Seed funding gotchas

Alex Iskold, Managing Director

[email protected]@alexiskold alexiskold.net

Techstars NYC

Seed Funding Gotchas

1. Lack of Preparation

★ Under prepared for fundraising

★ Didn’t understand all the pieces

★ Didn’t think it all through & rushed in

It takes a lot of time, data, focus, research, strategy, etc.

2. Lack of Traction★ Even if idea is good, there may not be enough

progress

★ Traction is subjective (growth is more objective)

★ Founders typically think their traction is bigger than it really is (50% WoW growth from 2 customers isn’t initially impressive)

No traction means very difficult to raise, especially for 1st time

founders

3. Being pulled into fundraising

★ Other founders casually introducing you to investors

★ Investors reaching out, encouraging you to raise

★ Someone commits and you start raising

Don’t let others set the agenda. Fundraise on your timeline.

4. Chasing wrong people

★ Not every bag of money is your bag of money

★ Angels, Micro VCs, VC firms - are vastly different

★ Many investors are highly specialized

Understand who is who and what they are looking to invest in.

5. Not pitching VCs & Angels Correctly★ Different investors write different check sizes

★ Different firms make money in different ways

★ Smaller checks happen faster, larger checks take time

Understand the process, check sizes, and motivation of investors

6. Not having an overall strategy

★ Who will you go to first? Angels/VC?

★ How much are you raising?

★ Whats your pipeline? How will you get the intros?

Mapping it all out is very important so you can run a

process

7. The I’am special problem

★ All of us feel that we are special

★ We tell ourselves only others loose in Las Vegas

★ Don’t get happy ears

Don’t bet on being special / lucky, prepare & put together the case.

8. Not realizing you are running a race

★ Once you start, the clock starts ticking

★ Word travels fast, investors talk

★ You don’t want to become stale deal everyone saw

Plan the raise and build up real momentum.

9. Running out of bullets

★ Don’t talk to everyone at once, stagger the conversations

★ If you run out of bullets you can go back in 6-9 months if you make a lot of progress

Fire every shot carefully and deliberately

Alex Iskold, Managing Director

[email protected]@alexiskold alexiskold.net

Techstars NYC