Your start-up is now past the seed funding phase. You have spent your money and found initial investors. Thanks to your supporters, your business is taking off. However, it needs to gain more momentum, so that it will not falter and fail. It needs more funding.
At this point, you may not want to risk some of your personal money that is meant for your homeowners insurance. Similarly, your investors in the seed funding phase may not extend beyond into the next stage. In this case, you will need to start another round where you will find new investors. Enter the Series A funding.
Series A funding often happens when the start-up has already established a customer base, some consistent financial records, and other signs that your operations are stable. The goal of Series A funding is to further help you develop your product and expand your operations. If you want to increase your odds at this phase, here are some of the things you may want to keep in mind:
Determine the right time
First off, you need to determine if you are ready for this funding round. Yes, your business model is already working, but you may want to reconsider, especially if you have large cash reserves. Series A funding is all about the optimization of your business, so you better make sure that you can present a detailed plan of your next steps. Other than this, you need to pick the right moment. For instance, the last quarter of the year may be a difficult time to raise funds, as investors and venture capitalists are enjoying their Thanksgiving or Christmas somewhere.
Network ahead of time
Surely, Series A funding is already part of your plan. But have you prepared well for it? If you really want to increase your chances, you need to have a solid network of investors and contacts. Try to do things gradually. For example, if you want a certain investor to support you, you should arrange meetings and encounters with them a few months before your target deadline for raising funds. That way, they will get a feel of your character.
Prepare your pitch
You’ve done many pitches before and you think that this will be much easier for you. It could be, but don’t be too relaxed. There is still a chance that you could fail. When creating your pitch deck, focus on your purpose, your business model, and your promising outlook for the future. Make sure that your investors can easily see how they will be able to benefit from your business. Moreover, you have to keep your pitch short and sweet.
Finalize the terms of the deal
When you have found the first investors in your Series A, you may feel excited and quite relieved. However, keep in mind that things don’t end with getting the money. Actually, before you receive the money, you should make sure that the deal and agreement are fair for everyone involved. You may hire a lawyer to read the details of the contract.
Go for it!
Preparing for Series A can be nerve-racking. But you have to keep in mind that you’re not starting from ground zero. This time, you’re starting from experience, so you have your chances.