How We Raised a $7 Million Series A from Foundry Group — our Top Choice VC

A seven step playbook to maximize your chance at fundraising success.

Fundraising is hard. Any founder who’s been through it before understands this inherently. And it’s probably a good thing that it’s so hard. Fundraising serves to toughen up entrepreneurs and subject them to the cold hard realities of the ‘market’, and at the same time, if done properly, fundraising can also be an incredible learning experience that helps founders and their companies focus on the most important things - by simply going through the process, and also by anticipating the process in advance and reverse-engineering what the company needs to achieve to be successful with an upcoming raise.

Ultimately, fundraising success requires:

fundraising execution + a compelling story/vision + evidence of traction + sheer determination + good fortune (luck)

This article focuses on the first of these five variables: fundraising execution. Below I lay out a 7 step framework to guide you through your fundraising process, and share some lessons learned having now successfully raised money for three separate ventures (and made plenty of mistakes along the way). If you’re looking for help crafting a compelling story, generating business traction, mustering up sheer determination, or being plain ol’ lucky, you’ll need to look elsewhere for advice (perhaps in a future Medium post).

My current venture, Borrowed & Blue, is solving the pain of wedding planning by building the first transactional marketplace for the $53 billion wedding industry; we help engaged couples discover and book wedding vendors for their big day. In October 2016, we closed on a $7 million Series A Round led by Foundry Group, and Jason Mendelson joined our board. Of my ranked list of 86 target VCs, Jason and Foundry Group were #1, due to their founder-friendly, emotionally mature bearing, their track record and strong reputation in the industry, and their expertise with growing successful marketplaces. I had also read several of their books, the main one being Venture Deals — Be Smarter than your Lawyer and Venture Capitalist, co-written by Jason and Brad Feld (if you haven’t read it already, go out and buy it right now) — their honest, transparent approach to investing really spoke to me. We’re beyond thrilled to be working with Jason and the Foundry crew. They are simply awesome. Here’s the complete playbook we used to make it happen.

Step 1 — Create Your Target Investor List

I started our Series A fundraising process by sequestering myself for two weeks in Boulder so I could focus exclusively on the task at hand. This proved to be incredibly valuable, and I would encourage everyone to do it. This follows an important tenet of fundraising — either be fundraising or don’t be fundraising. It’s pretty much an all or nothing proposition.

The first thing I did was to think about and then spell out what we were looking for in an investor. Then I compiled a ranked list of VCs that met those criteria. Being the Type A person that I am, I decided to create a Keynote deck to document the entire process. I believe there’s a direct correlation between an investor’s ability to add value to your business, and their likelihood of investing. So as the entrepreneur, all you need to do is figure out who can be most helpful to your venture.

First step: clarify your requirements.

In this first step, I defined the consideration set of potential investors based on their typical investment stage, domain expertise, relevant portfolio, physical location, and amount of dry powder (how many uninvested dollars they still have in their most recent fund). Then I ran a search on Pitchbook based on my criteria and ended up with 83 potential investors. If you don’t have a subscription to Pitchbook, ask your law firm if they can run a report for you — they can usually do one-offs.

Seed investors are not going to invest in your Series A rounds. Similarly, it will be an uphill battle getting a Silicon Valley investor to pull the trigger on your Miami-based startup. Why? From a practical perspective, your VC is going to take at least one board seat, so they will need to travel to you four times a year. Most investors prefer to invest closer to home so they don’t have to travel as much (although this is changing somewhat and investors are showing themselves increasingly willing to travel). Also, a healthcare VC is not going to invest in your B2B SaaS startup. So basically, do your homework. Fundraising is hard enough without wasting your time on folks that have 0% probability of taking your meeting.

The geography of your target investor list will drive your future travel schedule.

Once you’ve identified the list of firms that fit into your required parameters, it’s time to go a level deeper, and really understand which partners at each firm focus on your area. Ultimately, you’re not looking for a firm, you’re looking for a partner — the specific person within the firm that is going to be your evangelist, your board member, and offer you the best guidance on your journey. This is a step inexperienced entrepreneurs often skip, and it can kill their fundraising process. Most of this information is all right there on the VC’s web site — which partners focus on which specialties, and which portfolio investments they are responsible for within the firm. What you’re looking for at this stage is the most relevant partner at each firm — that is the individual you want to reach.

Create a slide for each firm, focusing on the most relevant partner for your business.

Believe it or not, I filled out a slide like the one above for all 83 investors on our target list. Yes, it took a lot of work; but that work provided me with a strong understanding of the investor landscape, and the confidence to tackle the mission at hand. Investors generally have all the power in the fundraising process - “he who has the gold makes the rules.” The only way to upend this lopsided dynamic is to create a competitive process, and the only way to do that is by doing your homework. Plus, it’s fun to rank VCs based on how excited you would be to work with them.

Step 2 — Hone Your Pitch

Putting together a great pitch deck and knowing how to deliver it is critical to getting the most out of your investor meetings. This is something every entrepreneur struggles with — how do you tell your entire story in ten slides? What happens when you’re pitching and the VC starts asking you questions 30 seconds in…and you have answers to those questions later on in your deck? What’s the most important thing to convey in your limited time with a potential investor? Are there any ‘tells’ that let you know what a VC is thinking about your deal? How hard should you work the close?

I don’t think there are any right answers to the above questions. You need to be true to yourself, and be authentic with your pitch. The best advice I’ve heard on pitching is this — the greatest predictor of pitching success is to genuinely believe in your product and your business. Yup. Actually believe that you’re going to put a dent in the universe — I know I do. Everything else is just details. Well, mostly. There are a few more points worth discussing regarding your pitch:

• Market — To get a VC to invest in your business, you need to demonstrate the potential of creating a billion dollar business. That’s just the way the economics of VC investing work. So be sure to tell that growth story.
• Traction — Unless you’re Elon Musk, you generally need to have a story around the traction you’re generating, or at a minimum, the significant derisking you’ve already done on your business.
• Focus — Investors want to know you have a plan for what to do once you close the round, and that you’re focused on the most important things. A great way to kill a deal is not knowing what those things are.

What’s your traction story?

What’s the most compelling way to tell your traction story?

That’s it. We could talk about Product/Market Fit, we could talk about Team, we could talk about your Unfair Competitive Advantage, etc. But if you don’t have a business with a ton of upside, you don’t have a traction story, and you’re not focused, it’s going to be a seriously uphill grind no matter what.

There are lots of opinions on what a great pitch deck looks like. Here is one of my favorite decks for example: the eShares Series A deck. But I think the best way to get to a great fundraising deck is to seek out those people that you trust, get their feedback, and iterate on your slides. At the end of the day, it has to feel authentic to you. One of the people that gave me feedback on our deck was Jason himself in our first meeting. So you can bet I took that feedback to heart and improved upon it for our second meeting. He told me later that my ability to receive and process that feedback was a big reason he decided to take the plunge with us, and I’m so grateful he did.

Step 3— Get Warm Introductions

OK, so now you have a list of all your investor targets ranked based on how excited you would be to work with them (and thus how well you think they can help your business), and you have a killer deck that tells your story in a concise, compelling manner. Next it’s time to get connected to the right partners at each firm. A few points worth making on the strategy of introductions:

• Partner meetings are the goal —While every VC firm is different, generally partners make all the investment decisions. So if you’re meeting with an associate or even a principle at most firms, it’s going to be a lot harder to advance to the next stage directly. If at all possible, I try to get meetings with partners. I’m simply trying to go straight to the decision-maker. Sometimes that’s not possible, so certainly take the principle/associate meeting if that is the only thing on offer. And there is a caveat here — some firms have amazing associates or principles that garner a ton of respect within the firm, but it’s really hard to know who these folks might be in advance. Bottom line: I would think twice before flying across the country for a meeting with an associate. Make it a phone call instead.
• Don’t go after your top targets first — Generally speaking, you’re going to get better at pitching the more you do it. So one of the benefits of ranking your VC target list is to know which folks are on the bottom half of the list. Start with them. Get some warmup pitches in, and pay close attention to body language and their questions. Bake answers to the most common questions into the next iteration of your pitch (yes, you’re still going to be honing your deck as you start having meetings).
• Never cold email a VC, it simply doesn’t work — Every single VC I reached out to was through a warm introduction from a mutual connection. I didn’t send a single cold email. Don’t waste your time — it’s not going to get you in the door. VCs get copious amounts of email. They simply trash ‘spam’ emails from folks they don’t know.
• Craft a great intro email — Once you’ve been introduced by someone, follow up with a great intro email. Short and sweet. Explain why you’re reaching out that specific investor. Reference the work you did in Step 1 — list why you think they are a great fit. Provide a highly condensed pitch in the body of the email. Bullet points are good. Potentially provide a Dropbox link to your deck (not an attachment). Potentially don’t do this too (I generally like holding off on sharing a deck until the VC expresses interest or asks for it. If I get a meeting, I’ll send the deck 24 hours in advance to the VC and their EA).
• The best intros are from fellow successful entrepreneurs — The jackpot intro is a sucessful entrepreneur that the VC has already invested in (and ideally made a bunch of money with). But good intros can also come from other investors, respected academics, business executives, trusted friends, etc. You really need to get strategic and understand that we’re playing chess here, not checkers. Dig in. Linkedin is your best friend at this stage of the process.

Another somewhat obvious win here is that as you’re going through the fundraising process, actively use LinkedIn to build your network — connect with everyone you speak with, as you may want to circle back with them later and/or leverage their network (for the next round or otherwise). Build relationships — you’re an entrepreneur; these are your people.

Step 4— Have (Great) Meetings

Once you’re in the room, have a great meeting! Here are some tips regarding the meetings themselves:

• Meeting Management — Get to each meeting 10 minutes early so you can wrestle with the various audio/video setup in the conference room. Sometimes it works perfectly, and sometimes it don’t! Make sure you travel with whatever special dongles you need for your sweet MacBook’s USB-C port. Be respectful of the VC’s time; keep small talk to 1–2 minutes, and then dive right in. Know how much time you have in advance. Typically, you’re allotted 25 minutes. If the meeting goes longer, you’re probably doing well. If you’re above 90 minutes, you’re doing really well. For your most important meetings with high value investors, make sure you leave yourself plenty of time for the meeting to go long. The last thing you want to do is have to sprint out the door to your next meeting when you’re having a great meeting with a high value investor.
• Time Blocking — It can be difficult managing your travel schedule and trying to line up meetings in different cities efficiently. What I did was block off my schedule a few weeks in advance, planning on being in SF for these three days, and in Boston on this day, and NY on this day, etc. Once I had blocked my time, it was easier to say, “I’m going to be in SF next Thursday and would really like to meet with you.” I also did some great work on airplanes — get the wifi and zone in on your fundraising process. Get a decent seat so you can get shit done.
• Get a Virtual Assistant — I leveraged Magic’s virtual assistant service during my fundraising process to help me book all my travel, and it was a godsend. Assuming you don’t already have an EA, there are other good services out there as well; the bottom line is, take the load off of yourself regarding travel booking — your time is much better spent being laser-focused on pitching, emailing, etc.

Step 5— Keep Stakeholders Informed

During my fundraising process, I sent out an email each week to our key stakeholders, which included both my existing investors, and the folks that were instrumental in helping me through the process because of their experience, their networks, and their emotional support (BTW thank you Nick, Tobias, Keith, John, Diane, Noah, Brendan, Sam, Mark, Joel, Trip, Josh, Andrew, Stew, Matthew, and Christin). These weekly email updates kept me focused, and enabled me to communicate exactly where we were in the process so that these stakeholders could help. I sent out an email each Friday that included:

• Highlights from the week
• Meetings held that week
• Meetings scheduled for the following week
• Pending meetings (VC has agreed to meet, but not locked in yet)
• Firms we’re moving forward with (due diligence, etc.)
• Firms we’re waiting on for next steps or a pass
• Total stats to date (total meetings held, total firms met, firms having two or more meetings)
• Link to my spreadsheet detailing all meeting notes

I am so happy I did this — because first of all, I have a written record of the entire process start to finish, and secondly, fundraising can be one of the loneliest journeys an entrepreneur can take — so it’s nice to be able to share the ups and downs of the process and stay connected to your team of supporters — for me, they were people I cared deeply about. Oh, and if you’re curious: 42 Meetings, 25 Firms, 10 Weeks from start to term sheet.

Step 6— Manage The Process

So, a word about process management. I designed a Google Spreadsheet to manage the process, but you can use whatever works for you — a CRM, a Word doc, whatever. The bottom line is that you need to stay incredibly organized throughout this process — you’re going to need to be staying on top of a ton of relationships and you don’t want anything to slip through the cracks. Being proactive here is key.

I created a Google Spreadsheet but use whatever works best for you to stay organized.

I personally created a flow that I felt encapsulated a successful process with one firm from start to finish, and tracked where I was in that process with each firm. Keep track of each relationship once you volley over your introductory email after your ‘connector’ has introduced you — and take copious notes throughout. It can be challenging managing all these various flows simultaneously, so another strategy that I employed was only initiating 5 introductions per week — that enabled me to have a managable number of touch points each week. Remember — fundraising is ALL you’re going to be doing while you’re doing it — don’t try to juggle operational responsibilities simultaneously if at all possible.

Step 7— Close the Deal

Ultimately, the goal of this entire process is to get to a term sheet with the best possible investor (and then close on that term sheet, but generally speaking, if you get a term sheet, you’re going to close). I learned going through this process that you can generally tell right after the first meeting if you’re moving forward or if you’re not. Simply say at the end of the meeting, “So, what do you think?” and pay very close attention to the VC’s reaction. If they are planning on passing, the first thing that comes out of their mouth, after, “It’s interesting…” will be some sort of objection. For example, “It’s interesting… but I wonder if it may be too early / too late for us,” or “It’s interesting…but I’m wondering if this might be competitive with bla bla bla,” or whatever. If the investor is interested, then they’ll answer that question with something positive, generally not caveated at all, about moving forward or next steps or who you need to meet with next. I found over time that I could predict with almost 100% accuracy where that investor really stood by asking that simple question at the end of our meeting. The reason this is particularly important to suss out is that a lot of VCs have in their minds that it’s better to simply go radio silent than give you a ‘no’ — and you want to be spending your time with folks that could ultimately say yes. I disagree with this practice — I always prefer a thoughtful no than radio silence. I guess sometimes entrepreneurs get all uppity when they hear a no, so some VCs have decided silence is best. Personally, I wish more VCs would simply be straight up and take 5 minutes to write an email as to where they stand, and provide any constructive feedback they have. I remember which VCs did that for me, and I appreciate them for doing it.

Ultimately, if you do your homework, create a compelling pitch, and run the process as I’ve mentioned above, you’ll put yourself in the best possible position to succeed. Then, it’s really up to the market to tell you what it thinks of the potential of your venture — at least you’ll have done everything possible to get the answer you’re seeking.

I sincerely hope you found this post helpful. Feel free to ask questions in the comments — now go out there and make it happen, and good luck!