Our recent QuickLaunch University webinar on seed fundraising addressed the issue of preparation and what information a team should have at the ready before meeting with seed investors. Jere Doyle, Managing Director of Sigma Prime Ventures and guest speaker during the program, commented:
"At the end of the day, you're talking first round of funding. This is way more about the people than it is about the numbers. Obviously, you should have a financial plan; you have to be in a big market with a really great opportunity for scaling because that's why outside investors want to invest—because they want to be able to see that the business is going to scale. But it really is about the people and what you've done, your track-record and your capability."
As founding teams prepare to get a financing started, it is important to understand that investors are making a decision based on what they think the company is worth in terms of future value. Investors make assumptions as to what the company looks like, who owns your intellectual property, who owns equity and how a company's employees are classified—all the places where value is assumed to exist. What all founding teams need to do before they start to raise money is make sure that they look at the company the same way an investor would. Recognize the potential issues and have a plan to address them. Understand the risk issues from an investor's perspective and make sure you have a good story to assure any investor that value will not be lost in unexpected ways.
Raising capital is time consuming and requires patience and persistence. Work with a network of advisors to develop a strategy for reaching out to potential investors. WilmerHale Launch has financing resources that include best practices for preparing your pitch and securing VC meetings, as well as information on the types of investors and financial terms and structures available to startups. You can also learn more about preparing for your first round of funding by watching the recording of our QuickLaunch University webinar on Seed Fundraising: How to Get Organized, Attract Investors and Negotiate Your First Round.
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