Insights into the Startup Fundraising Process
Learnings from Equal Ventures' Chelsea Zhang (Investor) and DayZero's Michelle Liao (Founder)
Last week we got a rare look into the startup fundraising process when we interviewed Equal Ventures' Chelsea Zhang and one of their portfolio company founders, Michelle Liao (Co-Founder, DayZero). These are all of the key insights from that conversation
When you’re starting to fundraise
Assign one founder to lead the process - Designating one founder to spearhead the process not only ensures a cohesive narrative and pitch but also effectively divides the demanding tasks of running the company and securing funds.
Do your research - Tap into your network to glean insights from those who have raised money before. You can learn a lot from their experience. Thoroughly research potential VC funds to pitch, find the ones that are aligned with the vision and stage of your company. Don’t waste your time reaching out to investors that invest outside of your scope.
Gaining momentum
VCs move fast - VCs often operate with a clear investment thesis, having extensively researched the sectors they specialize in. As a result, they have a precise idea of what they're seeking and can swiftly recognize it. For example, before Chelsea came across DayZero - she had already seen 40+ variations of the same model. When VCs identify an opportunity that aligns with their criteria, they move fast. The investment process between Equal Ventures and DayZero took ~2 weeks.
Gaining momentum during the process is important - Its important to end your VC conversations around the same time so you can round up all interested investors. Generating momentum involves prompting VCs to take action, which might entail instilling a sense of urgency or fostering a bit of FOMO to encourage swift decision-making.
Closing the deal
Be ready to negotiate quickly - Understanding which deal terms are important to you you as a Founder is crucial to research in advance. The process can unfold rapidly, making it overwhelming to decipher your priorities afterward.
Dealing with rejection - Receiving a "no" from an investor doesn't invalidate your startup. Investors operate based on specific investment criteria, so it's important not to take rejection personally. There’s an investor out there that is probably a better fit; the key is to keep searching until you find them.
More insights in the full conversation below:
Great event this week Andrew, thank you! Me & my business partner Ilan Slasky would love to seat down & discuss opportunities in the Israeli Start -up world in NYC. My cell/What's up 914-318-8368. e mail badbaruch@gmail.com Respectfully Baruch Deutsch