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For founders looking to take their startups to the next level, the road to fundraising can be challenging, especially as you scale to Series B and beyond.
In an exclusive webinar last week, we were joined by Nicolas Dardenne, Principal at YC Continuity一the arm of Y Combinator that focuses on supporting growth-stage companies with capital and company-building resources.
In a candid fireside chat with Aspire CEO and Founder Andrea Baronchelli, Nic shared key industry insights for founders to use when preparing for a Series B round including how to approach fundraising in Southeast Asia and tips for building a strong equity narrative.
In case you missed it, here’s a roundup of the three key takeaways to help you raise Series B successfully.
Scroll to the bottom to find more resources on fundraising and a recording of the webinar.
Time your Series B fundraising carefully
Too often, founders think about fundraising as simply “re-fueling” as they prepare to enter the next stage of hypergrowth. However, it’s important to be strategic about the timing for your Series B raise, rather than jumping into it automatically because you have less than 6 months runway.
According to Nic, you should only raise if you have:
- sufficient runway
- a clear plan for how you will use the capital to scale
- a strong narrative for your company’s future
Moreover, setting the groundwork for a successful Series B round stems from far more than 6 months of work. In fact, Nic recommends that founders begin the process of building strong relationships with potential investors 6 to 9 months before they commence on the fundraising journey, using a personal founder-led approach. Whilst it is acceptable to outsource fundraising to advisors at Series A or earlier, investors are expecting to communicate directly with the founder at Series B. Hence, leverage support from your finance team and start inviting investors to quarterly meetings far in advance.
On the topic of valuation, don’t jump to communicate a number too soon.
According to Nic, the easiest way to get a quick “no” from an investor is to signal a valuation that they feel is too high. By setting a price upfront, not only are you reducing optionality, you are also increasing the likelihood that an investor will simply pass.
Instead, he recommends letting investors lead with their expectation first. After that, it is best practice to let the market determine the fair price. Determining valuation is more of an art than a science at Series B, so it is important to approach the conversation with nuance.
Make sure you have a powerful equity narrative backed by company data
At its core, fundraising is storytelling. When you are raising a round, you are painting a vision of the future using your company’s historical performance as a backdrop for future success. How you communicate this story can make all the difference between a successful and unsuccessful raise.
Rather than focusing solely on numbers and data, spend more time crystallizing your equity narrative in order to capture investor attention and get them to believe in your company as much as you do. Furthermore, keep in mind that investors are more focused on the future vision of your business, so try not to get too fixated on the now.
More Resources:
Fundraising and Meeting With Investors - Y Combinator’s Library
How to Write an Attractive Investment Memo for Start-up Investors - Aspire Academy
Elad Gil's Insights on Entrepreneurship - Blog
Frequently Asked Questions
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