5 Tips on how to prepare and raise your series A round

Series A funding is the second formal funding exercise after seed funding.

Series A funding aims at injecting significant capital to aid in monetizing the company or continuing with the development of a product and service to the point of launching. Series A round investment, unlike seed funding, comes from angel investors, capital firms or family offices managing high-net-worth. This blog will educate you on the tips for preparing and raising your series A round.

Prepare a well-detailed business plan.

Investors will be interested in your business plan; thus, you must prepare a plan containing your financial forecast and your business performance to date. At this stage, you should have a valid business model, a promising unit of economics, evidence of revenue generation on a smaller scale, your market niche and potential customer. Finally, you must have all your legal documents and compliance forms from the health departments.  

Contact potential investors

Identify potential inventors in your related field (Diagnostic, digital health, life science or precision medicine).

You can locate potential investors through networking and extensive research on the investors who invest at your stage, those who invest in your respective industry, and those who have funds to invest. Ensure you have an executive summary of your business since it gives the potential investor a general idea of what the venture entails.

You can also try emailing the investors, but the best strategy should be to search for warm invites and appointments through the network you have already created.

Evaluate the investors that offer the best funding

After a successful application and searching for potential investors, you can evaluate the best investors that offer the most practical terms of funding. You can narrow down your list by considering various factors such as the stage of your business, the amount the investor is willing to invest.  You should narrow down to at least three investors with whom you can negotiate the business terms and other valuation. However, you should ensure your options are open until you compare their terms of investment.

Involve your legal term

Before negotiating the business terms with investors, you should invite a specialized venture capital lawyer to the discussion room. The lawyer will help you evaluate the business valuation, negotiate the investment terms with the investors, and prepare term sheet. The lawyer will also offer you expertise in drawing up the investment contract.

Ensure your business can meet the investment deal.

Before agreeing to the terms of the agreement, you should first evaluate whether the business will meet the terms raised by the investors. This is because the terms of the agreement will follow you as you operate the business. To avoid future disappointments, it is essential to understand your investor’s terms before signing the investment contract. You can consult your lawyer, your trusted mentor and other founders to ensure you fully understand the terms.

Series A round funding aims at building a scalable venture.

To acquire investment, you must present evidence of future growth that will return funds to investors. However, by following the above tips, you will be better positioned to handle the terms of series A and be a potential winner of this year’s 42PLUS1 Pitch Award!

But even if you haven’t even applied for the Pitch Award, you can always network with 100s of investors and industry leaders by joining the DxPx Conference either physically or even Virtually!

 

Take care,
Chris

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