Don’t get happy ears
Don’t bet on being special / lucky, prepare & put together the case.
8. Not realizing you are running a race
★ Once you start, the clock starts ticking
★ Word travels fast, investors talk
★ You don’t want to become stale deal everyone saw
Plan the raise and build up real momentum.
9. Running out of bullets
★ Don’t talk to everyone at once, stagger the conversations
★ If you run out of bullets you can go back in 6-9 months if you make a lot of progress
Fire every shot carefully and deliberately
