As the venture capital market begins to stabilize, there may be some relief for founders looking to raise a Series A round. However, as funding firms face challenges in liquidity and increased pressure from limited partners to be more cautious with their investments, it may still be a difficult process.
In 2020, TechCrunch+ advised that founders should start their fundraising journey when they have at least six months of runway left. They also recommended budgeting at least three months for fundraising, including one month for preparation and a two- to six-week pitch process with potential investors.
But according to Jesse Randall, founder of Sweater Ventures, founders should actually begin seeking a Series A round when they have around 12 to 15 months of cash runway remaining.
“Don’t wait any longer than that,” Randall warned in an interview with TechCrunch+. “The fundraising cycle, once you start it, takes twice as long and requires three times the conversations.”
Similarly, Leslie Feinzaig, founder of Graham & Walker, advises her founders to start preparing for a Series A round at least 12 to 18 months in advance. This includes understanding their business model, connecting with potential investors, and stress testing their readiness.
Investors are also emphasizing the importance of starting early for this longer journey. Feinzaig explains, “In this market, you have to prep for an A way in advance…Time goes by fast, and in my experience, this catches a lot of founders unaware.”
She suggests that founders should start focusing on their metrics right after closing a seed round, as it could be beneficial in the long run. Feinzaig adds, “Focus on your metrics immediately.”
This year, the market for Series A rounds is expected to be very different compared to last year, according to Randall.
“It’s an investor market out there,” he stated in an interview, alluding to the challenges faced by funding firms.
It’s clear that for founders seeking a Series A round, the key is to start early and be prepared for a longer journey. While metrics will always play a crucial role, it’s important to begin laying the groundwork and connecting with potential investors as early as possible.