* This blog post is based on Natan Chosnek’s presentation at the Alternative Finance Conference on March 4, 2013.
In the first two parts of “The road to Round A” we talked about the difficulties in transitioning from the pre-seed period in a start-up life, i.e., “the age of innocence”, to post-seed and preparing for round A series – when “reality bites”. We also discussed the common pitfalls start-ups face when preparing for Round A.
We are now going to share our top 10 tips for overcoming these pitfalls, beating the odds, and succeeding in raising Round A funding. So here they are:
1. Keep your priorities straight: Your top priority after your first round is your second round. Ask yourself – what should I achieve right now in order to be successful in second round?
2. Involve your investors: Remember that your investors care about you meeting your goals as much as you do – so keep them involved. Investors should know about your success and your failures.
3. Be realistic, even pessimistic: Plan attainable milestones – ones that you can actually meet. Don’t try to impress anyone.
4. Be flexible: Be ready to change your goal and even your next milestones if needed. Remember that there are many more ways to miss a goal than to reach it.
5. Focus on the next “baby step”: Use your strategic plan as a guideline only – while focusing on your next milestone – the “baby step”. That’s where you’re going to be evaluated.
6. MVP and go: Create a minimum viable product with value – don’t become a product-centric organization. Your product probably has many features, stick to the ones that help you reach initial sales.
7. Look outside: Invest time in your viability within your ecosystem: Clients, partners and investors. Don’t get stuck in your office, look what’s happening outside. It will help you figure out where you should be heading.
8. Always work on your pitch: Don’t ever think your pitch is perfect – get at least one feedback a week on your pitch, and constantly improve work on improving it.
9. VCs are just like customers: Study the VCs you are interested in for your second round early on. Raising funds is like sales, you should get to know your potential customers.
10. Product marketing is key: Think product marketing and not just strategic marketing. Make sure your product is your best marketing tool.
“This is the coolest time in a start-up life! You can do anything! You can change direction, and everything is open. The market looks huge, the potential looks infinite”, says Benzi Ronen, CEO of Farmigo, about the post-seed period. It helps to remind yourself about this, as you make your own mistakes. And good luck!