The VC world is small and connected, whereas the Angel space is highly fragmented, thus limiting your reach and the level of unbiased impact you can have. Getting turned down by 10 angels leaves you with at least 1000 more, however things function differently within the VC community which is small and connected. This means you have to play your cards right. Listed below are the key takeaways:
In our previous blog we addressed the concept of pitching alongside an Angel Investor and how that affects your fundraise. It is in fact one of the most trusted approaches in start-up marketing, where in you have your customers advocate your brand. Can the same approach bring similar results when an Angel Investor advocates your startup and pitches with you to other Investors? The answer is, Yes! It can fast-track your funding round, build trust and do wonders. And that is why it is the key agenda of LetsIgnite, India’s biggest Angel conference.
There has never been a better time to be an entrepreneur. The number of seed-funded companies have skyrocketed over the last four years. Over $4 billion has been invested in seed stage companies. Funding platforms like Letsventure are growing in popularity. What does this mean for growth stage startups? Ironically, this mad rush is unintentionally creating a Series A Crunch.
Thus, It is important for founders to understand the difference between raising a Seed/Angel round and being a Growth-Stage ready startup.
So what are the differences between the Seed Round and Growth Stage ready startups?
- The VC world is small and connected, whereas the Angel space is highly fragmented, thus limiting your reach and the level of unbiased impact you can have. Getting turned down by 10 angels leaves you with at least 1000 more, however things function differently within the VC community which is small and connected. This means you have to play your cards right. Listed below are the key takeaways:
- Start planning for your Series A fundraising process after you've hit major milestones. Starting your fundraise too early on during growth stage can be very risky.
- Be rational about the size of the round you want to raise. It's always easier to increase a round than to shrink it, so let the market determine the increase .
- Consider raising a Bridge round as a growth stage startup before raising the Series A, so as to ensure you have the right metrics in place.
- Take your time during your seed round to choose the right investors who will help you raise the next round.
- Higher professionalism and return focussed : While some angels may be doing it on the side or to “give back” to the community, the VCs are more focused and are doing this for a living. Their goal is to make money for their LPs, and they have been through this many many times.
Be thorough with your numbers and value proposition. Give yourself enough time in the market to get the volume of data you need, and figure out what is most compelling to share with prospective investors.
- The terms are more complex. If you raised a convertible note, you had a 3-5 page document that you negotiated. Venture rounds such as Series A are almost always equity rounds, and you will get into all sorts of issues that will really matter in the long run for the company including board structure and governance. Understand these terms or get an advisor who does.
Here’s how we at LetsVenture can help you - a growth stage startup - the best opportunity to meet the best from the ecosystem before you initiate your fundraise:
Growth stage startups are being given the opportunity to apply for LetsIgnite following which the applications will undergo a curation process based on the following criterias
- Readiness for Series A fundraising (Startups who have raised funding or bootstrapped startups with an established PoC and revenue model to apply)
- Sector
- Large addressable market
- Proven execution capability
- Good growth since last fundraise
- Financial feasibility and business model
Selected startups will then be invited to attend Letsignite 2016 where they will be given the chance to have face to face meetings with all the top VC’s. Last year saw VCs like Sequoia, IDG, Accel Partners, NVP etc
Only few companies with a stellar product, good traction and established product market-fit will make it to LetsIgnite this year. So, make sure you send in your nominations soon. Although that’s not all; Apart from giving you the chance to meet the network with these VCs we also have, a workshop that will focus on the milestones one comes across while transitioning from being a seed stage startup to a growth stage startup;
- Branding
- Financial Models
- Growth
- Culture
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