A guide and a benchmark for fundraising??| How to de-risk your venture ??

?? Hey everyone and welcome to Explore, your weekly Startups and VC podcast.

I’m Hugo Rauch, the writer of this newsletter and my goal is to help founders accelerate their growth, successfully fundraise and find inspirations from investors and startup stories. I love talking with my audience, feel free to DM me!

Summary: 
- YC's guide to seed fundraising, my favorite VC document ??
- How to de-risk your venture at each stage ??
- A benchmark for fundraising, this will help you set expectation ??        

YC's guide to seed fundraising??

Here is YC’s seed fundraising guide. ??

Let’s summarize the most important info!

To get started, you should ask yourself the following question:

Why raise money?

Yes it makes the headline and everything.

But it's not for everyone.

YC says:

"high growth companies need to burn capital to sustain their growth prior to achieving profitability."

Look at the word choice here.

It’s super important.

Raising money is for high growth companies.

Raising money is a support to get to profitability.

But as YC says, raising money isn't easy:

"Fundraising is brutal: the process of raising money is often long, arduous, complex and ego deflating."

You’ve looked at all of that and you're certain that you need to raise money, now what?

When, how, how much and for what price?

That’s what you need to figure out.

All those variables could completely change the trajectory of your fundraise.

• When: when you have an MVP and some sense of traction
• How much: as much as you need to reach profitability
• How: convertible note, safe, equity, choose your own path!
• Price: the price that investors are willing to pay for it

They are other factors in this guide to consider such as the valuation, the type of investors and how to navigate the process. Read the guide for more!

How to de-risk your venture??

Startups are all about balancing risks and rewards. ????

Here is a how to navigate each stage.

Observe how there is a natural path from product, to sales, to internal focus

?? Pre-seed

At this stage you should validate:

1. that you've got the skills required

2. that the problem is worth solving

If both are true, start building.

??Seed

Okay, you've got a product, or at least an MVP.

Now, you need to get your product in hands of customers.

Ask yourself this:

1. Am I able to grow organically in the market?

2. Is the market growing fast enough?

3. Is my product well positioned?

??Series A

You got it. The market is reacting positively.

Now is the time to scale operations, sales and marketing.

Find what works and double down on it.

You need to grow fast and created repeatable processes.

The goal is to manage the growth.

??Series B

Your ICP is already buying your product.

Now you must think about expanding.

That means going into:

1. new markets

2. new countries

3. new distribution channels

Find ways to identify the best opportunities and pursue them.

Your job is to decide what's worth pursuing.

??Series C

Now we are talking about stabilizing the growth.

And as someone famously said:

? "culture eats strategy for breakfast"

Your focus should turn onto creating a company that attracts the best talents and retain them.

A benchmark for fundraising??

Here is how much you should expect at each fundraising stage. ??

This graph shows pre-money valuation and cash raised per percentile for each stage.

How should you use it?

??Interest from investors is correlated to your percentile

Not every startup can raise $6M on a seed round.

Try and figure out the maximum you can raise.

But only raise what you need.

??Design a path to profitability

Understand how much cash you need until profitability.

Forecast when and how many time you will fundraise.

Investors will love you for that.

And you might also plan for your dilution % at exit.

Thanks for your support! ??

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Hugo ??