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8 Stages of a Venture Capital Fundraising Process

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Venture capital finance can be nuanced in ways that other forms of business financing aren’t.

These distinctions affect areas like funding structures, the amount of input into the company’s strategy by investors and even if the idea of mentoring is in place.

The funding, though certainly the most significant element but it is only one of the factors for entrepreneurs when making their choice between VC investors.

So let’s explore the ways to get venture capital funding.

1. Making sure that venture capital is ready

At the beginning of your VC funding process a great rule to keep in mind is the classic Steve Martin line:

“be so great that they won’t even notice”be so great that people can’t overlook.”

Another way to say – ensure that the business is commercially viable, ready and, ideally, scalable before contacting VC investors or seeking to raise capital for startup.

When we say “ready”, we refer to the fact that you must possess a minimum acceptable product (MVP). Your sales up to now should have a trend that’s hard for investment analysts to overlook.

If you’re involved in an online subscriptions company make sure you reduce your churn.

Whatever you do, be sure to remember this rule of thumb.

To support your business’s efforts to be ready keep in contact with as numerous VC funders as you can. Participate in events and workshops.

At this point it is important to not be influenced by the need to raise funds and should instead become part of the ecosystem of startups.

They might send you fascinating information, introduce you to appropriate contacts, or notify you of changes within your particular business – such as competition funding – which may have gone by.

Most importantly, keeping your business’s name on top of the minds of investors is a plan which will pay dividends in the future.
What is a minimum-viable product?

Minimum viable products (often known MVP, its initials’) with just enough features to communicate the core feature of the product to potential customers.

The purpose of this MVP is to introduce the product to market and then to test it with the first users and allow them to experience the benefits of it and give feedback to later versions.

An example of an MVP could be a money transfer service that offers three transfers (say US dollars, Euro along with Mexican Pesos). An even wider selection of currencies could be offered when the MVP is released.

2. Spreading the word

If your business has an MVP that’s generated positive feedback, then you’ve met the majority or all of the objectives you set at the start the journey (such as revenue and customer churn, hiring etc.) and your cash balance is out, it’s the time to start the process of venture capital fundraising with a bang.

First, you must get in touch the investors you must have kept in contact with.

Inform them that you’re in the middle of the fundraising process, and if they have anyone on the marketplace, and they include them they may be interested.

They’ll almost certainly inquire about your sales numbers and request the deck of pitches even if they’re just passingly interested, which brings us to step 3.

3. Designing the pitch deck

The first thing you should know concerning pitch decks would be that you can find many pitch decks from reputable firms that have raised millions easily available on the internet.

One quick Google search will take you to the decks of pitches utilized by companies like Uber, Airbnb, WeWork and many more.

Whatever the virtues of these businesses the pitch decks they used helped the company to get funding, and that’s the aim of any founder of a startup. Keep in mind that you don’t have to create a new idea with pitch decks.

The medium should not be the focus. The focus should be on communicating clearly what your business does. If your company can address the issue better than other companies then your pitch deck must describe what you do and how.

4. Making the right choice of the right investors

It is important to be more selective when it comes to analyzing the market, instead of using an approach of scatterguns.

Find VC companies operating within your field or have invested in companies like yours. Do not send out boring emails.

Create personal emails to each company in which you explain (briefly) your reasons for why your business is a good match for their funding.

The most effective ways to locate the investors you need is to visit sites such as TechCrunch, AngelList, Crunchbase as well as LinkedIn.

The majority of people will request an introduction deck after having presented your first pitch So make sure it’s prepared prior to this phase of the procedure.

A quick note about the sharing of pitch decks

If you are able to speak to many venture capital firms Your pitch deck will change quickly from here on out.

Certain slides will be altered while others disappear and new slides will be added when feedback from investors is considered.

In the end, you’re likely to be left with a variety of variations of this document and most likely, several versions of your financial model too.

This is the place where a virtual room can be of great help making sure that your data is well-organized and controlled.

A well-designed data storage space will also enable you to track the drafts you have created and what investors have seen each draft and adds benefit to your process.

5. Early stage Meetings

The early stage meetings are generally like job interviews, which the majority of people are familiar with.

There will be questions to ask about your personal background and the background of your colleagues, the reasons you chose the business you chose to join and where you’d like to be in five years’ time, etc.

Don’t be discouraged if the initial meetings are conducted by someone other than a VC analyst or an associate.

Usually, the partners do not join until later in this process (see further below). Take advantage of this chance to ask questions to the venture capitalist and.

Ask them what they’d change on the deck, and also where they see the obstacles and opportunities.

6. Late stage Meetings

Similar to the standard job interview the next step will involve all or one members from the VC firm.

There are multiple meetings, and you’re likely to be asked questions about each aspect of the business as well as its environment. This is the primary point where you will be able to share your expectations and hopes are.

Be honest about areas in which you’d need assistance in terms of technology or getting the company to scale, for instance.

Take note of what your partners are telling you about them and how well you get along with them. They’re likely to be a part of your company It’s vital that you feel at ease with them.

7. Sheet of terms

If the meeting with the other partners was successful then the next step is to get an agreement sheet.

The name suggests it,”term sheets” are piece of paper that defines the conditions of the venture capital company’s investment: their assessment of your business as well as what equity share they’re buying in the course of their investment, the finer points of these conditions (for instance, additional payments that are contingent upon the growth of your business) and the rights and obligations of each party to the deal beyond the simple financing.

They tend to be short and rarely less than three or two pages. If both parties to the agreement have been signed, all that is left to complete is the post-term sheet of due diligence.

8. Post-Term Sheet Due due diligence and closing

Because startups are generally smaller and less complicated than those that are involved in private equity so due diligence procedures are easier for them.

If you were truthful when dealing in dealings with VC business, this step will be nothing more than an officiality that is typically concluded in just a few weeks.

The VC firm has brought in their tech experts accountants, lawyers and lawyers to make sure everything is in order and that the closing process can begin.

To close the deal to occur, the VC company and the firm must sign a more extensive document with greater detail than the one in the terms sheet. It is basically stamping the investment with rubber and closing your fundraising procedure.


Despite its image as an unruly industry in which technology enthusiasts throw money at great ideas in between Ping-Pong games the venture capital sector is now a well-organized and even a part of the investment business.

Startup founders must adopt a logical strategy.

Create a strategy for the time and date you plan to conduct your fundraising to increase your chances of obtaining the capital it requires.