Live from SaaStr Europa 2022: Cantina Stage
Peter Specht (SaaStr Europa Cantina Stage) presents practical guidance on startup fundraising focused on process and tactics. He frames fundraising in three phases—planning, preparation, and active process—and emphasizes timing (raise for ~20–24 months of runway), prioritizing momentum (growth rate and seasonality) over absolute revenue, and avoiding fundraising during common holiday seasonality. He recommends preparing 3–4 months ahead (warm intros with ~20–30 target funds, 30-minute intro meetings), running tighter warm lists of 4–5 high-probability investors in the month before, iterating on a deck and building a data room (stage-dependent), doing dry runs, anticipating FAQ, and running a simple investor CRM to manage parallel processes.
Chapters
Welcome credom partner peter specht. Hi, all. Good to see you. Let's talk about a topic today that many of you will spend time on, most likely. And it comes over and over again, typically every 12 to 18 months or 12 to 24 months. Let's talk about fundraising. At fundraising, it actually makes a difference of how you play the tactics. It's not just, you know, I talk to an investor, he decides yes or no and then it works out or not. But you can actually, besides sort of like the product you have, the business you're building, you as a team, influence it quite a bit with process tactics. And this is because VCs look at a lot of companies and they react to sort of certain patterns they see or they react to process momentum and these kind of things. So I want to talk a little bit about how you can influence it and how you can nail your process for your next funding round. And I will leave time for questions in the end. So if you have some, feel free to keep it until then. And let's talk about it. So, first of all, I usually see the fundraising process in three phases. You know, one is the fundraise planning, the other is the proper concrete preparation, and then there's the active process of it. And the bad news is you actually need to spend quite some time on all of these three things. And so usually when we go into preparation mode, what does this mean? Months ahead of the fundraise, you know, three, four months before you should really think about what is your objective with it. Think about a rough round size that you want to have in mind. So basically setting the rough scene of what you want to achieve with it and what you need to raise, actually, and how to come up with a number that, that you need to race. It's typically, what do you need for 20 to 24 months of run rate? Ideally 24, of course, but that is the number you should probably be racing and have in your mind. And then the big question is always, when should we do it? And there's of course, at the very early stage at precede, whenever you need to start to build and need money to hire people. But later on, I would say it's latest, six months before cash out, or whenever you have fantastic momentum or reached your revenue milestones or other commercial or strategic milestones, then it's a great time. And typically I say prioritize revenue growth and momentum or other metrics. Momentum over the apps, over sort of like the absolute revenue level or milestone. So an example for that is I sometimes get the question should I raise it 1.2 or 1.5 million ARR? And it depends when you're I would say it depends when your year over year growth looks much better or when your monthly growth looks much better or when your seasonality is more favorable because investors tend to have the tendency to prioritize momentum over absolute number of absolute level of revenue. So if you have 1.2 million ARR, 3.5x year over year and great current momentum and seasonality, it's much more favorable than if you have 1.5 million ARR, but are coming just, you know, after two slow months in summer with limited momentum in your month over month growth and only have, you know, 2.8x year over year growth. So probably prioritize the momentum part of it. And then one thing which is very obvious but still lots of times people still don't have it on their mind is seasonality around Christmas and seasonality around the summer holidays. And yes, not all investors are in the whole summer on holiday, but over a period of time, most of the time between mid July and mid August, many of them go to holiday for two weeks, some for three, some for 10 days. But you don't want half of your lead funnel of investors to, you know, write you an out of office email reply. And so you just want to keep that in mind. And there's two things to, you know, keep in mind of, like who do you want to raise from? If it's angels, if it's VCs, if it's strategics, depending on that, you need to adapt your preparation and planning and make a specific list of funds for it and your preference for it. And I get to that in a second. Another thing I usually like is sitting down a few months before and looking at what were potential roadblocks in the last round. So what were for example, rejection reasons that VCs in the last round had and how have we developed on these reasons since then? And I usually advise to make a list, go through these rejection reasons from last round and see how you can address them in your talking line. But maybe also in the next three, four months until you fundraise to optimize those key KPIs or whatever reasons were to have a better answer to them in the next round. So then we get to the active part of preparation for it. And preparation. Many people say let's have coffee. I mean, hey, how are you doing? Let's catch up, let's have a coffee, a zoom coffee, whatever it is, that's a Good first step, but it's not enough and you can do much better than that. And I think with really spending the time on the material and stuff to prepare, you're going to have the key to success also. So what do you need to do in the one to four months before a fundraise? I usually advise to ramp up sort of your activity with investors and do those intro chats. And here comes the fine line. Intro chats can be. You can do endless amount of intro chats you get inbound from investors or you can outbound to invest and say let's get to know each other. But it's a fine line of how much time to spend investors. And my personal take on it is it usually is not worth your time to spend five coffee meetings and five interchats or like warm up chats with the same investor because it's great to build a relationship. But if you cannot do this with 20 people with 20 funds or 25 funds at the same time of having like four or five warm up meetings before. And so my advice usually is if you have a list of 20 to 30 funds for example that you target, you should try to have at least half of them warm before and that can be at an event as today at Saster, or it can be a zoom coffee chat or a coffee chat in real life that you, that you're having. I would only make them 30 minutes. I mean the purpose of this is just to know your business is great, you're a very interesting founder and whenever you go fundraise the investor's gonna spend high attention to this and focus and make time for looking at your round and dedicating resources to it and you wanna be top of mind, that's what it's for. But likely if you deploy lots of lots of coffee chats, I think the ratio of your time allocated versus spending it on the business side the four months before to how it's changing your likelihood of fundraising is not so good. So I advise to have for those 20 to 30 funds that are on your list a 30 minutes coffee chat. Focus on the storyline. Don't share your numbers in very detail yet because if you share too much details up front, investors can hold you a little bit accountable for like say hey, I'm at 50K. ARR, when I go fundraising in three months I will be at 80. And then in three months you go fundraising and you're maybe at 65 or 70 and you know, the investor of course then knows okay, something didn't go according to plan. And if you just are a little bit more, less concrete on numbers, it gives you more so more flexibility to craft your storyline when you actually go fundraising and control it better than if you share lots of stuff on the number side up front, but you should share you know, your story, your vision, what are you building, become top of mind. When you got that warm list of intro chats investors you had in the three, four months before, in the four weeks before, I typically recommend to have a warm up catch up call with a few with like a handful investors only which you think have a high likelihood of conversion and a very high interest and are sort of in your preference. It doesn't need to be your top 1, 2, 3 preference. It can be a mix of like preference and likelihood of converting. And those, you know, four or five funds you should be, you know, closer with and even more on the radar with because you cannot do it with 25, but you can do it with a handful of funds. And then in the two to four weeks before, you should build a deck and a data room. And a common thing here is really, yes, we're going out fundraising, let's build the deck. We're going to do it in the week before we go fundraising. Maybe not so great because it typically takes time to iterate on it. So if you better start three, four weeks before you craft a storyline, you can send it to entrepreneur friends, angels, your current investors get the first round of feedback. That probably takes three, four days. Then you iterate on it the next iteration and adapting the storyline, adapting the deck. So it typically takes two to three weeks in building a really good deck and storyline with multiple iteration processes. So make sure you have that time allocated to it and also build a data room and then roughly a week before reach out to your warm end cold leads to schedule meetings and ideally you do it on Monday and ask for a meeting next week. And some funds will come back and say like, hey, I really love what you're building, let's talk tomorrow. No, say great, we talk next week. Because what you want to do is you want to run the process in parallel because you're still in the preparation phase if you now start to take meetings because you think, oh, they're so excited and maybe just go goes quicker. I get that feeling. But it's much smarter for you to start sort of like a process in parallel when you actually focus your time on those chats, on the conversations when you're into it, having multiple calls and be smarter than getting dragged into the process when you're not ready yet. So some learnings from that phase. I already talked about iterating on the deck. I highly advise to do dry runs so having mock pitches with entrepreneur friends, angels, other investors, existing investors because you will get better the more you pitch. And many of you probably know this, but the first pitch you do is probably not the best one, but the fifth or sixth or seventh one you do. You hear the same questions over and over again. VCs are, you know, often have very standard questions that are the same things around your business and so you just get much better answering them in five calls and in the seventh call you're just much more convincing have a better answer and storyline around it. Also regarding these questions, I think it's great to have a list of anticipated questions for your fundraise and answer them yourself before. So ask your existing investors of like what are your biggest questions around this? What would you ask me in the pitch? And then build a list in a word doc and just answer them for yourself and practice them and build a storyline. I think that can give you the confidence to give really, really good answers and have good answers for the investors. We talked about the interchange before and then build relationships with enough investors. So not only with five investors but have a list. I usually recommend. I usually think that you can have four to five investor chats per day and if a week has five days that's somewhat around 20 plus 20 to 25 investors that you can talk to in parallel. And I think that's a pretty good number to have. And when someone drops out, you just, you know, loop in the next one to keep the funnel alive. Data room or not, if you are, I think it really depends on stage if you should have a data room or not. Most companies right now do data rooms. In notion, I would say it's much cooler than, you know, those very old school private equity data rooms. No, you don't want to have that. You, you want to have a very easy and light data room. It can be in Notion or on Google Drive. And I think at pre seed or seat stage there's likely no need for a data room. Your company is very early. You will surface with a deck or maybe a financial model that you need. But for series A it kind of makes sense and it allows you to run the process with more investors in parallel because you have less questions to answer. Because typically if you don't have a data room, investors will simply follow up with questions. Can you send me the X? Can you send me Y? I have a question about this and if you have it centralized in one place it allows you to drive the process forward much faster and much more in parallel and I've listed a few things here I think it's key to have of course a deck maybe a product demo via loom financial plan key KPIs a slide around the backgrounds of the team share your cap table and for series B you're going to make it more detail and bigger and add a few more things around maybe some background on product and tech maybe some customer interviews some more details about the market but I think about it no data room in precede seat some data room in series A and a detailed data room in series B. Then run an investor CRM. I mean I talked about the list of 20 to 30 funds or 20 to 25 funds that you will talk about. You will probably make a list of 50 or 60 VC funds that are potentially a target for you and I would you know together with your current investors or angels go through them.
