What Should a Series A Funding Process Look Like? [Step 1]

[This is a second article in the series of articles about raising money. Read the first article about how to set up a funding plan and strategy]

Most developer CEO’s dont quite like the word “process” – which usually means repetitive and bureaucratic. In this post I’ll try and outline how you can use process to scale and not lose your mind when dealing with investors.

1. The introduction and initial call: Since your plan has already given you a spreadsheet with the target investors and possible connections, this step in the process is to either email (or call as appropriate) your connections with a request to introduce you to the investor.

I recommend that you do a quick 15 min brief to your connection about your company so they know what your company is doing and why the connection you are requesting is a good fit as an investor. I would recommend a short 40-100 word email with your elevator pitch, which can be forwarded to their investor connection.

I would recommend not more than 10 firms in your list (5-7 is ideal). 3 of them which are your top targets, 3 that don't have an investment in the space, but have expressed an interest, and finally 4 who are likely to move slowly.

Usually in India, most investors respond in 3 days and in the US, the top investors in 1-2 days after you have been introduced via a warm contact. Of course there are exceptions, and it might take longer. If they respond faster, you have a connection that’s very highly regarded by the investor.

Ideally you should email all connections in a day or two and get introductions within 3 days from start.

After your connection has sent and email (ideally she has copied you on the introduction), expect a couple of days to get an email back. Usually the response to your email will be an note to you (with their admin copied) to schedule time to meet. Dont ignore the admin, because she will be a big help in steps 3 and 4 when things get slow or responses are delayed.

Elizabeth’s approach was to get meetings to completely book her schedule in 2-3 weeks, which might work for the US, but for India, I’d recommend spacing meetings out a bit so you can a) iterate your deck and positioning based on the feedback you receive, b) get some time to think and follow up with investors and c) give yourself time for traffic and travel (unlike US where most investors in the bay area are in Sand Hill road, in India, they are all over the map).

Spacing things out a bit also ensures you’ll get time to work on the action items they give you. Example: please go meet this person who I know is an expert in the space, or please send an email so I can connect you to a potential customer who is in our portfolio.

Nothing pleases investors more than you taking their advice, acting on it, and showing that you are diligent and value their input. Its the best way to build a relationship.

Setup the follow up meeting, ideally on Wed or Thur – why? Mondays are partner meetings so most people are busy all day. If you meet on Thursday or Friday there’s more chance of your deal being brought to the “partner radar” fresh the next Monday.

What might go wrong and how to fix it?

1. Your connection might not respond to your email. Follow up with a gentle reminder via email (if your connection is a good friend, call her)

2. The connection may take 4-5 days to send your email and may sent it to a influencer (associate) but not a partner. That’s okay, just make sure you meet the associate and try and see if you can get the partner to join – “Hey I met at and I’d love to follow up with him on my company,” might work.

3. The connection sends an email but the investor does not respond. Try twitter (most US VC’s are on twitter, but a few Indian VC’s are as well). Best approach is to get a second connection who can also put a word in for you. Calls rarely work if email did not, so try another connection.Try your legal firm’s partner as a person to connect you as well.

4. The investor says they are not investing in the space or they dont like market you are working on. Try and get an alternate investor who they think might be a better fit. “I understand, would it be possible to suggest someone who might be a fit?”

5. The investor says they are busy for the next few weeks / months (either because of their board meeting schedule or they are raising their own fund). See if you can meet them at the airport when they have a little down time. Dont laugh, this has worked for me several times in SFO. In India, investors attend many events, so suggest you meet there.

Next steps in subsequent articles: The first meeting & follow up. The presentation to the “partnership”. The negotiations and legal discussions. The due diligence and transfer of money to the bank.