How to Raise a Series A (Draper Esprit)
How to raise your series A
Presentation By Draper Esprit
You raised seed, and now you want to raise a Series A
By Sophia Bendz, Partner at Cherry Ventures, angel investor, advisor to Atomico and the Swedish Prime Minister, former Global Marketing Director at Spotify
Figure out who you want to raise from
Determine how large you could realistically scale your company and, then, how large the funds themselves are. In general, early- to mid-stage VCs are aiming to return 3x on the money they raised to investors.
Feel free to ask them about previous fund returns and their LP base, which are pieces of information that VCs don’t often publicly discuss.
Do your research on who the right person to approach at that fund is. Which partner has done deals in your industry or geography in the past?
Ask for references from existing portfolio founders and then collect some informal references from people who have experience working with a given partner and the firm.
Preparation is key
Set a specific timeframe for when you want to raise money and determine what you need — and when — to seriously pitch.
Spend some time on creating a pitch deck that tells your story in a strong and appealing way.
Show you are data driven too.
You need to have all the back up materials ready so it’s a good idea to prepare the data room and financial models so the investment team can dig into the numbers and run calculations
Prepare good answers to all of the following questions:
● How come you started this business, what’s driving you?
● Whose life are you improving and why does what you do matter?
● Why are you raising this amount of money and what are you planning to spend it on?
● How long of a runway will this round give you?
● What are the most important milestones you want to achieve before the next fundraise?
● What proprietary technology have you built and is it IP protected?
● What’s your strongest moat?
● What is your north star metric?
● Have you found product market fit and does it show in your data cohorts?
● What’s your gross margin on average?
● What’s your path to margin expansion?
● How can what you do become more profitable with scale?
● What do you prioritize as you’re scaling?
● What’s your go-to-market strategy?
● How do you differentiate your product?
● What customer/user love can you show in numbers?
● How do you plan to scale up sales activities?
● What have you learned from the previous country launches/product launches/etc and what can you do better?
● What’s the team’s background and why do you think you’re best positioned to win this market?
Dealing with investors already on your cap table
When you raise a Series A, you will have angel investors and early investors who either do not want to follow on or do not have enough capital to follow on. This needs to be managed.
Some advice from founders who have done it:
Start preparing your ideal future Series A story right after raising your seed round. — Lucas Carlsen, founder and CEO at Hedvig
Share your real challenges and worries too. — Sofie Qudenius, CEO and cofounder of Omnius
Choose your investor wisely, you’ll work with them for years. Raise significantly more money than your budget tells you too to give you room and time to get it right and keep innovating. — Jakob Jönk, CEO and founder of Simple Feast
Fundraising is hard work and it’s incredibly time consuming. But it’s worth it. It forces you to get your shit in order. It can inspire and challenge you to find blind spots. — Elsa Bernadotte, cofounder Karma