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- ♞ 3 Key Factors in a Pre-Seed/Seed Raise
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3 Key Factors in a Pre-Seed/Seed Raise
Often, when fundraising, it can feel like VCs are grading you using some criteria that you aren’t aware of. The reality is that they are.
There are loads of things that investors are looking for that most people never talk about. Unless you actually work with VCs, study them and analyze their investments, you won’t be able to articulate this criterion.
Today I will pull back the curtain and discuss three key factors that all VCs look for in a pre-seed/seed raise.
Cold Email Setup Offer
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Personal Commitment - When I started my first company, my CTO had numerous startups in the past two years. He’d spoken to most people in the local entrepreneurial community about at least 2/3 different ideas in the last year. Because of this, he had a reputation as someone who couldn’t commit to a single idea or startup. This made raising very difficult. The reality is that investors are looking at the founders' commitment. They want to see that you are working on this idea and fully commited to the venture. If you are still working a job or going to school, they will get concerned about why you won’t commit, and they, in turn, won’t commit their money.
Unique Insight - When we talk about building an MVP, the purpose of that MVP is to prove that your unique insight is correct. What is your unique insight? It’s what you believe that none of the incumbents in your industry do. For Netflix, it was that people would rather be limited in the amount of DVDs they could checkout than to have to pay late fees. Instead of unlimited DVDs with late fees at Blockbuster, they got three DVDs with no late fees from Netflix. For Uber, it's that people would rather book a cab on their phone than have to call someone. Their MVP was just an app where you’d order a cab, and the founders would call it for you. Investors need to understand what unique insight you have into your industry and they need to be convinced of it.
Work Ethic - Investors need to see how far you’ve come from the idea to where you are today. They need to know that you are willing to put in the work and to do effectively. Lots of VCs refer to this as velocity; how quickly you will make changes, integrate your product and move forward? In reality, this is all a result of their belief in your work ethic. A lack of skills can be overcome. A lack of work ethic cannot.
Do you deliver on these three key factors? |
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Are you looking to grow your business? Here is how I can help:
📱 Book a Strategy Call to get 1:1 feedback on your pitch, pitch deck and/or fundraising strategy. (If you need general startup advice, then reply to this email, and I’ll let you know if/how I can help.)
Onwards and Upwards,
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