118. Going from Seed to Series A, Money is a Tool

VC Minute
Money is a tool, and you should use it as an accelerant for an opportunity that you've identified.

VC Minute – quick advice to help startup founders fundraise better.

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Josh Sanchez

Money is a tool, and you should use it as an accelerant for an opportunity that you’ve identified. That tool, the capital, should be used to grow the opportunity.

I thought fundraising was going to be easy because we were growing really fast. What I realized is that when you go to institutional investors, they’re making a bet on the vision. What is it that you’re going to build?  Not that growth isn’t important or anything, but they want to know what the business looks like five years from now or 10 years from now.  You want to tell that story.  

I was not doing a good job of that, you know, when it came to the Series A investors. 

If you’re a seed founder, you just closed your seed raise, and you know that you’ll likely need the Series A, so you should always be working towards that next fundraise. 

The first piece of advice is to think of fundraising as a tool. See money as a tool to help capitalize on an opportunity and to help solve some of the challenges that might come with that opportunity. The capital that’s going to help accelerate the business further 

The second piece of advice is to always be working towards that next fundraiser, although you may not need it. Once you close your seed round, have conversations with parties you think might be a part of it.

There’s going to be advice that there’s no need to do that if you just closed a fundraiser. It’s not that you’re saying that you’re fundraising; you’re building relationships. And you’re building relationships so that when you’re ready to fundraise and you’re communicating that month-over-month progress, people see the growth that’s happening. And it makes it much easier to, you know, write a check as opposed to a new opportunity where you know nothing about the company and you’re just now starting that dating process. 

If I were to summarize everything I shared, it’s: don’t stop fundraising after you close the seed round. And that means continuing those relationships, even for those who may have said it was too early of an opportunity for their fund. Now’s the time to pick up that conversation and say that you just closed the fundraise, you’re continuing to grow, and you’d like for them to be a part of your update. 

So I think, in the end, continuing the fundraising doesn’t always mean you’re asking for money. 

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