StackAdapt closed its Seed Round recently. Overall experience was absolutely fantastic and it taught me a lot of things as a CEO. Here I want to share some lessons I've learned:
1. It Takes Longer Than You Expect
Things are always slower in reality than in your dreams.
If you expect serious investors to invest in your company after one phone call and one meeting , you are delusional. It takes time to get to know people. Investors want to understand your personality (as an entrepreneur) and see if you can deliver on your promises (in the short term).
Best advice: start raising your round at least 8-12 months before you want to close.
2. Pick the Right Investors
That's right. You absolutely have to choose the right investors. Bringing investors on board is like marrying someone. You can't use the checklist. It's either you love them or you don't. Same applies to finding the right investors. Use your gut feeling.
You can also talk to entrepreneurs they funded already, and try to understand dynamics in their relationships. Look at your investors' track record, their portfolio, major exists, investment timeframe, investment sweet spot (average round size). It's the combination of these elements that will help you to make the right decision.
3. Communicate the Vision
You need to show your investors where you are taking the company. You need to communicate your "Why". This is the core. If you want to build the next Google, but your investors want to flip the company and make a quick buck, you are in trouble.
That's why it's super important that you communicate the Vision early, and hope to see the excitement in your investors' eyes. If the investors laugh at you, leave the room.
4. Show the Traction
You can have the best idea in the world, but with no signs of traction - it's worthless. Especially in the early days of the venture.
Your backers will look at both absolute numbers (actual revenue, sign ups, traffic, downloads, etc.) and growth numbers (month-over-month % growth). The numbers have to be impressive enough, and show the potential for the hockey stick (J) growth in months (years) to come.
Besides, having this traction will help you to negotiate a better deal.
5. Know the Numbers
You need to earn investors' trust. You need to show your business savvy. This is usually done by knowing the numbers.
Make sure to understand completely where your company stands financially from both income statement perspective (accounting) and cash flow perspective (what's in the bank). All the future projections have to be backed by your assumptions. Assumptions have to be a little more sophisticated, than multiplying the previous month by 1.2 and showing 20% growth month-over-month.
Raising Money will require a fine balance between your "dreamer" side (showing 1000% growth, world domination, and billions of dollars in revenue) and your "realist" side (competition, actual growth, past pivots, etc.). Good luck!
Ildar Shar is the CEO of StackAdapt, world's first Programmatic Native Advertising Platform.