I asked my teammates for their least favorite thing to hear from startups and it's, "six months after this seed round, we're going to raise a Series A."
About SpringTime Ventures
SpringTime Ventures seeds high-growth startups in healthcare, fintech, logistics, and marketplace businesses. We look for founders with domain expertise, forging a path with a truly transformative technology. We only invest in software-based businesses in the USA. We bring a people-focused approach, work quickly, and reach conviction independently. Our initial check size is $400k to $600k. You can learn more about us and our approach.
About Rich Maloy
Rich's mission is to rebuild the American dream through entrepreneurship. He works with early stage startups transforming the world, giving all people the opportunity to grow, learn and earn. With prior careers in finance and sales, he's now focused on startups investing through SpringTime Ventures where he is a Managing Partner. He's a father of two young children and loves sci-fi, skiing, and video games.
Rich:
Wrapping up the week of Things You Should Not Say to Investors is SpringTime's favorite, or rather least favorite thing to hear: six months after this seed round, we're going to raise a Series A." There is so much wrong with that. We're going to put aside web3 right now, because things in that world are moving... differently. I digress. First. It can take up to six months to run a Series A process. Typically it takes two to three months. That means if you want to raise a Series A, you need to be at Series A metrics somewhere between now and the next three months. Let's go back to the VC treadmill analogy, and go back and listen to episode 16, 17, and 18 for more on this; those are some of my favorite episodes. High level, VC Treadmill is the process of raise, spend, grow, repeat. Only the absolute best of the best startups in the hottest industry with the highest velocity can skip the"grow" part of that. And even then only once. And usually not from Seed to A. Let's put this mythical six months on a timeline. You need to close the round, that takes one month. Hire great people, at least one month. Get those people up to speed, whether it's sales, product or engineering, at least one month on that. Now you're three months into your six month window and you're just now shipping product, ramping up sales, ramping up marketing. Now you need to start your A round and all you have to show for it is higher burn. It just doesn't work. Fundraising takes the CEO out of the business for the duration of the raise. Runway is important because it means the CEO has time to get back into the business to focus on the growth. Don't tell investors, you're raising a series a in six months. It doesn't show that you have aggressive growth expectations. It shows that you have unrealistic expectations and the business is going to suffer. That's a wrap for this week. Hit me up on LinkedIn or Twitter, let me know what sort of content you'd like to hear. Thanks for listening again. Time is our most precious asset and I'm grateful you'd spend more of yours with me.