Fundraising FAQs
All the Q&As we've collected for fundraising
By Noopur and 5 others6 authors242 articles
- What is a founder-friendly maturity date for a C-note?
- We’re in discussions with an investor and they want us to get “Investment Liability Insurance” -- which doesn’t make sense to us or our legal team. Has anyone ever heard of such insurance and what does it cover?
- We heard from the lawyers that we should not sign more than 1 SAFE. Or there will be some problems in equity. Is it right? (Part 2)
- Does any one had experience with Regulation A fundraising or know someone, who did or in the process right now?
- What is a typical SAFE cap?
- Is there a best way to respond to an investor who seemed like a "warm" lead (e.g. good partner meeting & feedback) that says they would like to do a check-in in 60 days?
- We heard from the lawyers that we should not sign more than 1 SAFE. Or there will be some problems in equity. Is it right? (Part 1)
- A family member wants to angel invest but at an amount less than the suggested minimum of $10k. Is $10k the suggested amount strictly as an anchoring tool or is there additional reasoning behind it?
- We have a lead investor that commits $1M but we can't get the extra $1M to close the round. Does anybody have any idea? Would the lead agree to crowdfunding platforms?
- Does anyone have advice or experience with taking investment from non accredited investors?
- For raising from Angels, how do you find out someone’s net worth?
- How do you handle it when a fund says that they want extra equity for opening doors and other support?
- Does anyone have experience consolidating individual angel investors/friends and family investors into an LLC or utilizing a proxy agreement to streamline shareholder voting?
- We have an advisor who has worked with late stage companies. He has signed the agreement and asked us if there will be a stock agreement etc. that will show strike price etc. Any advice on how you're handling the follow-up to the agreement with advisors?
- I have an investor with very high interest but I'm concerned that they're being a bit overbearing and invasive. We have a year of cash. Any advice?
- If an investor signed an NDA and asks for terms of previous investments but not issued term sheet yet - is it a good idea to provide details of previous SAFEs like CAP?
- All the Angels & VCs we've talked with refused to accept a SAFE and required convertible notes. Any thoughts on changing their minds? Additionally, a VC group we are talking with are invested in our competitor, should we be worried?
- Right now, my founder and I are deciding about vesting for the founders. What is the opinion of Alchemist on this subject?
- Driving a Syndicate Round Tactics
- Do European investors invest in US companies, even if the operations are in Europe?
- Data Room Guidance
- What amount of diligence information do you provide for angel investors vs VCs? Are you drawing any line based on potential check size?
- Did you ever issue ROFR (Right of First Refusal) for angel investors? Can it be a red flag for VC on demo day?
- Has anyone encountered people that want referral fees for making introductions? We are thinking of offering 5% of gross profit for 3 years on any clients they get us. Is that crazy?
- How many shares should our C-corp issue and how should we do so to minimize our tax liability?
- Does anyone have suggestions on what to do for building out/presenting an exit strategy?
- How do we avoid meetings with principals and EIRS? Any example of emails that worked for you to push the partner to join?
- We just had our second meeting with a venture group and they asked for the cap table. Is there anything we should specifically add beyond "shareholder", "percent", "number of shares", "price", and "value"? We are in our seed fund.
- Is there a mechanism that will allow a startup to be more flexible when they signed a term sheet?
- Is it normal for Alchemist mentors to invest in the companies? Also, generally what kind of involvement would the investors at this stage expect?
- Any suggestions on angels / early-stage VCs that are fanatics about investing in women founders + B2B SaaS?
- Does anyone know if there are issues/considerations if taking investment through "a non-accredited S-Corp"?
- What questions would you usually ask a founder from a VC portfolio when doing a diligence of a VC fund that is interested in investing?
- Does headcount go into the CAC calculations or just the expenses incurred to acquire customers?
- How long is a 409A process? And how much did it cost?
- If angel investors are required by the SEC to be accredited (net worth $200k to $1m), do these rules apply to investors who are not American citizens/taxpayers and companies who want to invest?
- Does anybody have a go-to-market slide that they're insanely proud of, and would be willing to share? Just want to get an idea of how other folks structure it.
- I have an angel investor who wrote a $10K check asking for a detailed business update and K1. Is there an authoritative resource that I can point him to that'll explain a $10K check don't get detailed informational right?
- How do you respond to the question "Is this a big market?" from investors? We have a bottoms-up analysis on the market and yet it raises doubts.
- An angel investor (Russian private person) asked us while we were discussing SAFE. There is a point that he should be an accredited investor. What is the best way to answer this from the legal side?
- An angel investor asked us to include financial details in the next update, is this a typical and reasonable ask for an angel investor? It wasn't discussed in any of our previous discussions with him.
- Any pointers on tools for managing & tracking the fundraising process?
- How did you deal with a fund (that signed an mNDA) requesting for code access? They want to analyze the quality of the code to understand how scalable (or not) it is.
- Is it normal for an investor in Due Diligence to ask what you think is appropriate in near and long term multiples for "a company like yours"?
- How do we deal w/ small checks that want to talk to customers?
- Help with Alchemist Standard Convertible Note: One of our investors want out (no qualified financing since the note was signed), are we legally obliged to pay the debt back as cash in such a situation?
- How would you go about angel investors that are worried about follow-on valuations being lower and being priced out?
- When you enter a due diligence stage, where VC folks want to talk to some customers, what's the best way to do it not to overload your partners? We're thinking of drafting a letter of reference and having our customers sign it.
- What's your most productive cold-email subject line?
- Are we required to share our financial bank account statements with angels?
- Current EU investor is saying it will be a “down round” if we raise a round on lower valuation than latest cap. Anyone having a good method of communication to mitigate that assumption?
- Is it true that if we get in Sequoia India's pipeline then Sequoia US will not consider us since they don't overstep/compete? Does this apply to future rounds as well? Should we take the call with the India team, or try to get in front of the US team?
- Could the Alchemist SAFE be used as a pre-money valuation to bring existing Indian investors to a new US entity?
- What are the typical multiples on revenue for valuation in Series A in SF? And does it differ in other locations?
- Does anyone have a template that ties exercising SAFE and warrant together?
- How to be transparent about pregnancy while maintaining negotiation power with a micro fund that is waiting to hear back within 48 hours.
- What do you do when an investor didn't transfer the money after signing the documents?
- How do you respond to a fund asking for when and at what terms will the Series A be raised?
- A tech scout says that their interest is strategic and if so involve the venture capital. Is that a typical thing? If so, what’s the best tactic? Take the meeting with vc arm and try not to get business side involved?
- Are EIRs at a VC firm someone who actually assess investment opportunities, or just someone looking for a good startup idea?
- How do I invite Other Investors to Demo Day?
- What are some tips for Demo Day?
- Customer Intro Videos
- Where can I watch Michia’s Mock VC Pitch?
- Bad Ways to Ask for Investor Help
- What do you do after an investor says yes?
- How do I craft Advice-Request Email to Institutions At The Top of my List before Demo Day?
- What investment instrument should I use & what should I include in the Confirmation Email after an investor has verbally agreed?
- How do I draft a Financial Plan with a Spend Level that Justifies an Institutional Raise?
- How do I draft a Key Milestones Slide?
- We received interest from investors at the Investor Summit. What should I do?
- What's the point of the Investor Feedback Summit?
- Can you give me a basic understanding on Note Terms and Dilution?
- How do I create a target list of Angels?
- Will investors factor in customer validation that is not paid? If so, how should we represent that?
- Do you take an into to a large VC from a seed fund if seed fund didn’t invest yet?
- Is it worth taking a meeting with an investor who's had a case of sexual misconduct in their background?
- Could you share instructions/links on how to send an email blast to investors?
- What are your most effective responses to someone complaining that the cap is too high?
- Is it reasonable for an interested angel investor whom you just had the first call to meet with your Tech Advisor in their HQ?
- We received a pre-emptive term sheet for a Series B of a raise of around $25m at around a $90m Pre. The lead VC has asked for Veto Rights to block an acquisition if the company would get less than 2x a return on their investment in that acquisition.
- We received a pre-emptive term sheet for a Series B of a raise of around $25m at around a $90m Pre. The lead VC has asked for Veto Rights to block an acquisition if the company would get less than 2x a return on their investment in that acquisition.
- Are we legally restricted by the number of individual entities that we can have on our cap table before we are forced to go public?
- We have some angel investors that want to write small checks (e.g. $10k). Should we take those checks?
- If 1-2 funds simply stopped replying after almost a week, should we write a review on their Vault profile?
- Any good/bad experience in sharing data room (projections)?
- How do you deal with investors in competitors? Are they realistically going to invest?
- Any tips on finding out which partner from a VC worked on a certain portfolio?
- I have a connector who wants to connect me to investors. Is there a template I can send them?
- Is it safe to share a visual aid to help explain a SAFE to prospective angels (sophisticated investors but no tech/SV experience)?
- Do safe note investors need to be accredited investors?
- How do you deal with patent trolls?
- Dealing with overly positive statements from investors
- Is there a "troll pool" where startups can subscribe and join a mutual fund we can use to defend ourselves from patent trolls?
- How do you politely respond to an angel who wants to see our financials?
- A company got an offer to invest on a SAFE w/ a Term Sheet asking for a subscription agreement. What is a subscription agreement? Are there red flags re: agreeing to something like this?
- I got a warm intro by a portfolio founder to a general partner and asked me to meet a principal as a first step. Is there anything I can do to still meet with the partner first?
- What is the strategy for intros or investors who reach out on their own? Do we talk to them at all, do a quick intro call maintaining that we're not fundraising or tell them to see us on Demo Day?
- Is there anything wrong with Capshare for equity management? I know Carta is more popular, but it's like 10x expensive.
- Which angels should I reach out to if I'm a social impact company?
- VC’s are often requesting that I send a pitch deck. Is it OK for me to push back on that request? I am not sure if I am overthinking this but I would rather show it to them in person so I can better control the conversation.
- Is it possible to raise money on a note after you've already done a priced round?
- If an angel want to put in money (say 300k) but is really an AngelList syndicate, is there anything to be concerned about?
- What if an investor ever asks for a Private Placement Memorandum (PPM)?
- How do I respond to someone who offers to bring you in front of angel group and you're not interested?
- Is there a basic breakdown to term sheets?
- What do I say to a VC who wants to contact our current customers as a part of DD?
- Is there a basic breakdown to seed fundraising?
- Is it common for a fund to ask to talk to our previous investors?
- What if the convertible note “expires” and the note owner does not want to postpone it?
- I have an opportunity to take investment (smaller check $25K) from a customer. What are the pros and cons with that?
- Is someone with a SAFE entitled to ask for company financials? (after the investment is made)
- An angel investor is asking for all previous investors caps at which we raised for all notes and copies of the signed notes. Should I disclose that information before any commitment from the investor?
- What should I wear for partners meeting with a seed fund?
- What is the standard amount of information to share when an angel investor asks to see your cap table, after meeting with them?
- What is a good response to "although I like your ..., I would rather wait till next round when you have more growth." ?
- What is a good deal we should offer friends and family (cap and discount for convertible note)?
- Is there a spreadsheet that can help show how equity dilution occurs over a few rounds?
- Is it alright to keep conversations on with two partners of a fund (got in touch with them from two different introductions) at the same time?
- What if an angel asks for pro-rata rights?
- Can I use an artificial deadline to get angel investors to move faster?
- Should we announce our seed round funding to help our recruitment of talent?
- Do all the founders have to sign on a convertible note?
- Is there a polite way of telling associates at a fund that you will only meet if a partner is present?
- What does AngelList ask for to set up a syndicate?
- What are your thoughts about SAFEs vs Convertible Notes?
- What is a convertible note?
- What size and type of deck should I be emailing to investors before a meeting?
- Should only the CEO go to investor meetings?
- One of my investors is asking me for the contact information of my other investors, should I disclose that information?
- What if an angel asks me for additional shares as "commission" for bringing on other angels?
- How much should we trust investors when they say they will pull the trigger after they speak to a reference and they actually do?
- Who is an angel?
- What do I say if potential investors ask who else I am talking to for investments?
- How can you push investors to complete diligence?
- What is an example of an investor update email?
- How do I request references from a VC?
- How do I follow up with a fund that has not gotten back to me after our meeting?
- What do I say to an investor if they question me on why the cap increased?
- What is protocol for investors wiring money?
- Is there a template for an inside advisor fundraising round email?
- How do I structure a pitch meeting with a VC?
- If a SAFE holder wants to sell part of their SAFE to another investor, and doing so at a profit (they want to sell at a higher price than they paid), mechanically, how does that work?
- Should I use a broker for fundraising?
- Can I receive money from a grant?
- Should I disclose to investors the other investors I am talking to?
- What do I do if a VC is moving too quick?
- VC’s are often requesting that I send a pitch deck. Is it OK for me to push back on that request?
- What is an AngelList syndicate?
- What about using AngelList to find angels?
- What do I do if someone gave me a verbal investment commitment but nothing in writing?
- An angel group wants me to pay money to pitch to them, what do I do?
- Does Alchemist have any angel group recommendations?
- How do I obtain email addresses for angels I do not know personally?
- What are some examples of emails to reach out to personal contacts?
- Is there a template/example for organizing investor prospects?
- Are convertible notes / SAFEs unsecured debt typically? What makes a debt instrument "secured"?
- How should I respond to an Associate who reaches out before Demo Day?
- I'm ready to kickoff my next fundraise. How can Alchemist help?
- What do you do to get signal out of the noise? (when getting pitched)
- I received a term sheet from an investor! What do I do now?
- In your experience, are pro rata rights common in a Note at our stage? If not, do you have any advice about how to respond to social starts?
- What to include in an email to a common LinkedIn connection to request an introduction to a LinkedIn target investor?
- I agreed for an angel to invest $10K even though our minimal is $25K, and now he is holding our funds in escrow until we raise 400K. What should be our response?
- In the case of any funds who say "we want to invest, but who we need a lead", is there a way to drive them to close without having a "lead"?
- An angel / investor that wants to meet with me is involved with a competitive company. How should I handle this?
- How do I start off a pitch to a VC? How do I signal strength and access?
- I need to create a list of investors I should target for my raise. What resources are available for that?
- I’m going to my first all partners meeting. Any suggestions (do's and don't) or best practices for a partnership meeting pitch?
- What should I reply back with to investors that connected into me at Demo Day?
- I have an angel that wants to invest but is asking for a huge (e.g. 40%) discount on the note. What should I do?
- Why is the Alchemist note founder-friendly compared to having it all in preferred stock. And how can you sell this to an investor as investor-friendly?
- My VC is asking for customer references. What should I tell them?
- How much dilution is reasonable for me to expect?
- We are going to do a $20-25K SAFE with our CPA - but in exchange for services. We owe him $10K and he will put in another $10-15K this year for free to keep the cash flow low and invest more into our company. How do we handle this structure?
- How should I reconnect with an investor now that I’m fundraising?
- What resources are there to help with pricing for SaaS?
- Do you by any chance have a sample spreadsheet format that is typically used to present projected financials to VCs?
- How much should we say we are raising? And what valuation should we say we are raising at?
- I need to close Angels -- but they are waiting for a lead. What can I do to close them now?
- Struggling with Fundraising?
- Increasing your Pipeline of Investors
- Resources for Finding Funds
- We are getting guidance that our market size is too small. What should we do?
- We have money until 2 months after Demo Day. Should we look into additional angels now?
- We have an individual who wants to help connect us to investors but is asking for commission / compensation for connections made. Any guidance on how we should structure the compensation?
- An advisor wants us to pay a fee for him to connect us into investors. What should we do?
- Estimating valuations
- VC wants you to meet with a portfolio company because they see synergy
- We got a term sheet, but also want other VCs to issue term sheets.
- Do SAFEs affect the Delaware Franchise tax?
- Cold email template (to investors)
- How can I get angel investors to follow through and commit?
- Which SAFE does Alchemist recommend we use?
- How to convince investors to invest before a demo?
- Should we include letters of intent in our pitch deck?
- Raise Amounts Based on the Size of VC
- Company is running out of cash
- Investors asking to speak to current customers
- Technical due diligence
- Meeting with VC Scouts
- How to push an investor forward who is stalling on getting back to me?
- Resources for Crowdfunding
- How to Push Investors Forward, Create Urgency
- Investor Memo Templates
- Should I ask investors to sign an NDA?
- Competitive Differentiation in Investor Pitch Deck
- Pushing Small Checks in a "Party Round"
- Make Alchemist the Bad Cop
- "Lead" investor
- Warm Introductions to Investors
- Closing Your First Checks and Early Fundraising FAQs
- Zoom Call for Potential Investors in "Party Round"
- Cold Emails to Investors
- Non-US Company Pitching to US Investors
- Create Urgency and Scarcity for Investors
- An investor is asking me which other funds I'm chatting with. Should I tell them the names of others?
- Investors Want to See More GTM
- Showcasing Insider Support to Secure Funding
- What level of traction is expected of companies aiming for Series A?
- Investor Databases
- Tactic for Asking if Investors are Actually Interested in You
- Managing the Lack of Urgency from Angel Investors
- Leveraging Alchemist as the 'Bad Cop' to Push Investor Commitment
- Prepping for Partner Meeting
- What do we need to do differently when speaking to a partner vs associate when going over a slide deck?
- Sharing Alchemist Funding Data with Pitchbook
- The Branching Effect - Why You Should Avoid Intros from Non-Investors
- How to Ask Customers to Be References for VCs
- Prepping Customers for Investor Reference Calls
- VC Request for Sales Pipeline Projection
- Investor Checks as % of Fund Size
- How to Address Investor Concerns About Your Competitive Landscape
- Steps After Receiving a Term Sheet
- Sharing Pitch Deck with Potential Investors
- Common Founder Challenges
- What's A Typical Seed Stage Valuation?
- Expected Salary for Seed Stage Founders
- 99 Pieces of Unsolicited, (Possibly) Ungooglable Startup Advice
- Non-Dilutive Financing Reference Guide
- How much revenue should I communicate in my projections for the next 12 months if coming from Net New ARR vs Expansion ARR?
- What are your thoughts about SAFEs vs Priced Equity round for Pre-Seed/Seed?