Navigate Your Raise Like a Boss

Fundraising is so much more than just, “hey, let’s get an investor.” It’s a two-way exchange: investors are making sure your company is worth investing in, and you should be making sure the investor is a good long-term partner. As you embark on your raise and navigate the process, there are several keys to getting the outcomes you want.

In order to understand the nitty gritty of what to do (and what not to do), we sat down with Sierra Peterson. Sierra is one of two co-founding partners at Voyager Ventures. Voyager invests in early-stage climate technology companies in North America and Europe.

Focus on Getting the Right Partner, Not Just a Partner

The goal of a successful fundraise isn’t just capital, it’s getting a real partner who aligns with your vision, business stage, and value add. Think through who is going to be helpful to you between now and the next raise, and who will set your company up for true long-term success. For early stage investment, you’ll have 5+ years of collaboration with this team.

The investor that arrives first with a term sheet may not be the most helpful in getting you to commercialization fastest or getting you the best Series A outcome. Come to the conversation with a very clear sense of the milestones you’ve identified as the North Star for this allocation of funding. Be very crisp and clear in your vision and purpose for this specific use of proceeds, and your goals and targets, in addition to the overall opportunity set. This will inform the dialogue and guide both sides on what diligence needs to be done to reach alignment.

Get ready, get ready, get ready (and save everyone a lot of time)

Before you start fundraising, seek out speaking and publishing opportunities. For example, if you publish your thesis on how to build a business in direct air capture, investors will read it and get a sense of you and your thinking, outside the context of a transaction. These reputational proof points will help build interest in what you’re doing, so the conversation doesn’t start cold.

Once you have your raise in sight, make sure your pitch deck and data room are ready to go, and have your references lined up. Beyond the standard list, expect that any mutual contacts will get a call. Investors will likely reach out to people who aren’t official references. If you had a prior startup or a role with another company, they’ll get a call.

For software startups, diligence will include customer references, deep dives into operational metrics, and scenario analysis around growth and performance. Make sure you provide the relevant data to make the job easier for your prospective investors.

For deep tech, investors will need to understand the defensibility of the technology itself. If a founder claims they can somehow escape gravity, this is a red flag. Deep tech founders benefit from showing up with the names of experts who can help validate the specific approach. Investors will frequently look through the papers referenced by the founding team to find the experts who are most cited, and will call them and potentially hire them as outside consultants. Be ready to field questions from global experts who are interested in this technology.

Come prepared with a strong pro-forma, but remember that these are estimates, not forecasts. Estimates help potential investors to see that your team is capable of thinking big, and executing backward from a plan. Give them detail on what the future looks like and how that translates back to the amount you’re raising now. This will enable a fairly swift diligence process by helping investors to focus on the right things.

Last but not least, if your business is capital intensive, make sure you clearly understand your fundraising journey for the foreseeable future.  Often VCs conflate "capital intensity" with dilutive/equity capital needs, so do this homework for them. Make it clear that you understand the different dilutive and non-dilutive capital sources available to you, how they align with spend, and what your likely timeline is for raising additional funds.  Line up your key milestones with your fundraising strategy - for example, if you’re building new hardware, align technology readiness with distinct sources of capital. This is essential in these early stage conversations with high tech founders.

Schedule Concurrent Conversations

Pipeline management is key to an efficient fundraising process. Given today’s fundraising environment, you should expect 200+ intro meetings with distinct investors for a pre-seed/Seed round, and likely 100+ for a Series A.  Once you’ve built your funnel, gotten warm intros, etc, make sure you keep moving forward where there’s mutual alignment. It’s important to maintain multiple concurrent conversations, so that you can effectively compare terms across different investors. Ideally you’ll get these timelines to line up, but try to keep an open mind and let the process unfold.

Don’t Manufacture Urgency

It’s critical to communicate your momentum to propel investor action.  You may be tempted to manufacture urgency, but this can alienate your best potential partners.

It’s more effective to communicate the factual details of your progress. If you have ten people in the data room and eight meetings this week, that’s exciting and people should know that. But don’t say “We’re closing on this (arbitrary) date” just to force action. Once you do have term sheets from one or more VCs, sharing the high-level terms with other potentials can galvanize interest far more than just saying “we have term sheets due on this date.”

Know Who You’re Talking To and Keep it Tangible

In each conversation, come with a sense of this particular investor’s starting point. Are they technical experts? Are they someone who has built businesses? Know where this individual enters the conversation, so that you can be ready to address the questions they’ll bring.

Because you know who you’re talking to, you can target specific anecdotes that give real terms to the questions they’ll need to see answered. Think through those questions ahead of time. If you have an early stage SaaS startup, be able to speak to the customer experience, have a great product demo, and make it all very tangible. Abstraction is never as effective as details involving real partners and an actual demo experience. Concrete examples will more effectively show your momentum, and will allow you to speak to the lessons you’ve learned.

For software, if your product isn’t live on the website, be able to talk it through. Show a Loom video to demonstrate how it works. For deep tech, be able to talk through the technical challenges that you’re working through, and the sequencing for this specific fundraise at this time, as well as sources of capital for future fundraises.

Demonstrate that you’ve done your homework on who you're talking with and why this particular venture capital team is a good fit. Come to the conversation with clarity on why this team could be uniquely helpful to you. For example, show that you need someone who is good with manufacturing scale-up, or someone who has policy experience, or someone who has strong relationships with European commercialization partners. Investors want to work with people who are excited about what they can specifically bring to the table, not just that you saw on their website that they’ve done some work in climate.

Don’t be shy to say “here's the ideal syndicate for what I've envisioned, and here’s how your team brings this particular piece.” This gives a sense of reality to what can otherwise be an abstract conversation. Investors appreciate knowing that you’ve been thoughtful about the team you want to build.

Sierra Peterson is the co-Founder and Managing Partner of Voyager, and has been structuring markets, financial products and investments for climate stabilization since 2005. A Kauffman Fellow, she has invested in more than 25 early-stage climate tech companies since 2015. Previously, Sierra led corporate development teams at financial technology companies responsible for $3B+ in solar and energy efficiency financing. Her experience in climate policy and market design includes the Obama White House Office of Energy and Climate Change and the International Energy Agency.