3 Vital Things You Need To Gain Credibility At Startup Seed Stage
Investor confidence can make or break a startup. In this guide, I show you the 3 things you need to ensure credibility and confidence at seed stage.
There is a branch of futurology that forecasts that in the next few hundred years, humans will be able to tap into telepathy and predict the circumstances we will face. Right now? This ability is more questionable… Or else why did no one predict 2020?!
Putting aside the issue of whether psychics are real and whether AI will give us advanced cognitive abilities, I have a greater point to draw here… Investors don’t want to read your mind. They don’t want to interrogate you either- though it may feel like it at times. Investors simply want to see what they’re investing in.
To set yourself up for a successful seed round, you need to focus on transparency and put yourself in an investor mindset when doing so. This is going to allow you to close investment right from early seed round prep and, perhaps more importantly, to build a business that works in the long-term.
This stage of startup life is difficult, but you’ve smashed it just by getting here. Harnessing the traction you need in order to scale is going to require investors- whether big angels or small VC’s- and once you bite the bullet and throw yourself into seed round prep, things are going to start coming together very quickly.
In this article, I’m going to show you three things you need to take investors inside your mind, to build credibility and to show them why they need to invest. The three things you need to incorporate into every pitch are:
- The Past — Company History
- The Present — Data Room
- The Future — Data Reports & Projections
The Past- Company History
Regardless of your startup’s background, you’re sure to have a backlog of history that you can refer to to strengthen your investment potential at seed stage.
If you’ve taken on investment to get you to this stage, you’ll of course want to note that. Look back through your records. Everything from incorporation to minutes from company meetings will be useful in demonstrating the strength of your procedures to date.
All companies go through a number of shifts; showing how you have done so on paper is key. You should also show that you’re set for any planned changes you’re showing investors.
The Present- Data Room
To show investors everything they need to see, you need to ensure that your business is set up with transparency at the forefront. You want them to buy into your vision for the future, so you need to show that this is clear and that existing circumstances are aligned with it. This comes down to the way you present your data and your current circumstances through narrative.
Which platform you choose will depend on preference and, of course, budget! Top tier M+A lawyers I’ve spoken to who have advised from seed to exit stage recommend making use of sites such as Ideals, Ansarada and Datasite in order to raise the visibility of your startup story. I’ve used Ideals and like it- quick, simple and comparatively well priced!
The Future — Data Reports & Projections
Data reports and projections might sound daunting, but if you have traction, you have data. You need to extract as much of it as you can. Then prepare it for presentation to seed investors.
Pinpoint the core metrics of your business, particularly those that relate to growth, and consider them from the perspective of an investor. Ultimately this should be returns focused. Think about what the outcome of investment would be and how it would change the future of your business.
Considering all of these things allows you to tell investors exactly what they want to hear. When you frame a seed round from this angle, investment becomes a whole lot easier.