Here’s what you need to know to successfully raise a Series A in the current landscape.
There is good news and not-so-great news to report.
The good news is that the venture capital market appears to be finding stability. However, the less great news is that securing a Series A continues to prove challenging for founders. This is especially true as venture firms grapple with liquidity issues, higher interest rates, and pressure from their limited partners to exercise more caution when making deals.
In 2020, TechCrunch+ advised founders to begin the fundraising process when they had at least six months of runway remaining. They also recommended budgeting for a minimum of three months for fundraising, with one month for preparation and a two to six-week pitch schedule with potential investors.
According to Jesse Randall, founder of Sweater Ventures, it is now advisable for founders to start seeking a Series A when they have approximately 12 to 15 months of cash runway left.
“Don’t wait any longer than that,” Randall advises. “The fundraising process, once initiated, takes twice as long and demands triple the amount of discussions.”
Leslie Feinzaig, founder of Graham & Walker, typically invests in pre-seed and seed rounds. However, she recommends that her founders begin focusing on their business at least 12 to 18 months before seeking a Series A. This includes thoroughly understanding their business model, building relationships with suitable investors, and conducting thorough stress tests to ensure their readiness.
The advice provided by investors for securing a Series A this year clearly demonstrates how much the market has changed, and yet how little. While metrics will always play a crucial role, the key to success seems to be starting early for this longer journey.
“In this market, advanced preparation for a Series A is essential,” Feinzaig asserts. She suggests founders consider beginning the process immediately after closing a seed round. “Time flies, and in my experience, many founders find themselves taken by surprise. Don’t delay, focus on your metrics from the start.”
As Randall notes, this year’s market offers a vastly different landscape compared to the previous year.
