This week we’re featuring a Q&A with Indra Sofian, co-founder of Sora Schools, and Sonya Trachsel, CEO of Tokka, on how he prepared to raise his seed round and what founders should expect in an investor meeting. We also announce the new Series A fundraising report and webinar, our partnership with the Funded podcast, and invite you to participate in our DocSend Fundraising Research. Let’s get to it!
Q&A with Sonya Trachsel
Many first-time founders are unsure of how to approach a meeting with an investor. Before meeting with an investor, what kind of preparation did you do while raising your round?
Indra: First, we really focused hard on marketing and sales. When you’re meeting with investors, you want to be on a good growth trajectory and put forth your best foot possible. Second, we spent time preparing the pitch deck and practicing the pitch. You generally don’t want to start off the fundraising process with a dry pitch that you haven’t been practicing and improving on–definitely don’t do that with your ideal investor. Third, we made sure to put in calls and messages to friends of ours who could make recommendations and intros to the investors we wanted to meet. That way, our whole fundraising process was already lining up without doing much of any cold outreach.
Sonya: The base of every great pitch is the human conversation during which the investor sees why your startup is that one unique opportunity that’s going to make millions. So before your first meeting make sure you are confident to speak to the following points:
- Which exact problem you are solving and Why?
- What is unique about the way that you want to solve this problem and Why?
- Why you are the best person/team to solve this problem.
Sometimes founders solve too many problems or don’t have a clear plan on what success looks like. Before you truly know the answers to these questions it’s pointless to meet with investors.
Now that raising capital is mostly via video calls, can you share what that experience is like, so founders can know what to expect?
Indra: I’ve only ever raised a seed round during the pandemic–I genuinely don’t know what the process is like outside of that. It seems very efficient. The nice thing about Zoom pitches is that you can set a meeting for 30 minutes, pitch, and then immediately switch off to the next 30-minute pitch meeting with no time in between for commutes or normal in-person context-switching. As a result, there were days where we were doing a dozen back to back pitches with investors across the country–that’s just amazingly efficient. The pitching itself is pretty normal. If done right, it’s usually a mix of talking through your story, your company and everything around it, and your plan and back-and-forth conversations with the investor (no pitch deck). Also, it’s very important to leave with a clear next step, whether it’s sending the deck, setting an intended date when you/the investor would hear back from the other party, and the like.
Sonya: What’s harder to do over the video is to “read” the room to understand whether investors have questions or concerns. So my recommendation is to try and have as much organic conversation as possible. I start by asking “Would you like for me to start with the pitch deck or telling you our story?”. Then based on the answer I walk them through the pitch and regularly check back on what they think.
While there are downsides to raising over video calls, one thing that’s hugely advantageous is that you can raise funding from anywhere. You can pitch someone in Palo Alto and Boulder, Colorado – all on the same exact day. You can reach more people with way less effort, and it’s incredible.
In your experience, what are some signs that a meeting with a potential investor is going well, and what are some signs that it isn’t?
Indra: It’s very easy to tell when an investor meeting isn’t going well, like if they’re checking their watch or seem very confused. When it’s going well, there’s a lot of back-and-forth conversation/debate between the founder and investor. The investor really needs to get the market and space from the get-go in order to have a good chance at moving forward with the investment. Lastly, the investor will usually end the call with something like “I want to talk to my partners about this” or “let’s get a partnership meeting set up”.
Sonya: In my experience, if investors aren’t asking thoughtful questions specific to your case study or problem, that’s usually the signal that they either haven’t done their homework (which could be understandable, because everyone’s busy), or aren’t deeply interested in the problem. Either way, I usually consider these meetings as a “pass”. However they are always learning opportunities, and sometimes can turn into a “yes” later on.
After you’ve pitched an investor that shows interest in investing, what happens next? How should founders keep the process moving forward to increase the likelihood of getting a term sheet?
Indra: Make sure both parties know the next step, whether you need to send a deck or the investor needs to connect with their partners to set up further conversations. In general, a very good fundraising process can be wrapped up in a few weeks. That’s also generally how long most big VC firms like to take, between speaking with the partner initially and doing the partnership meeting and further diligence. You want to be abundantly clear with the investor during the initial contact and the first meeting that you are fundraising, you have a general timeline in which you want to raise the money, and you’re busy and need to raise the money so you can go back to building the company.
Sonya: Always finish the meeting on what the next steps are and the timeline:
- For example, you agreed that the investor will share your story with their team, and will get back to you by the following Monday.
- Then follow up the same day with an email confirming the next steps. If you don’t hear from them by Monday, give them a couple more days, and follow up in the same thread. One great tip I got before is to follow up with exciting stats or milestones to show that you are making progress.
Do you have any other advice for early-stage founders or anything you’d like to add?
Indra: Investors usually have a thesis or at least some kind of general worldview that they adhere to. As a founder, it is very beneficial to connect your company to that if possible. If you know the investor really believes in the Creator Economy, tie your pitch to how you’re empowering creators. If you know the investor is looking for companies with social impact, talk about how your company can benefit society as a whole. Ultimately, much of your pitch in early-stage fundraising comes down to the market and Why Now and Why You.
Sonya: Founders that had a successful fundraise are often quite willing to help other founders by either reviewing pitch decks or offering introductions. Take advantage of this opportunity and reach out to other early-stage founders you look up to. After all, everyone understands what’s this journey like and wants to give back.
Pitch Deck Interest Metrics Update
The metrics we recorded from last week broke records again. Investor interest last week is 43.31% higher than the same week in 2019. Share this on Twitter.
Read our full analysis of last week’s changes in the fundraising marketplace.
New Report: “The Anatomy of a Series A Raise”
Join Russ Heddleston, CEO of DocSend, for our webinar Q&A where he shares new data from the upcoming report on what it takes to raise a successful Series A round. RSVP here for priority access to the report and the Zoom link.
When: Thursday, October 29th at 10 am PST (7 pm CET)
- Find out what parts of your Series A pitch deck VCs are the most interested in
- Learn what the optimal timeline to raise is
- Discover what to expect in your Series A round, from how many investors to contact to how long it will take
We’re excited to partner with the Funded podcast!
Coming this November, Funded podcast features some of the entrepreneurs you’ve always admired to tell a story you haven’t heard before—how they raised millions in venture capital. Host Jason Yeh talks to Silicon Valley’s stars about how they got strangers to bet on their grand visions.
Listen to Funded, Season 1’s trailer and subscribe wherever you listen to podcasts.
2020 Kleiner Perkins People Report
The team at Kleiner Perkins published their inaugural 2020 Kleiner Perkins People Report. This report consists of shared learnings and content, as well as a series of surveys conducted throughout the year.
How We Built a Startup Fundraising Network that Aims to Remove Bias
The DFN has been in the making for almost a year now and it consisted of three separate MVPs that we iterated on to get to the offering that we just launched. Here’s the story of how we did it.
Participate in DocSend Fundraising Research
If you’ve enjoyed all of our research this year, you can be part of the next round by participating in this year’s fundraising survey. Founders and investors from anywhere can submit their responses.
To participate, please fill out this quick survey.