There is good news and just “OK” news.
The good news is that the venture capital market is showing signs of stabilizing. The bad news is that raising a series A will continue to be difficult for founders, especially as venture firms face liquidity problems, higher interest rates, and pressure from their limited partners to be more cautious in their dealmaking.
In 2020, TechCrunch+ reported that founders should start fundraising when they have at least six months of runway left and that they should budget fundraising to last at least three months, with a one-month prep time to a two-to-six week pitch process with investors.
Today, Jesse Randall, the founder of the platform Sweater Ventures, said founders should start looking to raise a Series A when they have about 12 to 15 months of cash runway left.
“Don’t wait any longer than that,” he told TechCrunch+. “The fundraising cycle, once you start it, takes twice as long and requires three times the conversations.”
Leslie Feinzaig, founder of Graham & Walker, says she primarily invests in pre-seed and seed rounds but tells her founders they should start focusing on their business at least 12 to 18 months before fundraising a Series A. This includes understanding their business model, connecting with the proper investors, and stress testing their readiness. The advice investors gave for a Series A this year shows how little and how much everything has changed in the market: Metrics will always be important, but starting early for this longer journey is key.
“In this market, you have to prep for an A way in advance,” Feinzaig told TechCrunch+, adding that it could be fruitful to do so right after closing a seed round. “Time goes by fast, and in my experience, this catches a lot of founders unaware. Focus on your metrics immediately.”
It’s an investor market out there
This year is set to be much different than last year, Randall said.