Keep your existing investors engaged and excited. The other piece of advice that I hear myself constantly reminding our companies of is to keep the existing investors engaged and excited. Too often, those monthly emails or short phone calls or coffee are taken for granted. Sure, entrepreneurs are busy. But investors start to wonder how the company is faring if they don’t hear anything. In the case of a seed extension, it’s imperative to keep the momentum, especially when the Series A marketplace may provide a negative signal. Little nuggets like customer anecdotes, compelling stats, etc. that the partner on the deal can share with her/his partners help keep up the momentum.
Gut check the insiders. When the company appears to be heading towards a seed extension, with a minimum six months before cash out, it’s wise to start taking a gut check of the current investors. Who plans to write the extension check and for how much? Some funds are automatic in the extension, some will do pro-rata of the total raised, some insiders will price/others will not.
I’ve even seen some investors say they will not do extensions under any circumstance, which frankly feels quite unsupportive. But it’s important for the entrepreneur to know early how much they have from the insiders. The insiders already know each other, so managing them carefully is critical, and the signal from these insiders will speak volumes to the broader funding community.
Those that manage their existing investors correctly will often find that virtually all of them provide a second check. Many funds have already earmarked the capital, and if not, they may take it from their Series A follow-on. Most investors want to support their companies. I’m also increasingly seeing insiders who may have seemed a bit more passive (often non-lead investors) step up and say they’ll lead the extension. This is huge and a reason to keep all your relationships warm — big and small investors alike.
Always be fundraising. Keep your eyes and ears open. One company I invested in was considering going out for a seed extension, and while they were discussing the terms of the note, an investor called asking about the A. The team ultimately decided to take a smaller amount of money from this investor, letting them get back to work more quickly.
Be realistic about the metrics required for a Series A. B2B companies need to show real revenue and multiple name brand partnerships that have progressed beyond pilots. Investors are going to peel the onion. Expect them to do real diligence with your customers. If you don’t have enthusiastic advocates using the product, be prepared for disappointment.
現実的に、シリーズAの場合、このような測定基準が必要となってくる。B to B ビジネスを取り扱う企業は正確な収益と実績または経過中の取引先企業のブランド名を提示する必要がある。投資家とは、たまねぎの皮を剥くようなものだ。顧客に誠意ある勤労を期待する。しかし、もしあなたがその商品に熱狂的な支持を抱いていない場合には、失望させられる用意をしておくべきである。
Consumer-focused companies need to be making serious progress. You need to be in the Zeitgeist at some level. You don’t have to be Instagram, but you have to have something. If a VC (or their spouses/kids/associates) hasn’t heard of your company, it’s going to be a tough process.
In both cases, Series A investors will want to see that you’ve hired a team. If you haven’t been able to pry one real superstar away from a lucrative gig at a big company, your chances will be diminished.
The bottom line
When you realize it’s time to discuss a seed extension with your investors, make sure to do your homework. Asking for a seed extension means you underestimated the challenges in your market, need more time in a more challenging Series A climate, or both. Whatever the case, be sure that your new plan will allow you to hit the milestones required for a proper Series A. Think of seed extensions the way you would have asked a professor for an extension on a term paper. If you’re a good student with a compelling excuse, you may get one break — but you’ll rarely get two.
投資家とシード拡大について議論する頃だと気づいたら、課題を必ずしてください。シード拡大をお願いするということは、市場での挑戦を過小評価していて、より挑戦的なSeries Aの環境で時間がもっと必要か、もしくはその両方を意味する。いずれのケースにせよ、あなたの新しい計画が必ず、適切なSeries Aに必要である重要な段階を経験させるようにせよ。学期末レポートの（提出期限）延長を教授にお願したであろう方法で、シード拡大を考えよ。あなたが、説得力のある優秀な生徒であれば一回休みがもらえるかもしれないが、二回もらうのはほとんどないだろう。
Micah Rosenbloom is a managing partner at Founder Collective, an early stage VC firm based in Cambridge and NYC that has made investments in 150 companies, including Uber, Buzzfeed, and HotelTonight. Follow him at @MicahJay1.