I was just meeting with a founder who is raising their first Seed Round. They echoed something I remember from when we were raising our Seed round and that I’ve heard from other founders – “it’s hard to know what exactly we should be preparing for investors.”
While there’s a lot of discussion about the pitch deck, which of course is important, there are two other things that I think don’t get highlighted enough that are also pretty darn important IMHO. These are:
- Use of Proceeds
- Financial Model
Now I know what you’re going to say, “what’s the point of a financial model at the Seed stage? Isn’t it just going to be wrong!” Sure – it likely will be wrong but at least you can show investors that you do have a plan to make money and outline in more detail how you plan to do it. An investor that I think very highly of recommended making a three year model, which also sounds like a lot more than you’d need at Seed, but to her point, “it shows the investor that you’re thinking about how you’re going to make money and that your growth rate meets the expectations of a VC firm.”
As for the Use of Proceeds, well that should make logical sense right? You’re asking for someone to give you a million dollars (and often more) it seems only logical that you’d have a plan for what you’re going to do with that money when you get it.
Last but certainly not least – Mark Suster has a must-read article about What you should send before a VC meeting, you can read it here, and seriously, this is a must-read.