Superhuman CEO Rahul Vohra’s 5 essential rules for your first fundraise

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Global venture funding in the first half of 2021 shattered The previous six-month record – in the second half of 2020 – exceeded $100 billion. the market was flooded with new startups, and made headlines one after the other for deals that were previously unheard of: a $70 million seed round, a $1.5 billion Series A, A unicorn evaluation after just two years.

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If you are thinking that there has never been an easier or better time to raise money than this, you are right. First, the pandemic generated a huge demand for new products and services as we all adjusted to new ways of working and living. And second, the pandemic made funding more accessible as deal-making shifted almost entirely to Zoom.

That’s why a large number of founders are trying to raise – I myself just raised Superhuman Series C — and many of them are doing so for the first time. in my role as a Angel investor like in startups Alt, Circle And LuckI am often asked for fundraising advice, and these are five tips I give over and over again.

always keep growing, but never Active Establishment

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Most founders are familiar with the adage that they should always keep growing. And while that’s true, I’ll add a caveat that you should never Active Raise.

Why? Because the best companies are never actively looking for funding; Rather, they have investors chasing them all the time. In venture capital, perception is important – and looking desperate is not a good thing!

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So while you should always be talking and building relationships, you should avoid saying you’re picking up until you have your first inbound offer. At that point, you are not increasing because you have to; You’re picking up because you already have an offer.

understand the code

“Let’s run a ‘no-process’ process.”

“We want to invest at least $10 million.”

“We’re basically there. I’d like you to meet a few more people.”

Such statements sound simple, but they are actually part of the coded language used by VCs. In this sense, raising a round is similar to dating. Neither side wants to put all of their cards on the table, and you can’t always take what is said at face value.

Find someone who has gone through this process before—ideally on both sides of the table—who can help you understand what these phrases mean. This is especially true when investors introduce floating numbers, such as “We want to invest at least $10 million.” Is it an investment proposition or just an investment strategy?

You need good intuition – and access to wisdom – to know how close you really are. Many early-stage startups stumble upon such statements by reading too much.

always make a deck

While we’re on the topic of things that shouldn’t be taken at face value, I’ll share one I’ve heard many times: “You don’t need to build a deck, we’ll just walk through your data.”

While it may sound tempting – building a great pitch deck is massively time-consuming – don’t do it! If a potential investor is telling you not to build the deck, it’s actually to save you time… so next time, do the exact opposite: build the deck. In fact, create the most compelling and highly polished deck you can imagine.

There are many advantages to this approach. First, having this deck will actually make it more likely that you will receive an offer from this initial investor. Second, you now have an incredible asset to share with other potential investors. And third, even if you don’t have an offer, you now have a great tool you can use to close candidates, boost morale, and motivate your team.

Get ready to go from zero to 100 very quickly

Getting your deck ready is important for this next step. After months of Zoom calls, coffee, and relationship building as part of your ever-enhancing-but-never actively growing strategy, you’re going to get a term sheet from an investor you’re excited about.

At this point, you’ll have to drop everything to talk to other investors and get a deal on the line quickly. Today, the time frame is extremely narrow: many investors are moving from oral offerings to term sheets in just a few days. This means you have a very small window to make a market, avoid looking like you are “buying” and avoid becoming a “stale deal”.

don’t talk to too many people

This brings me to my final point: When including the investors leading your next round, start with your top five, not your top 15. The word pretty quickly makes its way around investment circles, and if you’re talking to multiple firms at once, people will wonder why. Is there something hidden in your data? Or trouble on your team? As I mentioned earlier, perception is important, and you want to work from a position of strength.

Raising funds for your startup is almost always a wild ride; I have gone through this process many times and every time I learn something new. Happily, investor appetite is at an all-time high. If you arm yourself with a little bit of this insider knowledge, you can grow your company faster than ever.

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