How to build an investor pipeline and raise a Seed round - a step-by-step guide
A practical guide for founders
I wanted to share the process I used to raise a $2.6M Seed round for Halp led by Matchstick Ventures with participation from Techstars Ventures, Slack, Next Frontier Capital, and Access Venture Partners. More info on that here if you’re curious.
Over the past 4 years, I was on the investor side of the table for 60+ companies when I was a platform manager at Upslope, I’ve been directly involved as an investor in 20+ companies via Kokopelli, and I got to watch many of the 10 companies in my Techstars Boulder 2018 cohort raise rounds.
I took my learnings from these 100+ Seed rounds I’ve been directly involved with to build the process outlined below.
Please note: This post is not advice about how much to raise, whether to do a priced round or note, or how to structure your fundraise. There are plenty of great articles about that from smarter people than me. This post is also not as applicable for founder outside of the US, I unfortunately only have experience in the US.
This is a straight-forward, step-by-step guide on the process of actually building an investor pipeline, working through it, and getting commitments on the round.
1) Build your list of investors
The first step is to build a list of relevant investors to your company. As of this writing, there are over 800 Seed funds.
There are a few great tools to help you build your list:
Dorm Room Funds’ VCWiz: Each investor is tagged by location they invest in and sectors. Great resource and can also act as your CRM.
NFX’s Signal: a tool built by NFX that has a large portion of investors, includes check size for many, and it will tell you most likely connection paths based on your Gmail conversations.
Shai Goldman’s Google Doc: Shai has diligently kept this list up to date over the past few years, and it’s a great resource
If you’re in Colorado, I made a list of Colorado Early Stage funds.
You should prioritize funds based on location, stage/check size, sector, and regions they invest in. Try to build a list of 50–100 funds that you think are the best match for you.
2) Make a google doc for intros
Next, you should put the list of your highest priority funds you need intros to into a Google Doc. Use Google Docs, not another tool, because you are going to use this doc to get offers for introductions to funds from your network. They will be most comfortable in Google Docs, and you want to make it as easy as possible for them.
The folks in your network also probably have short attention spans, so make sure they focus on the top 10 funds you want intros to. Organize the google doc into an “above the fold” section of your top 10 funds, and below that is all the other funds for your true champion mentors who want to go through them all.
Also, use this doc to add details about relevant portfolio companies, any portfolio companies that are customers of yours, and any other relevant notes specific to this firm. You will use these later on when you are getting the intros.
I created a basic Google Docs template for you to start from ( choose file-> make a copy) https://docs.google.com/spreadsheets/d/1HMbwzRpsTJ7OZb0OHHzBcyER3uaExOxhcYeJHQsTdgI/edit#gid=0
3) Build an intro pipeline
You may have noticed the last 3 columns in the template are for intro offers. The idea here is that you can get up to 3 folks (or more) in your network to offer intros to each fund. After that, you can decide which one to try to get the intro from.
Note: Do not blast this doc out in a mass email. Send individual emails or a mail merge to your mentors and other connections with a link the google doc and asking them to add their name next to anyone they are willing to make intros to.
4) Make a deck and get double-opt-in
While you were building this intro pipeline, you should also have been working on your slide deck for your round. Creating a solid pitch deck is another topic I won’t cover in this post, but it’s definitely worth putting real effort and designer resources into your deck. It’s the most critical fundraising material you’ll have.
Now, go through the intro offer list and choose the person who you think would give the best intro. Send them an email titled “Intro: YOURNAME @ YOUR COMPANY <> FUND NAME.” Include a blurb about your company along with something slightly personalized for that fund, such as specific companies that they’ve invested in or portfolio companies of theirs that are customers of yours (this is where those other columns in the doc come in handy).
Attached a compressed PDF of your pitch deck so they can open it up directly in Gmail. Use Docsend or some other tracking service if you really want to (I won’t get into that debate).
The goal here is to make it insanely easy for the person to forward. The less work you make it for them, the faster they will do it. If someone offers you multiple intros, send a separate email for each intro so they can just forward them all and not have to write emails.
As you get introductions and set meetings, update the status of funds so that you aren’t getting more intro offers for funds you’ve already connected with.
You’ll continue to get connected to folks during the process that can make intros for you. Keep going back to step 3 with those people and sending them the doc to make intros.
If you don’t hear back on an intro ask that you send out, follow up with the person who offered the intro once. If you don’t hear back again, try with the next person who offered an intro. Hitting a fund multiple times is fine if you haven’t heard back with a formal pass. Persistence is 🔑.
5) Go to SF, NYC, and maybe LA
While you should definitely start with funds based close to you, you should be looking across the US for sources of capital. If you (like me) are not based in SF, NYC, or LA, I think it is very important that you physically visit at least one if not all of those cities as a part of your fundraising process.
As you are planning trips to these cities, you can create separate tabs in the google doc for each city. I made one for SF and one for NYC and then followed the process of step #3 for my strongest connections in each of those cities.
Make sure you have specific dates booked to be in those cities, hopefully centered around a meeting you have scheduled. This helps create urgency and a reason for VCs to make time while you’re in town. It can often be good to do a 30 min introductory call a week or two before you visit to make sure the in-person visit is a good use of everyone’s time.
6) Pitch, pitch, pitch
You should be able to get intros to at least 20–30 funds. Remember that every interaction you have with them is part of your pitch. Be thoughtful about your emails, phone calls, and scheduling process. Take note of how they treat the process too, you’re finding a partner to help you build the business for the next decade.
Note: Practice your pitch before you have to pitch it live. Use your deck as a guide but be willing and able to go off script. Figure out the most common questions and have answers for them.
Try to enjoy it! You get to tell the story of your business to a bunch of super smart people and have them give you feedback/advice. Don’t take it personally, use it to make your business better.
Make sure you leave time at the end of meetings to ask them specific questions about fund/check size, how they like to be involved, what their ownership target is (so important!), and what their decision-making process involved. Directly ask them how interested they are and what the next steps are.
If you’re doing a priced round, if you get a few firms very interested then pick a specific week where you will accept term sheets. Be clear with them that is when you will be accepting term sheets and drive towards that date.
7) Close the loop
Finally, after you meet with investors on your list, whether its a positive or negative outcome make sure to follow up with the person who made the introduction for you.
You can go back to your handy google doc here, find the person who made the intro and just shoot them a quick note. This goes a long way. These are very valuable connections for many people, and they will want to know what happened so they can better curate intros going forward. Be very respectful of the social capital in play.
If you’re looking for more tips, Jenny Fielding wrote an amazing guide on this topic: https://www.slideshare.net/jefielding/building-an-investor-pipeline-spreadsheet-keep-your-funding-flowing/jefielding/building-an-investor-pipeline-spreadsheet-keep-your-funding-flowing
That’s it! Best of luck, it’s a crazy process, but I truly believe that as of this writing there has never been a better time to raise a Seed round as a founder. Would love to hear any tweaks or tips others have used in their process.