I concluded my writeup about raising money for Keen by offering to help anybody who was going through the same process, or just had general questions. I think I had some really interesting correspondence with folks who reached out, and I wanted to share some of that here. I’ve anonymized the questions to protect identities (but if you recognize yourself here and want credit, let me know!).
On to the questions!
Question: We are an inexperienced team. You guys were vetted through Salesforce and Google. Were there inexperienced founders in your TechStars class? If there were, how did they make up for inexperience from the investors’ point of view? We know that the bottom line is talent (our team is great) and traction (we start testing next week), but we’re not sure how to best present ourselves.
Me: The founders in our class came from various levels of experience. But everybody had previous work they could point to as representative of how awesome they were. The CEO of EmergentOne, for example, was only 20. But he had worked at Rackspace for a while and was obviously really smart.
What you have to do is figure out what about you and your team stands out. For us that was previous accomplishments at big name tech companies plus our really tight knit relationships with each other. That’s an obvious recipe for success, but it’s not the only one! If you went to a big name university, talk that up. If you’ve been working together for a long time, mention that. Take time on this one. We spent most of TechStars trying to figure out what message we wanted to get across at Demo Day, and ended up picking only two things, one of which was that we had a great team.
Question: I just wanted to get in touch to say thanks for the article on raising vc, we are in a position where we want to raise a small seed round to prove out our business model and find product market fit.
Would you recommend going for an incubator or raising from Angel at this stage?
We’re pre revenue but there was a lot of interest at LeWeb.
Me: I’d say do both. An incubator or accelerator will hopefully make you better as a company, but they don’t usually come with a ton of money. Our route was to do the accelerator first, which helped us figure out what we wanted to do. Once we had that we raised money.
At the end of the day, figure out how much money you’ll need to get yourself to where you want to be. Usually that means 12–18 months of runway, and you’ll spend that time getting your business to a point where you can successfully raise the next round. But maybe you don’t need that long for what you want to do.
Question: Would you recommend doing Techstars?
Me: If you get the opportunity to do TechStars, don’t hesitate. It’s one of the best things I’ve ever done.
Question: Did you guys end up getting a referral into Techstars?
Me: We didn’t get a referral or anything like that. We applied, then went to TS4AD (TechStars For a Day) where we met the managing director and talked to him about our ideas and team. He liked us enough to let us in.
That being said — a referral can’t hurt. 🙂
Question: I am thinking of raising working capital and as you stated “Get in touch with us” ! would like to ask you two questions.
1. How did you value your company?
2. Can you send me a blanked out copy of your convertible debentures.
Me: Roughly. We didn’t do a priced round so we didn’t have to set an exact value. The convertible note sets a cap which is an effective price, though. We worked through that with our lead investor. He said he’d invest in us up to a 10 MM cap. But we went lower than that. Didn’t want to optimize on price. Wanted to optimize on the quality of investors we could get.
We didn’t use exactly these documents, but the TechStars Open Source Model Seed Financing Docs are pretty solid. Definitely look under the Debt Financing Structure header.
That’s it for now. I hope this is helpful!