Edit ModuleShow Tags

10 Tips for Landing Venture Capital at the Seed Stage

Seventy-five percent of venture capital dollars are funneled into three markets


Published:

Even though Colorado has a vibrant economy for startups, one component of starting a business remains elusive in the middle of the country: raising venture capital.

Anna Mason, partner at Rise of The Rest seed fund, said that 75% of venture capital dollars are funneled into just three markets (Silicon Valley, New York City and Boston) during a panel at this year’s Denver Startup Week.

Here are Mason’s top ten tips for increasing your shot at securing venture capital investments in Colorado.

Fundraising is marketing

Before you even approach venture capital firms, you must establish certain components of your business. To start, build your funnel, research and know your customer, close the loop and nurture your relationships.

Be careful what you wish for

You enter into a business marriage the day you accept venture capital (VC) dollars. Before accepting any funds, you need to do your research on the VCs because they will hold you accountable.

Perfect your pitch deck

Your 10 to 15 slide investment deck should be short, simple and sexy. The deck needs to stand on its own and should focus on team, product, market size and traction.

Create a narrative

A startup is only as valuable as the sum of its people (and their stories. VCs like when you can link personal experiences to market opportunity.

Competition is good

No competition means a limited or non-existent market. Do your research before suggesting no competition exists and when you find it, differentiate yourself.

Represent your city

Focus on the strategic advantages of your city – not every successful startup was born in Silicon Valley. Lean into why your city is the right location to build your business when pitching to venture capitalists.

Timing is everything

VC is a supply-constrained industry. FOMO (the fear of missing out) can create a VC rush, so approach the market only when you are ready. And when the time is right, know how much you require and what you are going to do with investment dollars.

Be ready to scale – fast

VC demands significant and rapid scaling to realize returns so you need to be able to hit the ground running when you land that first seed round check. But remember, this is a business marriage so leverage investors’ experiences and networks and you will go far.

Don’t use bespoke investment terms

Think twice before accepting terms from an investor that demands terms deviating substantially from standard. Experienced securities counsel will help you understand and negotiate these terms to protect your company and your equity in it.

Decoding VC responses

No means no – and probably means never. Thank the VC for their time, ask why they aren’t interested and move on.

Not now – this generally means the VC is interested, but you are missing something or seeking investments too early. Ask the VC what they would like to see before investing and follow up when you hit that milestone.

Yes means yes…usually. When you receive a “yes, but” – it usually means they aren’t ready to lead. Keep the VC up to date on your progress and follow up when you find a lead investor.

Casey Kidwell is an associate at Husch Blackwell LLP's Omaha office. 

Edit Module

Get more content like this: Subscribe to the magazine | Sign up for our Free e-newsletter

Edit ModuleShow Tags

Archive »Related Articles

Defining Your Why: How to Make an Impact

If you haven't already, start to define your own why. Start to think about who you want to impact, the type of impact you want to have and the changes you may need to make. And don't forget to write it down.

Everyone wins when you invest back into the community

Successful business leaders know financial growth isn’t the only measurement of a company’s prosperity. Investing in people, products and services also plays a significant role in performance and morale.

Co-Founding is a Serious Commitment: Saying goodbye

Four startup veterans share what they’ve learned as entrepreneurs including how to maintain control among co-founders, vetting potential investors and takeaways for breaking up a partnership.
Edit ModuleShow Tags
Edit Module


 

Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags