tsh masterclass you've got seed... now what?
DESCRIPTION
• What does a Series A mean? It is your first round with professional investors, with true financial targets and commitments.• How to get from seed to A: deliver an MVP, build out your team and get customer tractiono MVP: the core of your business to prove the businesso Committed team: working together full-time and covering the key bases of the businesso Product/Market Fit: proving that you have built something that target clients will pay at a commercially viable rate• When do you need Series Ao When you have proved the aboveo 3-6 months before you need the moneyo When you need to get to the next level• Investors mattero Money isn’t money... remember that you will be in a close relationship with these investors for years! They should be a resource to help grow your business. They should be people that you would really like to work with!o They will generally follow-up in subsequent funding rounds and will have influence over your future equity• Start early- start to casually network and pitch 3-6 months ahead of time. Investors will want loads of data, but try not to let it distract you from running your business (consider doing this ahead of time or appointing someone to focus on this)• Build a relationship- have trust for the road ahead & understand their firm (their investment thesis)• When pitching, be UNIQUE and put the vision in context of your competitors• Agree on milestones with your investors early. This is important to align the vision of success and motivate the team. Less direct milestones might be of equal importance. Examples can include: user conversion/engagement rates, team & product development.• You have series A- now what?o Know your runway- how much time do you have before you need to fundraise?o Start investing to grow the businesso Communicate the milestones that you agreed with your investors with your team Set a communication schedule and keep to it Communicate loads!o Think about your own role (will you be the person who will lead the company into series B and beyond, or should you start specializing?) o In your board meetings, use it as a working session to problem solve and automate your data so that you don’t spend too much time generating data just before the meeting• After Series A, B/C is for expansion and team building, C/D/later is growth including expanding to new locales, product lines, etc.TRANSCRIPT
Ryan Kiskis January 2012
You’ve got seed funding…Now what?
VP Product at BaseKit
Internet entrepreneur from California
(Maybe too) often fundraiser
Who am I?
Fundraising 1.2 times per year, plus many more as advisor
Why am I here?
Series C $5M Apr ‘04
Series D $5M Oct ‘05
Sale $102M Apr ‘06
Seed $50k Sep ’07
Seed II $500k Apr ‘08
Series A $1.7M Sep ‘08
Series B $6.5M Jun ‘10
Series A $2.6M Apr ‘10
Series B $6.5M Apr ‘11
First round with professional investors
True financial targets and commitments
Relationship that will last years
What will Series A mean?
Minimum Viable Product
Committed team
Product/Market Fit (Traction)
All within your runway
How to get from Seed to A
The core pieces to prove your business
Xfire: an IM that shows me what game my friends are in
Martini: 10 network sites and 2 advertising clients
BaseKit: Massive array of design controls; limited UX
Run this over and over again for each new development
Minimum Viable Product
Worked together, in this full time
Cover the key bases of the businesses
Committed Team
Proven that you have built something
that your target clients will pay for at
commercially viable rate
Product/Market Fit
When you’ve proved the above
When you need money (actually, before)
When you need to get to the next level
So when do you need Series A?
Tempting to think money is money
Exits now are often 5-7 years or more
You interact with investors every week
Investors matter
They’re going to be following up
And they will have influence
Founder 1
Founder 2
Seed
Founder 1
Founder 2
Seed
Investor 1
Investor 2
Employee
After Series C funding, investors collectively own 55% of the company vs founders each having 13%
Timing
Portfolio
Relationship
Story
Milestones
Some things to think about
3-6 months
Lots of networking as much as pitching
Don’t let data swamp you
Start Early
Find a firm who might actually invest
Understand their thesis or theme
Look for competitors!
Portfolio
Have trust for the road ahead
Understand their firm
Fundraise in 48 hours
Build a relationship
VC partners see over 1000 plans a year
Be unique – not just a twist
Put the vision in context
The story
Do it early!
Your success rides on them
Great motivators
Agree on milestones
User counts, revenue, “traction”
User conversion/engagement rates
Team & product development
Agree on milestones
Know your runway
Start investing
Communicate
A – Now what?
Probably need to expand
Emphasize the upcoming goals
Think about your own role(s)
Team Management
Might be first time formally reporting
Set a schedule and keep to it
Communicate, communicate, communicate
Communication
Get to the point concisely
Use it as a working session
Automate your data
Board Meetings
Seed: Provide minimum viable product & market fit A: Prove traction. You have customers beyond those you can touch B/C: Expansion. You’re building a team, facing scaling C/D/later: Growth. You’ve got a good business and may be going to new
locales, opening new product lines
YMMV but…
