As a founder, raising a Series A is an undoubtedly challenging task. However, there is some recent news to take note of. The good news is that the venture capital market seems to be stabilizing. However, on the other hand, raising a Series A will still be difficult due to several factors such as liquidity problems, higher interest rates, and pressure from limited partners to be more cautious in dealmaking.
In 2020, TechCrunch+ reported some key tips for founders looking to fundraise. These included starting the process when there is at least six months of runway left and budgeting for a minimum of three months, with one month dedicated to preparation and a two-to-six week pitch process with investors.
Jesse Randall, founder of Sweater Ventures, advises that founders start the process of raising a Series A when they have about 12 to 15 months of cash runway left. He adds, “Don’t wait any longer than that.” According to Randall, the fundraising cycle requires twice the time and three times the conversations.
Leslie Feinzaig, founder of Graham & Walker, primarily invests in pre-seed and seed rounds. However, she advises her founders to begin preparing for their business’s Series A funding at least 12 to 18 months in advance. This includes understanding their business model, connecting with the right investors, and stress testing their readiness.
Feinzaig also emphasizes the importance of metrics in the Series A process. However, in this current market, she recommends starting early to give companies a better chance for success. According to Feinzaig, “Time goes by fast, and in my experience, this catches a lot of founders unaware. Focus on your metrics immediately.”
It’s an investor market out there.
Randall predicts that this year will be much different than the last. The key for founders is to be prepared and start early, giving them a better chance of success in a competitive market.