It's exhilarating. That feeling of shipping your first product, securing your first customer, or getting your first customer testimonial. This is just the beginning. Startups need to continuously ship features, acquire customers, and delight users to grow. Usually, that requires external funding. Your first round (or sometimes second) of external capital is called "seed funding". This article highlights the basics of raising your seed round and sheds light on BIP Ventures' seed investment process.
Any startup prioritizing rapid growth has two key functions:
The amount of money needed to be able to hire and retain top talent to build, market, and sell your product is likely more than the founding team's ability to self finance. This is where angel investors and early stage venture capital funds (that's us!) come in.
Some founders can raise money with an idea and a diagram on a napkin. Usually those founders have started and sold several successful companies before, and investors are usually betting on the founder to do it again. Most founders need a product and some traction with customers to successfully raise a seed round. While specific requirements vary, BIP Ventures looks for the following in seed companies:
Investors also have sectors and industries of focus. BIP Ventures focuses on B2B SaaS, Healthcare IT, Fintech, Digital Media & Entertainment, Developer Tools, Cybersecurity, and Frontier Tech. We do NOT invest in hardware, biotechnology, pharmaceuticals, professional services, or CPG brands. Unsure if you meet our criteria? Drop us a note here.
It is important to approach investors that have expertise in your industry. Beyond their capital, such investors can help with relevant introductions to potential customers, advisors, employees, and strategic partners to accelerate your growth. Finally, you have to decide how much money to raise. Rule of thumb is that a seed round should give you 12-18 months of cash to run and grow your startup. BIP Ventures invests between $100,000 and $500,000 in seed stage companies through a SAFE, Convertible Note, or a priced equity round.
Now that you know the basics of raising a seed round and what BIP Ventures looks for in a seed company, here is what you can expect going through our seed investment process.
Essentially, we are looking for companies that fit our industry focus, and seed criteria. We will never lead you on. If your company is not a fit, we will reach out and tell you whyWe will never lead you on. If your company is not a fit, we will reach out and tell you why. And if your company is a fit, a member of the investment team will reach out and set up an introductory 30 minute call to learn more.
The Introductory Call
Don't stress, this is not an interview. Our goal with this meeting is to get to know you and your story. In an average introductory meeting, we like to hear the founders' story, why they decided to start this company, their progress so far (product status, number of customers, revenue etc.) and fundraising goals. Curious about how to best structure your story for this meeting?
The Second Meeting
The next step is a second meeting with another member of the investment team. We always make sure multiple people participate in the deal process so we have multiple perspectives early on as we consider an investment decision.
The One-pager
As a next step the investment team puts together a one page investment memo that is shared with the broader BIP Ventures team as a way to invite questions, comments, and feedback. This is a valuable part of the process as different members of the team weigh in with their various expertise to develop our opinion on the company and the market opportunity.
The Final Investment Memo
We share the team's comments, feedback, and questions transparently with the founding team. This is when we dig deeper to answer these internal questions and get conviction around the team, market opportunity, business model, and how the company stacks up against our seed criteria. This process might involve more meetings with the founding team, one or two calls with a customer, or digging into the data room and financial projections. It culminates in a final investment memo shared with the BIP Ventures Investment Committee and put to a vote. If the committee votes yes, BIP Ventures is committed to investing in the company (pending legal diligence).
Welcome to the BIP Ventures Community
This is the fun part -- you send us the legal documents of your round. Once we review and sign, we wire you the money and officially welcome you to the community with a kickoff call.
The most important thing to keep in mind is that we can't invest in you if we don't know you. Don't be shy, say 'hi!' You don't need a warm intro to raise money from BIP Ventures. We are serious. You can just directly email tcheney@bipventures.vc or fill out our contact form here with a short blurb about your company. We respond to 100% of these inbound messages.
If you know someone in the BIP Ventures ecosystem, feel free to get an introduction from someone in our circle. This could be another founder we have backed, a friendly venture fund we often co-invest with, or someone who is friends with a team member. Again, you don't need to look for a connection, cold emails work great with our warm team.
BIP Ventures is a firm built by founders and operators and we understand that raising venture can be a daunting task that is distracting from your core goal of building a business. That is why for our seed investments, we move fast, don't waste founders' time, and make sure our process is flexible and founder-friendly. We are excited to learn more about what you are building. Tell us here!
