How to Raise VC Funding

In this episode we answer questions about raising money from Venture Capital funds. Many startup companies seek VC funding, but it can be a complex process if you haven't done it before. We are here to help! In this episode we answer questions including:

• Is a SAFE or priced equity round better?
• What's the recommended amount to raise at every stage?
• How do I meet investors to pitch?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: Is a SAFE or priced equity round better?

There is no right answer that you can apply to every situation. A SAFE is often faster, less complex, and maintains more control for the founders. Because of their simplicity and the flexibility they offer to an unproven startup, SAFEs are a frequent choice for an early-stage startup that is still figuring out much of its business.

However, there are plenty of situations where a priced round makes sense. A priced round can provide more clarity about ownership and the present valuation of the company. However, this clarity adds complexity to the process. In addition to needing to negotiate with more precision about the valuation and ownership, a priced round usually involves a board seat for an investor. Thus, you are forcing your company to grow up a lot right now with a priced round.

Q2: What's the recommended amount to raise at every stage?

Consider raising as little as possible – enough to get to your next milestone so you can raise the next round. Capital is expensive!

While the round size can vary widely from one startup to the next, these are more common amounts that startups raise at key stages:

• Pre-seed - $250-$750k
• Seed - $1-3M
• Series A - $5-10M
• Series B - $15-25M
• Series C - Anything can happen

How do you which stage you are at today? It’s hard to know with complete confidence until you go out and raise!

Q3:  How do I meet investors to pitch?

Volume is key when it comes to a successful fundraise. The following avenues are great channels for meeting investors:

• Warm intros from other entrepreneurs is the golden ticket.
• With high quality emails, cold outreach can generate a ~30% response rate.
• Conferences and events.
• Press.
• Customer referrals causing inbound.

Make it easy for people in your network to make warm intros: send an email blurb that they can easily copy and paste. And of course, consistently reach new milestones for your business – don’t forget that part of the equation!