After weeks of meetings with various venture capital firms, I found myself on the main stage of VC deal-making: the Monday partners meeting. The VC partners meeting is an industry tradition, a day when perhaps a half-dozen promising startups present to the firm’s partners, associates and advisors.
“Good luck in there,” a startup founder said to me sheepishly as he exited the shark tank. Clearly, things had not gone as he had hoped.
After a round of introductions, handshakes and business card exchanges, it was my turn. For the next hour I would be leading the group through my business plan. My goal was to convincingly tell the story of how my startup would someday become a big enterprise software company.
Unfortunately, this particular meeting had the dreaded know-it-all partner in attendance: an arrogant non-entrepreneur who threatened to disrupt my entire presentation with his shoot-from-the-hip comments.
“You’ll never have large-company customers, your product is for small companies only,” he challenged -- despite the fact I had just told the group that larger companies were now using our product.
At this point I knew that the meeting was probably doomed. The odds of keeping the presentation on track and getting the rest of the partnership to go along with an investment were slim. Sure enough, after the meeting I got the inevitable call that there would be no Series A investment.
“But let’s stay in touch,” the partner suggested cheerfully.
Thankfully, I had other meetings that went much better. In fact, by the end of my Series A roadshow, we had multiple firms vying to invest. One firm that I really liked preempted the others and sent me a term sheet, a two-page document that outlined the terms of the deal: the amount to be invested, the valuation, and other details. It was the offer I hoped for, from the firm I most wanted to work with.
It was then that the roles were reversed and I was the one telling the other firms that I would not be working with them. I thought I would relish this part of the process, but mostly I just wanted it to be over.
After I had signed the term sheet, the lawyers got to work drafting the documents that would formalize the investment. Statistically speaking, there was a 99% chance that the deal would now go through. But there was still a fair amount of due diligence to be done: uploading customer contracts, P&L statements, and the like.
After a few weeks of due diligence and legal machinations, the closing was finally at hand. I signed a stack of documents and within 24 hours more than three million dollars poured into our bank account. It was a great feeling. We now had the resources we need to build a great company.
Even though the raise was complete, there was still one important detail left to tend to: communicating the funding announcement. A Series A investment is a great opportunity to generate some press for the business.
Since we didn’t have a PR firm, I personally pitched journalists to cover the story. This part of the process was like a mini-version of the Series A raise, with journalists deciding if they would help tell our story. Thankfully, the coverage was excellent. I read each article with a sense of pride, accomplishment and relief.
We successfully crossed the Series-A chasm!