hunting cloud network (note: if A tale of two cities body is used to describe contemporary that is “this is the most easy to obtain seed financing era, is also the hardest times to get A round of funding.” But a hero is known in the time of misfortune, wise and farsighted entrepreneurs still can make such times in their place. This article will teach you how to take on seed money, rushing through A round of funding. In this paper, the author is First Round VCS, co-founder of Josh Kopelman.
at the beginning of my fathers, copy a friend gave me a book called “scraping knees, a blessing in disguise” in the book. The book is filled with different philosophy. Most of the young parents all hope that children grow up healthy and happy, they take care of children, as they sweep growth obstacles, far away from the pain and unhappiness. The author of the book, however, opposes excessive protection of children, she thought the courage and perseverance are indispensable to life skills, from learning how to overcome difficulties, such as knee bruise) is very necessary. Only in this way can people in later life of calm in the face of the inevitable setbacks.
today maybe is the best period of entrepreneurship. The number of companies to obtain seed financing has quadrupled in the past four years. And more than 200 “breeze” company in the near future the early stages of the investment of more than $4 billion. AngelList and FundersClub is becoming more and more popular. All this for entrepreneurs to provide a good start to the environment. Previously, to obtain seed money usually takes a few weeks or months, but now days have been obtained by examples. Business incubators and accelerator launched a large number of companies – many of them in a few hours after the presentations get the risk investment agreement.
however, ironically, it seems to me at this stage the tide “seed money” had inadvertently adding A round of austerity. A surge of seed money made many entrepreneurs on A round blind self-confidence. As the chairman of the board of the Y Combinator Sam Altman in a tweet recently said: “today’s seed money more and more readily available, this let entrepreneurs optimistic to think that as long as oneself, can obtain financing at any time in the future.”
available seed round
our recent partner is a talented young entrepreneurial teams, they won the seed financing effortlessly. They can choose investors (very grateful to selected by them, and won the double raised. Plain sailing for A round of funding set aside for six months of preparation time, during this period, they gradually realize the reality. In formal financing, they found their ideas like bubble light, spend A few months time to prepare for A round of funding is clunky. Their CEO said: “we finished the seed funding, inexorable then began A round of funding and review all aspects of the data. But it’s like as disconnect from primary school and dived into the university.”
no matter in the First Round of the community inside or outside, there are many entrepreneurs and startups have a similar experience. So I guess in the whole industry, seed money gives them the startup at an all-time high is very difficult to understand the status of A round of funding. You use the concept of “austerity” to describe this phenomenon, but there is no doubt that it will be to cause significant damage to the company’s long-term development. In my opinion, only the thoughtful, don’t let the seed money to head to avoid being affected by this trend.
in my career, at this stage of the high amount of seed money and get the difficulty of low are unprecedented. Ironically, however, this has increased the difficulty of the follow-up work. Seed financing success make people (especially young, first venture entrepreneurs) look down upon the hardship of the entrepreneurial process, so the natural will raise the expectations of A round of funding. But the reality is not reduced the difficulty of A round of funding, amount and no gains. Compared with five years ago, the situation is like the number of companies with your seed money into four times, that is the same pen A round candidates into four times, naturally, difficulty is also fully into four times.
many entrepreneurs and I talked to them A round of funding, many of them are said for the difficulty of the risk investment agreement, prepare the time needed for financing and the complexity of the talks are far beyond the expected. One of the CEO, said: “for seed money, you only need to display their own ideas and thoughts; But need to show you A round of funding all kinds of actual data. We specializes in data team, don’t understand the LTV and CAC, more can’t answer the question of scale economics. Just like in the interrogation of accept a your unprepared.”
the cause of this result is one of the founders don’t know the real interests of investors. Inexperienced entrepreneurs in many venture capitalists of e-mails and telephone notification, it thinks his own financing process begins immediately, cannot be delayed. Instead it hasty preparation was very dangerous. Risk investors tend to hire more people go to and promising start-ups, but does not give commitment. They hope that entrepreneurs will inform yourself before formal financing, in this way they can to stay at startup and congratulations to all the candidate list. But some entrepreneurs are misunderstood this behavior, blind optimism to see they have no risk really interests of investors.
A round investors usually before did not formally start investment negotiations, with the possible startup, making their own investment situation better. They are eager to in early talks, so frequently send mail to entrepreneurs. When inexperienced entrepreneurs to see their full mailbox, popular new will think oneself, then hastily began to prepare for financing, but don’t know this is just the means of risk investors to pursue their own interests.
haste to finance the real danger is that your company does not meet development turning point, financing strategy is also imperfect. After harvest seed money, every startup companies should understand their own development, income, the turning point of the required etc., to increase their competitiveness in A round of funding (customer acceptance, marketing, and index of income, employment, etc). Achieve these especially the importance of the development turning point at this stage, because of seed capital in the series A investors have more choice.
entrepreneurs forget early financing risks
start-ups and venture capital companies once talks too much, will be admitted as “selling trade”. Startup information flows between the group quickly. Success often financing process is rigorous, like tactical tasks. The superiority of the rigor of information is the entrepreneur. If the risk investors know there have been 20 peer refused a company, then he will have a negative impression of the company. Like a hotel has been criticised 20 of your friends, there will be attractive to you?
of course, there are also some risks investors without the herd mentality, but the investors are likely to make your initial working capital shortage. This does not mean that cannot ascend, future financing only exacerbate the challenges faced by you. Once the transaction into selling, you have to find another company in 9 to 12 months before the harder to prove to investors that their execution.
startups are difficult to secondary review
another trend now is some startup of seed capital only A few months later began to constantly improve the estimated amount of A round of funding. The amount of investment is a basis, a $15 million investment need to get out is more than the $5 million investment in 3 times of faith, these beliefs naturally from the strength of the startup. These fledgling startups are eager to get $15 million in financing phenomenon can be attributed to two reasons.
on the other hand, some entrepreneurs see case in point is. If an entrepreneur to see their friends get A large sum of A round of funding, and look at some of the articles of science and technology on A round of funding, will think you also can do it. Of course is possible, but the probability.
on the other hand, many investors late advice on early-stage entrepreneurs may be misleading. They suggest that entrepreneurs in Sand Hill Road talks for the first time requires a large amount of financing, if investors do not blink, that means your goal is feasible. However this is not the case.
I’m advice: add funds shrink is much simpler than.
I have seen the success of the issuer are good at waiting for financing – clearly, waiting for your company to develop a turning point. And formal financing, they lower target is put forward. Because you can’t first lion big openings scared venture investors, say: “I said I ready to raise $15 million m last month, but after I and many investors will have a face, I decided to target fell to $6 million.” Investors clearly implied meaning of this sentence, it will put you and your company in disadvantage. If put another way: “I hope to get $600 to $600, but from the perspective we give the benefits of investors, won the 12 million m should not be a problem.” The effect is much better.
I know the story of A round of failure, the reasons are premature entrepreneurial finance, and demanding. This phenomenon has spread to the whole industry, but entrepreneurs just to recognize their own problems.
entrepreneurs greatly underestimated the risk of A round
so entrepreneurs do?
today’s trend is a double-edged sword, see you how to seize the moment. Smart startup as possible before you step into A round of funding to enhance their own strength.
, for example, some entrepreneurs are working with me using seed capital to get more early financing, to strive for more time and resources to achieve the development of the company a turning point. If you are an outstanding entrepreneur, do our utmost to absorb resources.
seeds is also A good chance to improve their financing stage, so as to bring up in A round of funding more persuasive data. I often say that digital screw up A good thing, but this is the status quo of A round of funding.
entrepreneurs need to collect data to prove his appeal, development situation and the potential, and thus the financing basis. In that case, why not set aside the original $1.5 million in financing plan, bold raised $2.5 million in seed, to further improve yourself? A round of preparation time is best for 18 to 24 months. Because the best time for follow up capital is the capital you have plenty of time, two years can greatly improve the success rate of financing.
on today’s environment of seed money not limited to, the benefits of investors in selecting seeds, startup option has increased. Entrepreneurs can deliberate to choose one of the investors.
I suggest entrepreneurs meticulous investigation, find out which company or investors have affinity to help startups succeed. Because investors are also good and evil people mixed up, and both the super angels, also has not “super” or “angel” investor.
for startups, and choose more vc cooperation “financing” cooperation, not can choose A personal help, introduce yourself to others, help yourself to find talents, provide feedback in A round of funding, even for others to help their own investors will be more conducive to their own development. Be sure to choose will actually help you seed investors. After all, a company is difficult to use the services of $250000 to $25 million class.
once get the financing, entrepreneurs will need detailed plan for the future. However, many startups rather fail in terms of program funds. You must be clear to show investors in A round of funding company which aspects of development, and the relevant evidence. If the evidence is not only caused valuations leap of the key factors, but also can reduce the risk of your idea. Than the value of outstanding talent in budget as well as the Bay Area now house prices more difficult.
far easier than you think to spend $1 million
when you have a marketable products, have the opportunity to establish a large company, be sure to keep the fever rate of money.
many companies plan said: “our cash operating 12 months, so just listed in 11 months.” It is not a good idea.
if you spend on products to build 11 months, even if you can get listed (almost impossible), will be before they realize the importance of market data out of ammunition. So you can’t rely on A successful commodity increase their success rate of A round of funding, also is unable to contribute to A successful listing of wins the favor of customers.
how is the result of product, would be shown in the next few months. If you have an e-commerce company, and the annual Christmas is 40% of your income. In that case, you will of course try to cut back on spending to hang for Christmas, refinancing operations to February, rather than spend money in November.
these important company development turning point is to change every year, so you must be aware of how the current financing conditions. In the hardware business A year ago, for example, the $1 million on the Kickstarter booking amount plus good product idea is enough for A round of funding. But now, investors demand to booking amount to millions, you also need to have actual (or functional) in the production of products, but also give full consideration to bringing it to market risk.
in terms of time, it is important to remember that success in the financing process will take 4 to 8 weeks. Combined with the preparation and follow-up time, tend to spend a few months time. When you make schedule and developing evidence to obey this cycle. Will arrange too compact but very dangerous tasks.
data, of course, the success of the financing plan alone is not enough, after a lot of perfect polishing can achieve the desired effect. This is indeed a chore, but you must clear, financing process do or die. But the reality is that many entrepreneurs on the weekly payroll cost more time than the financing plan. nullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnull