By Nathan Beckord
Jennifer Smith needed to raise the seed round for her tech company Scribe. But she didn’t have two months to step away from her cofounder duties to do it—so she did it in under two weeks.
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Having raised a pre-seed round to get Scribe’s MVP up and running, Jennifer targeted $8 million to get the company to the next level. Then, she did her homework and hit the ground running.
Jennifer walked me through her lightning-fast two-week fundraise and how you can replicate those steps to fund your own startup.
The search criteria for investors
When she set out to fundraise, Jennifer had three guiding principles. And first, she wanted her investor to do no harm.
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“You might smile and laugh at that as being a low bar, but I have seen a lot of investors do a lot of frickin’ harm to companies,” Jennifer says. The biggest harm to look out for? VCs that invest in your first round but won’t do a second round. This creates a signaling risk for future potential investors.
Her next criterion was that the investor had to be someone she wanted to work with for the long haul. Investor relationships are something like marriages, and it’s best to avoid getting married to someone you don’t even like.
Finally, Jennifer wanted Scribe’s seed investors to have connections or expertise in areas relevant to the company. Investors can help round out a founder’s skill set and network.
5 steps to raising $8 million
Jennifer had prior experience in the venture world, so she’d seen the gamut of deals. While two-week raises were relatively unheard of prior to the pandemic, the market’s heat made many funding projects happen quickly. She took advantage of that market shift and declared that she’d be doing a two-week raise. Not all investors were game for that.
“It was just about being transparent,” she admits. “Two weeks is really aggressive. That might not be enough time for some.” But Jennifer keeps in touch with those who couldn’t invest within such a short timeline. They might be a good fit for future rounds.
So how did she get investors to commit $8 million in two weeks? With plenty of preparation and homework.
1. Make a shortlist
First, Jennifer made a list of possible investors. She tapped fellow business owners and friends in the industry to get their takes on which investors might be receptive to her pitch.
Another thing to consider: the industries each VC invests in regularly. Stick to the ones that align with what you do.
How many investors should be on your shortlist? Jennifer says she’s seen up to 200, which is too high. But five to 10 is too low. She recommends increasing such a list by 30% to 50%. She had 15 initial meetings to raise Scribe’s seed round.
2. Get warm intros
Sometimes, you don’t have much choice but to cold call a VC. Ideally, Jennifer recommends having someone introduce you. Lean on your network to help you with this.
3. Set up your meetings well in advance
You might want your raise to take place over two weeks, but VCs tend to schedule meetings with more lead time. If you have a target date to start your raise, reach out to put meetings on the calendar at least a month in advance.
4. Have your data ready to go
Due diligence is a necessary part of the fundraising process, but it can be time-consuming. Save time and deliberation by keeping anything a VC might need ready to send. This also includes preparing customers who are willing to give testimonials or talk to investors.
5. Sequencing is everything
Batching is a popular concept in productivity, and it works like a charm for fundraising.
“You want to be batching meetings together so they’re all on a similar cadence,” Jennifer explains. “Have all of your first conversations on Monday through Wednesday the first week. Then you can start doing second and third conversations toward the end of the week. You want to be gearing up for partner meetings the following Monday,” she explains.
All of these factors put together allowed her to close Scribe’s round in just nine business days.
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The surprise Series A
After the whirlwind seed round, Jennifer wasn’t quite looking for a Series A yet. For one, it was only six months after her seed round closed. And the other part? She was eight months pregnant.
“We were not planning to raise, but we had an opportunistic conversation. My thought was, Is this a good time for me to be raising? I’m about to have my first baby. And I’d never seen a pregnant founder before. I’ve been around VCs who literally can’t say the word pregnancy because it makes them uncomfortable,” she says.
It all worked out, however. By being open to an unplanned Series A, Scribe’s total raise shot up to $30 million and allowed the company to expedite its growth.
Drop the theatrics
Jennifer has some good advice for presenting to VCs: Don’t think of it as a performance. Investors see multiple pitches per day, all of which are well-rehearsed and polished. Although it’s best to put a professional foot forward when pitching your company, it’s also good to connect with the people in the room.
Think about it: VCs have been on the inside of many businesses as they weathered various storms. Who better to help you solve some of your roadblocks?
If, as an investor, “you’re sitting through five pitches a day, and … everyone [is] trying to impress you every time, that’s really boring,” Jennifer points out. “But if you get a founder who comes in asking for help with a problem, it’s probably more interesting for you.”
Get vulnerable about the challenges your company faces. Chances are an investor will have an idea that sparks a creative new solution.
Article is based on an interview between Nathan Beckord and Jennifer Smith on an episode of the How I Raised It podcast.
About the Author
Nathan Beckord is the CEO of Foundersuite.com, which makes software for raising capital. Foundersuite has helped entrepreneurs raise over $9.7 billion in seed and venture capital since 2016.
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