How to Raise a Pre-Seed—Straight from Investors’ Mouths

You’ve conceived the next great innovation, but actually pushing it out into the world is a whole other endeavor—and it's not cheap.

For New York Tech Week, Fenwick corporate partner Al Cooper sat down with some of Silicon Alley’s premiere tech and life sciences investors to discuss what makes them tick and what startups can do to maximize opportunities.

Moderated by Brooklyn Bridge Ventures general partner Charlie O'Donnell, the panel also included Entrepreneurs Roundtable Accelerator managing director Brian Hecht, Four Acres founding partner Jenny Friedman, and XRC Ventures director of accelerator Sam Wils. Here are their tips:

Be thoughtful and intentional. Early money is the most expensive capital you’ll raise, so it really pays to be thoughtful before taking it. And don’t just take money because you can, either—have a plan for it and ensure that you can articulate that plan. Remember: There is no correlation between how fast you raise cash and how far you go.

Line up your experts early. There are so many easy ways to mess up if you try to go it alone. Before pitching, engage with legal counsel to check your contracts, shore up IP documentation, and eventually help you optimize the terms of a funding deal. The same goes for accountants. It’s not just about protecting your interests—investors want to see you have your ducks in a row.

Seek out “super-connectors.” Some people are just more plugged in to the scene and love helping build the larger network. Seek out and pitch these folks. Even if they pass on your company, it’s a great opportunity to ask them to connect you with someone who might be interested. Even better, do a little research to identify other investors in their network, and ask about how to connect with those people or funds specifically. It shows the super-connector you’ve done your homework. Another strategy is connecting on LinkedIn with investors you're interested in, then looking at their connections for entry points.

Adjust your expectations. Pitching is tough. VCs might hear a half-dozen proposals a day, but they typically only fund a very small percentage of companies they meet with. It also takes longer to get funding than it did a few years ago. Traditionally, the time from formation to capital averaged over a year, but that timeline is even longer these days.

Advice on advisers. Advisers can help steer you in the right direction, but they're not all created equally. There is no blanket percentage you should grant an adviser. Instead, think about what they can do to advance your company. Attach vesting to equity and monitor what they provide. Don’t be afraid to make changes.