How To Raise A Startup Seed Round in 2023. Part 1.
- Aaron Bai
- Feb 12, 2023
- 3 min read
Updated: Feb 12, 2023
What you need to prepare for your seed round. Written by a seed stage founder — Aaron Bai.
Introduction
I'm Aaron Bai. At 17 years old, I raised a $6.2M seed round from LightShed Ventures, Eniac Ventures, Global Founders Capital, Montage Ventures, Soma Capital and angel investors for my fintech startup. I'm still building Affiniti here in NYC, so I'm not qualified to give advice on a big exit or scaling a unicorn. But, I've been asked for tips on raising a seed round many times.
So, I am creating a 7 part blog + video + podcast series on how to raise a seed round. If you'd like to follow along, it'll be posted on these sites:
Blog: Medium & Personal Site (back-up)
Video: YouTube & TikTok
Podcast: Soundcloud
Agenda
One of the most common scenarios I see is a person having a brilliant idea but not being able to raise enough money to fund it. A lot of times, it's because they don't know what they need to start the process. If that's you, part 1 of this series is meant for you!
If you already know the basics, then feel free to click into any of the other parts in the Agenda to learn about what is the most impactful for your scenario.
What you need to prepare
Here are the 10 things you should prepare for your seed round. There are exceptions to some of these items based on your specific scenario. Disclaimer, this is my advice for US-based companies because that's where my experience is.
Business entity and bank account Rule of thumb: form a Delaware C corp. This is what the lawyers that you'll hire and what VCs hire will be the most familiar with — so it saves everyone time and money (lawyer bills are high!). I'll dive into this in more detail in part 2.
Pitch deck Nothing fancy. Do not hire a designer. More on this in part 3.
Data room Put your corporation documents, employee contracts, stock agreements, pitch deck, customer testimonials, patents, and KPIs into a dropbox folder. If investors are interested after your first few meetings, this data room should be all they need to conduct thorough due diligence to make sure that you're legit (real company, real employees, real metrics, etc.).
Blurb about your company 2 sentences that summarize why someone should invest. You're going to need this to preface any warm VC introductions, cold emails, cold DMs, and more. No one wants to read your pitch deck before even meeting you — but they will read a small blurb.
"Expert" in the industry This can be you or a mentor. But it needs to answer why I should trust your team. If you're not a "thought leader" in your industry, inviting one to join your advisory just for the "trust factor" will be very valuable. It's a simple human psychology trick. If an expert believes in it, why shouldn't I?
Product traction / proof-of-concept Give investors a hint on if this product will work. More in part 4.
A "way in" to talk to investors This one needs a lot of thought. More on this in part 5.
A financial plan How much do you need to raise? Will it last? More in part 7.
Contact
I'd love to brainstorm your seed round with you!
Comentarios