- When you're raising money from VCs, it's really important to know the stage that you're at as a company and know the stage that your investor typically invests in. Now there are some investors whose firms invest in multiple stages, but that's usually not the norm. Most firms typically have a stage of company that they're focused on. So if you're raising an early stage financing, a seed round of a million dollars, and you're talking to a partner at a firm that is a firm that has a billion dollar fund that they're investing.
Unless they have a specific seed program, you're probably not the right fit for them, and they're not going to be very responsive to you. The flip is true as well. If you're doing a late stage financing, and you're doing a series D financing for $50 million, spending a lot of time with seed investors is probably a complete waste of your time. Recognize that while firms do invest across different stages, a lot of times even within those firms, you have different partners that are investing at different stages. So do your research and make sure you understand who you're targeting, not just in the context of a firm, but in the context of the individual investors within the firm.
Last part of this is recognize who the decision makers in the firm really are. In a very small firm of two or three partners, probably all three of those partners are decision makers. In a firm that has 50 people in it, there's going to be a lot of people in the firm who actually can't make a decision on a deal. And just because you have an associate who's willing to spend a lot of time on the phone with you and actually meet with you, it doesn't mean that any of the decision makers or partners in the firm may even know about your company. So recognize that when you're out raising money, it's your responsibility to really know who you're engaging with and whether they're the right fit for you, whether it's the stage or the person within the firm.
- Exploring potential stakeholders: friends, family, and more
- Finding a venture capital firm
- Breaking down the term sheet
- Taking on debt
- Asking for NDAs
- Accepting a no