The Episode in 60 Seconds
The four phases of fundraising.
Phase 1: Preparation
- Start preparations either in early September or in January, as to not hit the VCs’ winter or summer break.
- Don’t waste your time talking to VCs which aren’t adequate for the round you are trying to raise anyway.
- Use personal introductions wherever you can.
Phase 2: Pitching
- Do a first screening call to gauge the general fit of the VC for your business and round.
- The goal of your pitching is to get a term sheet, which equals an offer to invest from a VC.
Phase 3: Negotiating Term Sheets
- Once you have (hopefully) collected a few term sheets, it’s time to evaluate and negotiate on the different offers.
- When choosing an investor, the cultural fit should not be underestimated. Don’t be afraid to get references on the VC from other ventures he/she has previously invested in.
- Don’t obsess too much over valuation. It is not an exact science.
Phase 4: Due Diligence
- Once you have decided to go with an offer, the investor will perform his due diligence on your business to make sure your books are in order.