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Startups are in constant competition for 2 resources — capital and talent. One of the most common ways to secure capital for a startup is by raising venture capital. However, raising capital for a startup, especially an early-stage startup, is no easy feat. In order to best improve your odds of raising capital, you need to have a game plan and system in place to kick off your raise. At Visible, we often compare a fundraise to a traditional B2B sales process. You are adding investors (leads) to the top of your funnel, nurturing them with Updates and meetings in the middle, and ideally closing them as a new investors at the bottom of the funnel. Related Resource: All Encompassing Startup Fundraising Guide Just as a sales and marketing team has a process for acquiring customers, so should a founder when setting out to raise capital. Learn more below: 1) Display Growth and Traction First things first, you need to make sure that your company is in a position to raise venture capital. Investors are generally taking a major risk by funding startups so it is important to demonstrate that you have the ability to generate outsized returns. One of the main things investors will look to is your company’s growth and traction. In order to do so, it is important to have a system in place to track and monitor your key metrics. A few of our favorite resources to get started: 6 Metrics Every Startup Founder Should Track Our Ultimate Guide to SaaS Metrics Key Metrics to Track and Measure In the eCommerce World Why This Item Is Important As we previously mentioned, investors are taking on risk so they want to see that your startup has the ability to grow into a large company. The easiest way to do this is by showing consistent and rapid growth from one period to the next. 2) Define Your Startups Milestones and Fundraising Goals If you’ve determined that your business is in a good place to raise venture capital, it is time to put together milestones and goals for your fundraise. A couple of questions you’ll want to ask yourself and think through before raising: How much capital do I want to raise? When do we need new capital by? What valuation should we raise at? What will we do with capital once it is in the bank? Related Resource: The Investor Due Diligence Checklist: How to Treat New VCs Like Business Partners Why This Item Is Important Before setting out to launch a new acquisition campaign, you likely have goals and milestones in place. The same can be said for a fundraise. By having a list of milestones and goals in place, you will be able to field any questions from investors as you’ve done the legwork upfront and will come off as prepared and calculated with your raise. 3) Make Sure You Have a Compelling Pitch Deck At the end of the day, fundraising is storytelling. You will want to hook your investors and help them build conviction for why they should invest. One of the most popular tools for telling your story is a pitch deck. Check out a few of our favorite resources to help you build your next pitch deck below: Tips for Creating an Investor Pitch Deck 18 Pitch Deck Examples for Any Startup Our Teaser Pitch Deck Template How To Build a Pitch Deck, Step by Step Why This Item Is Important Investors generally have little to no context about your business and your market. In order to help them build conviction around your business you need to arm them with the right information and assets to move as quickly as possible to invest in your company. A pitch deck is a great tool to distribute to potential investors and use as a guiding tool in your raise. 4) Prove Your Product/Service Is Scalable As we previously mentioned, investors want to fund companies that have the ability to turn into large businesses and exits. One of the aspects they will focus on most is your ability to build your customer base and revenue at scale. During the course of your raise investors may ask to see a few of the following things: Metric growth as it relates to your acquisition efforts How your current acquisition strategy works Stories from customers that show you have happy customers Why This Item Is Important Without a clear path to scale your revenue, investors will likely have no interest in funding your business. You need to demonstrate that you have had success in the past or have a gameplan to scale revenue in the future. If you have an acquisition strategy that is already working well, investors will feel more inclined to invest as you should be able to demonstrate how their capital will directly grow the business using your existing channels. 5) Build a List of Investors Just how a sales process starts by identifying your ICP and potential customers, the same is a true for a venture fundraise. VC funds invest in all sorts of companies – ranging from early stage to late, new markets to old, small teams and big, etc. We suggest starting by building a list of 50-100 investors that you believe are a strong fit for your company and staying focused on them during your fundraise. A couple of traits that are important to pay attention to (from our post, Building Your Ideal Investor Persona): Location – Where are you located? Do you need local investors? Or maybe you are looking for connections and networks in strategic geographies. Industry Focus – What type of company are you? Where should your future investors/partners be focused? e.g. If you’re a B2B SaaS company don’t waste your time with marketplace focused investors. Mark Suster suggest that it is best to prioritize investors with companies in your space. Stage Focus – What size check/round are you raising? e.g. If you’re raising a $1M seed round avoid a firm with $2B AUM. If you’re raising a $30M round avoid a firm with $75M AUM. Current Portfolio – What type of companies should be a signal to you that they’re a good fit? Is there a high likelihood they’ve invested in one of your competitors? If so, best to avoid as they likely won’t double down their bet with a competitor to a portfolio co. Motivators – What do want to get out of your investors and what do they want to get out of you? Do they need to match your values and culture? Deal Velocity – Are you in need of capital as soon as possible? Or are you taking your time and looking for strategic investors? Varying investor’s have different philosophies for the velocity they’re making deals. Point Nine Capital and Kima ventures are both regarded as top firms in Europe. However, Point Nine makes ~10 investments a year whereas Kima makes 1-2 investments a week. Why This Item Is Important Randomly reaching out to any investor is a poor strategy when it comes to pitching investors. You want to make sure you are spending your time on the most relevant investors for your business. By starting with a list, you’ll be able to customize your outreach and make sure you are spending time on the right investors for your business. Check out our free investor database, Visible Connect, to filter and find the right investors for your business. 6) Tell a Story About Your Company As we mentioned earlier, storytelling is a component of a successful fundraise. While metrics, data, traction, etc. will certainly grab the attention of investors, that will likely not be the sole reason they write a check. As a founder it is your duty to build a compelling narrative around your business that will help investors build an emotional understanding of your business. This could be things like your background, founding story, customer stories, etc. Why This Item Is Important While the duty of a VC is to generate returns for their limited partners, there is still a human element to investing. Investors, especially at the early stage, are generally investing in the founder. In order to help them build conviction in you and your business, you need to present stories that will help them gain a new understanding of your business. 7) Introduce Your Team and Stakeholders Of course, founders are not the only people behind a business. You might have co-founders or early teammates that have helped get your business to where it is today. Be sure to prep your current teammates and inform them on the status of the raise. Investors will want to hear about your teammates and earliest hires to understand why your business is positioned to execute on the problem you are solving. Why This Item Is Important At the early stages, investors are generally placing a bet on the team and the vision of the company. They will look to your early hires and executives to help them decide if your team is right for building the business. They will likely want to see relevant experience, roles, and traits that make your team stand out from your competitors. 8) Include a Cap Table One of the benefits of investing in private companies is the ownership and equity that comes with it. Because of this, investors will want to see the ownership breakdown of your company. This is generally best served via a cap table. There are countless tools (we suggest Pulley) that can help you quickly share your most up-to-date cap table. Why This Item Is Important Cap tables are another tool that help VCs understand the structure of your business. It will help them understand their potential ownership position and the investors they will be working alongside. While you might not need to share a cap table from the start with investors you should make sure it is up-to-date and ready for later stages of your fundraising process. 9) Signup For a Fundraising Relationship Platform Just how a sales and marketing team have dedicated tools, so should your fundraise. By finding a tool to track and manage your fundraise you’ll be able to spend more time on what actual matters, building your business. Find investors, manage your raise, share your pitch deck, and update your investors all from one place. Try Visible for free for 14 days here. Why This Item Is Important Having a dedicated place to keep tabs on your fundraise and investor relations will not only help you speed up your fundraise but will allow you to focus on building your business. Visible Is Here to Help You WIth Your Fundraising Fundraising is difficult. Our mission at Visible is to help more startups succeed. We’ve built a set of tools that will help you with every step of your fundraising journey. Find investors, manage your raise, share your pitch deck, and update your investors all from one place. Try Visible for free for 14 days here. Related resources: Navigating the Valley of Death: Essential Survival Strategies for Startups Top 18 Revolutionary EdTech Startups Redefining Education

Kingsley Advani is a British investor who started investing in 2013 and turned $34k in savings into ~$100m in private investments. Since then he’s co-founded an angel group with 1,000+ investors and founded a private markets platform, Allocations. Kingsley is joining Visible.vc to discuss the benefits of creating a hybrid SPV + fund strategy. Kingsley Advani, Founder and CEO of Allocations joined us to discuss trends in SPV investing and the benefits of raising SPV’s for VC fund managers. In this webinar recording, you can expect to learn: SPV Overview (what are they, how did they become popular) Kingsley’s perspective on the ‘Why Now’ for SPV’s 5 Benefits of Creating a Hybrid SPV + Fund Strategy Demo of Creating an SPV in Allocations Using Visible for SPV + Fund Reporting

The foundation of a great relationship between General Partners and their Limited Partners (LPs) is based on trust and transparency. A great way to foster this dynamic is by sending regular, insightful communications to your LPs. While it can feel intimidating to go outside the box and share details about your fund performance in addition to the standard LP reporting requirements, this is a great way to stand out as a General Partner. With competition for funding being as intense as it is in today's climate, it's a smart move to go above and beyond to impress LPs and establish a trustworthy reputation as a GP. A guide to LP reporting best practices for VCs This guide was created in partnership with Aduro Advisors, a premier Fund Admin led by industry veterans. We partnered with Aduro for a webinar where we discussed the process of reporting to Limited Partners and best practices in-depth. This guide is a summary of that discussion. The contents of this guide include: The importance of the LP reporting LP reporting best practices Sending LP updates as a fundraising strategy What to include in an LP Update A quarterly LP reporting update template LP update templates for VCs If you're not sure where to get started with your communication with LPs try checking out LP update templates for VCs or asking other GPs in your network for examples of what they're sharing with LPs. Some basic LP communication rules to follow include: 1. Send your updates on a regular cadence 2. Go beyond just the basics 3. Be authentic with your communications 4. Don't share sensitive information about your companies For more tips check out: Tips for Writing LP Updates for Emerging Managers (with Templates) For more inspiration check out Visible's LP template library for inspiration. Resources for reporting to LPs for venture capital investors Check out these additional resources to inspire your next LP communication. How to Report to Limited Partners with Gale Wilkinson of Vitalize VC Tips for Writing LP Updates for Emerging Managers (with Templates) 4 Tear Sheet Examples to Give You Inspiration for Your Next LP Report

Equity financing comes in different shapes and sizes for startups. The most common form is a traditional venture capital firm. However, there are other instruments and organizations that will fund startups in exchange for equity. Related Resource: All Encompassing Startup Fundraising Guide One of the more common alternatives to venture capital is a syndicate. Learn more about startup syndicates and how your company can raise funding from a syndicate below: What Is Syndicate in Startup Terms? An investment syndicate is an investment vehicle that allows a group of individual investors to pool their money and make an investment in a single company led by a lead investor. Syndicate investing is used in multiple asset classes including startups, private equity, real estate, and others. Syndicates have risen in popularity due to the ease created by tools like AngelList. As the team at AngelList puts it, “A syndicate allows investors to participate in a lead investor’s deals. In exchange, investors pay the lead carry.” Related Resource: The Understandable Guide to Startup Funding Stages What is a Syndicate Lead? A syndicate lead is generally a well-established investor that has a pulse on the market. They are the individual dedicated to deploying the capital and investing in individual startups. This allows the lead, who may not have enough capital to keep up with their deal flow, to pool money from other individuals and ideally generate returns for the group. How Does Syndicate Funding Work? Syndicates function differently than a traditional venture capital firm. It is important that you understand how they work as a founder to improve your pitch and odds of closing a syndicate plus to make sure they are a fit for your business. Check out a quick overview of how syndicates work below: 1) The Lead Investor Chooses a Startup As we mentioned earlier, a lead investor is generally someone with strong dealflow or a presence in a particular industry. They might be a venture capitalist themselves or closely associated with the market. To kick things off, a lead will find a startup they would like to invest in via their syndicate. 2) An Investment Vehicle is Created Next the lead investor pools money from a series of backers to help fund the company via their syndicate. This can be created in tools like AngelList or StartupXplore. Backers, or individual investors, can serach through and find the syndicates that they are most interested in and invest within the syndicates parameters. The lead investor they will need to help distribute materials and data that show why LPs or backers should join their syndicate and make an investment. This is typically done within one of the tools mentioned above. Once the syndicate is fulfilled they can move on to make the actual investment into a company. 3) Monitor Investments Naturally, everyone invested in a syndicate will want to understand how their investment is performing. Generally, it is on the startup founder to inform the lead investor who will distribute the necessary information with the investors within the syndicate. 4) Liquidation or Exit Of course, syndicate investors are partaking in a round because they believe there is an opportunity for upside from the investment. Eventually the investment will be faced with a successful exit or a liquidation event. For an example from StartupXplore, “If the investment does not go well, the vehicle will disolve. If there are benefits (dividends, buyback or partial or total acquisition of the startup), all the investors will receive the amount they invested and 89% of the capital gains generated. Of the remaining part, the leader will receive 10% and Startupxlore 1%.” Related Resource: Down Round: Understanding Down Round Funding and How to Avoid It On the flipside, AngelList lays out a successful exit that looks something like this: “Here’s an example: Sara, a notable angel investor, decides to lead a syndicate. The syndicate investors agree to invest $200K total in each of her future deals and pay her 15% carry. When Sara makes her next investment, she offers to invest $250K in the company. She personally invests $50K and offers the remaining $200K to her syndicate. If the investment is successful, the syndicate investors first receive their $200K, after which every dollar of the syndicate’s profit is split 80% to the syndicate investors, 15% to Sara and 5% to AngelList Advisors. AngelList Advisors is a venture capital exempt reporting advisor with the Securities and Exchange Commission, and a subsidiary of AngelList.” How Can an Investor Become a Part of Syndicate Investing? Syndicates are open to any individuals that are considered accredited investors. As put by the team at Investopedia, “An accredited investor is an individual or a business entity that is allowed to trade securities that may not be registered with financial authorities. They are entitled to this privileged access by satisfying at least one requirement regarding their income, net worth, asset size, governance status, or professional experience. In the U.S., the term accredited investor is used by the Securities and Exchange Commission (SEC) under Regulation D to refer to investors who are financially sophisticated and have a reduced need for the protection provided by regulatory disclosure filings. Accredited investors include high-net-worth individuals (HNWIs), banks, insurance companies, brokers, and trusts.” Related resource: Accredited Investor vs Qualified Purchaser The 3 Types of Syndicate Investors Syndicates offer an opportunity for an array of different individuals to make their way into startup investing. Learn about the most common types of syndicate investors below: Funds Some funds may use syndicates as a way to diversify their portfolio and make their way on to additional cap tables. Full-Time Investors Another common syndicate investor is a full-time investor or angel investor. This is someone that might not be attached to an individual fund but has a portfolio of startup investors. Related Resource: How to Effectively Find + Secure Angel Investors for Your Startup Regular Individual Investors Lastly, there could be any individual who partakes is accredited and is interested in diversifying their investments by investing in startups. Related Resource: How to Fairly Split Startup Equity with Founders Benefits of Syndicate Investing for Startup Founders On top of being an additional funding option for startups, syndicates offer a few benefits that might make them intriguing to a founder. A few benefits below: Large LP base with a single investor. Founders can tap into the individual investors in the syndicate but is only treated as a single investor on their cap table. Speed. Founders can move quickly when raising from syndicates as most of the diligence and effort is done upfront on behalf of the syndicate lead. Benefits of Syndicate Investing for Investors On the flip side, there are plenty of benefits to individuals that back a syndicate as well. A few of the benefits below: Access for smaller investors. Syndicates give individuals that write smaller checks the ability to back larger deals and rounds. Diversification. Syndicates give individuals the ability to make investments in more companies that might not be available to them as an individual investor. For More Fundraising Help Contact Visible Today Raising a syndicate is one of the many funding options available to a startup. As you kick off your raise and pitch different investors along the way, let us help. With Visible you can find investors with Visible Connect, add them directly to your Fundraising Pipeline, share your pitch deck, and track your round’s progress. Give Visible a free try for 14 days here.

If you read newspaper headlines you might think every successful startup jumps from funding round to funding round and celebrates its extreme growth along the way. However, building a startup is incredibly difficult and every founder is faced with ups and downs along the way. If you hear the term “down round” at a VC event, heads will turn. But if your startup is around long enough, chances are the thought of a down round will cross your mind. Learn more about what a down round is and how you can try to avoid one below: What is a Down Round? As put by the team at Investopedia, “A down round refers to a private company offering additional shares for sale at a lower price than had been sold for in the previous financing round. Simply put, more capital is needed and the company discovers that its valuation is lower than it was prior to the previous round of financing. This “discovery” forces them to sell their capital stock at a lower price per share.” While not celebrated by newspaper headlines, down rounds are a natural occurrence during a startup lifecycles. Learn more about down rounds below: Reasons Why a Down Round Occurs There are a number of reasons why a down round occurs. Startups are impacted by everything from internal decisions to macro events. Learn more about a few of the common reasons why a down round mights happen below: The Company Fails to Reach Necessary Earnings Milestones First and foremost, and most simply, a startup might fail to reach milestones they laid out during previous funding. In the early stages, startups generally have little to no traction and are setting milestones and projections based on a small dataset and history. If a startup is raising capital to last them 12-18 months at a seed round and are setting milestones for the next 12-18 months, investors will want to see that progress. If the startup is not at those milestones or showing strong progress, raising at a higher valuation will be difficult. With that said, it is important to be intentional and realistic when setting expectations and milestones during a fundraise. You will want to see your expectations high enough to entice investors but realistic enough to achieve. Of course, there are plenty of instances where you might miss your milestones but are showing strong traction and product development that might warrant a higher valuation. New Competitors are Grabbing Market Share There are also changes to markets that will impact a startup’s funding path. Markets, especially emerging tech markets, will see new competitors pop up often. In the lifecycle of an early-stage startup, navigating competition and standing out among your peers is crucial. Related Resource: How to Model Total Addressable Market (Template Included) Investors want to see that your company is grabbing market share and becoming an authority in the space. If there are hot new startups or large corporations entering your market (e.g. Amazon building a tool in your space), investors will feel less motivated to fund your company at a higher valuation. General Financing Requirements are Becoming More Stringent Another common reason for down-round funding is the macroeconomic environment. Venture capitalists are institutional investors and have a duty to return capital to their investors/LPs (limited partners). When times get tough, VC investment decision-making will likely get more stringent. While it can make a founder feel totally helpless, there are steps you can take during downtimes to see your startup through. One company that excelled through multiple downturns was ExactTarget. We interviewed former ExactTarget CEO, Scott Dorsey, to understand how they navigated both the Dot-Com Bubble and The Great Recession. Learn more below: Related Resource: 4 Takeaways From Our Webinar with Scott Dorsey Three Ways to Potentially Avoid a Down Round Now that we know the reasons why down rounds tend to happen, we can start digging into ways to help you avoid a down round. Of course, there are times when they are inevitable but there are steps that can be taken to help your odds of success: 1) Cut Costs to Make Money Last Longer As we mentioned earlier, we interviewed Scott Dorsey, former CEO of ExactTarget, to understand how to succeed through a downtown. “While cash has always been king, Scott mentions that it is even more important during a downturn. As a founder, you need to have a deep understanding of your cash flow and burn rate. It may be difficult to fundraise during a downturn but you need to be able to show your investors that you can (1) make it through a downturn and (2) thrive on the other side. If you can successfully display that you’re in a good cash position and ready to thrive after, you’ll improve your odds of raising capital.” If you can successfully cut costs and maintain your burn rate, you have the opportunity to stand out among other startups and generate interest from potential investors. Scott also recommends communicating often with your team and building an even closer relationship with your customers. Of course, cutting costs doesn’t only make sense during a downturn. If your company is struggling to hit milestones or find product-market fit, it might make sense to extend your runway so you can continue to develop your product and refine your go-to-market approach. Related Resource: 6 Metrics Every Startup Founder Should Track 2) Raise Bridge Financing As put by the team at Investopedia, “Bridge financing “bridges” the gap between the time when a company’s money is set to run out and when it can expect to receive an infusion of funds later on. This type of financing is most normally used to fulfill a company’s short-term working capital needs. There are multiple ways that bridge financing can be arranged. Which option a firm or entity uses will depend on the options available to them. A company in a relatively solid position that needs a bit of short-term help may have more options than a company facing greater distress. Bridge financing options include debt, equity, and IPO bridge financing.” Related Resource: How to Secure Financing With a Bulletproof Startup Fundraising Strategy 3) Consider Renogiatiating with Investors Of course, you can turn to your current investors and re-negotiate to work your way through a downturn. If you’ve been regularly communicating and updating your investors, chances are they will know the position of your company. If they’re aware of your status and believe in your ability to execute a plan, there is a chance they will be inclined to re-negotiate or help you work through a downturn. Related Reading: Startup Syndicate Funding: Here’s How it Works Steer Clear of a Down Round With Visible’s Help While there is no silver bullet to avoid a down round, there are steps a founder can take to avoid the potential of a down round. By taking your fundraise seriously and approaching it with a sales strategy, you’ll be able to better build momentum and focus on what truly matters, building your business. Learn more about how you can use Visible to help find investors, share your pitch deck, and track the status of your raise. Try Visible for free for 14 days here.

Securing venture capital for a startup is difficult. On top of having a business or product that is fundable, you need to have an approach to how you reach out and engage with investors during the process. At Visible, we oftentimes compare a venture fundraise to a traditional B2B sales process. You are adding investors to the top of your funnel, nurturing them with meetings, emails, and pitches in the middle, and hopefully closing them at the bottom of the funnel. Related Resource: How to Secure Financing With a Bulletproof Startup Fundraising Strategy Learn how you can craft a strategy to reach out and engage with potential investors below: Step-by-Step Guide to Investor Outreach As we mentioned earlier, fundraising can mirror a traditional B2B sales process. Just as you have a step-by-step process for reaching out to potential clients, you should have the same for investors. Check out a few of our recommended steps below: 1) Understand the Market First things first, you need to understand the market to help understand why an investor would want to fund your business. Ultimately, you need to understand the person you are “selling” to. This will be incredibly important when it comes to crafting your investor list as well. To learn more about the venture capital industry check out our post, “A Guide to How Venture Capital Works for Startups and New Investors Guide.” 2) Research Your Target Investors Just as you would build a list of potential customers that fit your ideal customer profile, you can do the same for a fundraise. Fundraising becomes a full-time job for many founders so it is important to make sure you are spending your time on the right investors. A couple of filters/fields we recommend starting with: Location Market focus Stage focus Check size Fund size Portfolio makeup Learn more in our post, “Building Your Ideal Investor Persona.” Use Visible Connect, our free investor database, to filter and find the right investors for your business. 3) Build a List of Potential Investors After you have a thorough understanding of your ideal investor, you’ll want to start building out a list of potential investors. Generally speaking, founders should talk to 60+ investors during the course of a fundraise (of course this number differs from company to company). You can use Visible to upload your list of investors (or add them directly from VIsible Connect) and track conversations. Give it a try for 14 days here. 4) Draft Your Outreach Email or Use a Template Once you’ve got your list of investors together it is time to craft messages to reach out to everyone. Cold email investors comes down to a fine balance between personalization and focus. Check out some tips and a template to get you started in our post, 3 Tips for Cold Emailing Potential Investors + Outreach Email Template. 5) Perform Your Outreach Of course, putting everything in place is only half the battle. You need to start actively reaching out and moving investors further through your funnel. One of the strategies we recommend here is from the team at First Round review. As they wrote in their post, “Group investors in batches to better evaluate and select them, like a surfer scanning sets of waves that move toward the shore… Say you have a dozen partners at firms who might make a good fit. Don’t group all your top choices in the first set of five. Pick two or three of your highly-ranked VCs and round out the set with lower priority firms. Even if you’ve rehearsed your pitch, you’ll continue to refine it, so diversify your schedule to account for that learning curve. It’s going to take some time in market to perfect the actual pitch. That said, don’t leave all your top picks until the end as they’ll be very out of sync with your process if in a later set. It’s a balancing act.” In order to better monitor your raise, you should have a tool or system in place to keep tabs on the status of your round. Check out our Fundraising CRM and give it a free try for 14 days here. 6) Prepare Your Marketing Materials and Create a Pitch Deck Inevitably, investors will ask for different assets, metrics, materials, etc. throughout a raise. We encourage founders to have them prepared in advance so they can respond to an investor quickly and efficiently. If you survey a set of investors, they will likely all offer different feedback on when, how, and where to share a pitch deck. Some investors (like Brett Brohl, check out his interview with us above) recommend sending a “teaser deck” in advance of a meeting. This should give investors the context they need to have a productive conversation and avoid spending time going over the basics of your business. Check out our Teaser Pitch Deck Template here and our other tips for creating a pitch deck here. Related resource: 23 Pitch Deck Examples 7) Follow-up With Potential Investors Any good outreach strategy has a set plan for following up with targets. It typically depends on the conversation and if expectations were set but we recommend following up a week or so after if an investor has not responded. However, if you have had contact with a potential investor you should set expectations with them on how and when you will follow up. For example, if you speak with an investor and your company is too early for them, you can send them your monthly investor updates to show your continued growth and traction. 8) Track and Measure Email and Click-Through Rates Gauging investor interest throughout a raise will be an important skill to hone. You will want to spend your time on the investors that are truly interested. Use email engagement data to uncover who the investors are who are most interested and engaged with your company. Related Resource: How to Build a Strong Investor Relations Strategy 9) Have Productive Conversations and Close Deals If you’ve done your homework and research beforehand having productive conversations should feel natural. If you have researched and targeted the correct investors and sent them the information they need in advance, you should be able to sit down and have a strong conversation. Every investor won’t say “yes”, in fact, most will say “no” so it is important to stay focused and continue to have strong conversations. Related Resource: Unlocking the Power of Thoughtful Relationships with the Founders of Clay What are the Best Platforms For Investor Outreach? Just as you have tools and mediums for reaching out to potential customers, the same can be said for investor outreach. Check out a few popular mediums and they can best be leveraged for investor outreach below: Email Reaching out via email is generally the best method for getting in front of potential investors. It is common practice that founders will reach out via email so investors are awaiting cold emails from founders. To learn more about reaching out to investors, check out our cold email template and best practices here. LinkedIn & Twitter Different investors will tell you different things about reaching out via social media. Some might like it, some might not. There are countless stories of founders who have had success using Twitter for outreach. For founders that are “building in public” and sharing their story over social media, either channel can be a powerful tool for finding new investors. Phone Calls Cold calling is likely not the strongest channel for getting in front of a potential investor but it can certainly find its purchase throughout the process. Phone calls are generally most effective after you’ve had some prior conversation and need to catch up quickly to understand the next steps. Visible Connect As we mentioned earlier, Visible Connect is our free investor database that can be used to help you identify potential investors and build a list to start your outreach. Check it out for free here. Visible Visible helps founders communicate and strengthen relationships with their investors. You can use Visible to find the right investors, track conversations, and share Updates throughout the process. Check out an Update template you can share with potential investors and start a free 14-day trial here. Visible is Here to Help You With Your Investor Outreach Raising venture capital is difficult enough. Having a system in place to help you build momentum will allow you to focus on what truly matters, building your business. Build a cohesive fundraising strategy and create momentum with Visible. Try Visible for free for 14 days here.

The underrepresented founder’s ecosystem has grown over the past several years but there are still systemic barriers in the industry. One of the most common arguments heard is that diversity hampers quality but the stats don’t support that, as Jeff Karoub explains “For example, women-founded startups, on average, have twice the return of male-founded startups. So, without systemic barriers, more money should be invested in women-founded startups.”. Another barrier for underrepresented founders has been accessing resources including, personal wealth, education, and network. The more money someone’s family has the more likely they are to go to a prestigious university, be introduced to a network of people that can help further their career goals, and have financial support from their families as they bootstrap their business to start. If we help support underrepresented founders today we will begin to see a multi-generational wealth impact. This starts with having more diversity within VC’s (black investors make up only 4% of partner-level roles and women are at 5%) as well as creating more networks for underrepresented founders in which they can connect with one another and have access to mentorship and knowledge to help them grow in their journey and gain access to capital. Related resource: The Femtech Frontier: Opportunities in Women's Health Technology + the VCs Investing Underrepresented Founders Stats: “Global VC funding nearly doubled year-over-year to more than $640 billion in 2021, Crunchbase data shows. Black founders received only around 1.3 percent of total venture funding last year—up from 2020, but still a tiny fraction. On a percentage basis, funding to Latino founders has largely stalled, and for sole female founders, it actually fell last year.” source “According to The US Census, the country will be majority/minority by 2045. As demographics change, so does economic influence. Yet fewer than 3% of venture capital partners are Black and in the record-breaking first half of 2021, Black founders received a mere 1.2% of the $147 billion invested in startups.” source According to PitchBook, “only 18% of about $240 billion raised by all venture capital-backed companies fund female founders.” Source “The current system capitalizes women and minority founders at 80% less than businesses overall. But miraculously, about 80% of investors believe that minority and women business owners get the capital they deserve — spotlighting the disconnect.” source “One report found that minority tech startups in the U.S. saw almost no progress in venture capital funding from 2013 to 2020. In a January piece for Crunchbase, Kinsey Wolf, a fractional CMO at Chisos Capital, suggests several potential solutions, including cultivating an ecosystem that supports minority founders and holding traditional funding avenues accountable to diversity, equity and inclusion benchmarks.” source “While funding to black entrepreneurs quadrupled over the first half of this year, it still only represented 1.2% of total US venture dollars – and only 0.34% (!!) to black women. Investment in women-owned startups fell over the last year, to just 2.3% of funding. On the investor side, only 4% of investors are black (compared to 14% of the population), only 5% of investors are women, and Latinx venture representation dropped from 5% to 4% over that period.” source Other Funding Opportunities Revenue-based financing with Founders First Capital Partners TechCrunch Article: First Capital Partners, a San Diego startup investment firm that uses a non-traditional approach to funding called revenue-based investment to invest in historically underrepresented founders AWS launches new $30M accelerator program aimed at minority founders Partner organizations include those that work with Black, Latino, LGBTQIA+ and women founders, including Black Women Talk Tech, Digitalundivided, StartOut, Backstage Capital and Lightship Capital. The Thiel Fellowship gives $100,000 to young people who want to build new things instead of sitting in a classroom. Venture for America: A national nonprofit and two-year Fellowship program that gives recent college graduates firsthand startup experiences that help them become leaders who make meaningful impacts with their careers. According to Forbes, “generalist funds like PayPal announced a $500 million fund, part of which was specifically black-led startups. Prudential committed $200 million to DEI in private equity. Funds were also raised with diversity as a core mandate. Female Founders Fund raised $57 million to invest in female founders. Harlem Capital raised $134 million, Collab Capital raised $50 million, Screendoor formed a $50 million fund, Sixty8 Capital closed $20 million. All in all, 134 venture organizations to-date have made commitments to back underrepresented founders (Harlem capital provides a comprehensive breakdown).” Resources The AllRaise Airtable of investors. All Raise is on a mission to accelerate the success of female founders and funders to build a more prosperous, equitable future. Data from the team at Diversity VC The Fundery’s Essential VC Database for Women Entrepreneurs This public airtable aggregating investors who invest in underrepresented founders Investors and Accelerators in the Space: Precursor Ventures Location: San Francisco, California, United States About: An early stage venture firm focused on classic seed investing. Thesis: We invest in people over product at the earliest stage of the entrepreneurial journey. Investment Stages: Seed Recent Investments: Noula Health AnyRoad Dispatch Goods To learn more about Precursor Ventures check out their Visible Connect Profile. MaC Venture Capital Location: Culver City, California, United States About: MaC Venture Capital is an early-stage venture capital firm focused on finding ideas, technology, and products that can become infectious. Thesis: We invest in technology companies that create infectious products that benefit from shifts in cultural trends and behaviors in an increasingly diverse global marketplace. Investment Stages: Seed Recent Investments: Petra Spora Health Edge Delta To learn more about MaC Venture Capital check out their Visible Connect Profile. Backstage Capital Location: Los Angeles, California, United States About: We invest in companies led by underestimated founders. Thesis: We invests in new companies led by underrepresented founders. Investment Stages: Pre-Seed, Seed, Series A Recent Investments: A Kids Company About Hello Alice BookClub To learn more about Backstage Capital check out their Visible Connect Profile Lightship Foundation Location: Ohio, United States About: Hillman Accelerator focuses on companies led by underrepresented individuals in tech by developing venture backable companies. Thesis: We serve underrepresented tech-driven startups through mentorship, specialized curriculum, partnerships, and capital investments– providing them the resources and guidance they need to scale. Investment Stages: Accelerator, Pre-Seed, Seed, Series A To learn more about Lightship Foundation check out their Visible Connect Profile. SoGal Ventures Location: New York, United States About: As the first female-led millennial venture capital firm, SoGal Ventures represents how far our generation has come, and how deep our impact on the world can be. We believe in the power of diversity, borderless business, and human-centric design. We invest in seed stage diverse founding teams in the U.S. and Asia, and aim to be the first institutional investor for our portfolio companies. Our investments paint the future picture of how we live, work, and stay healthy. Thesis: We invest in the future of how we live, work, and stay healthy. Investment Stages: Pre-Seed, Seed, Series A Recent Investments: Lovevery Everyly Health Function of Beauty To learn more about SoGal Ventures check out their Visible Connect Profile. Women’s VC Fund Location: Oregon, United States About: Women’s Venture Capital Fund invests in early stage companies which have raised angel capital, developed their core technology and are demonstrating bona fide market traction. The Fund capitalizes on the expanding pipeline of women entrepreneurs leading gender diverse teams and creating capital efficient, high growth companies. Thesis: WomensVCFund II makes investments in early stage (A/B), revenue-generating, high-growth companies led by management teams inclusive of women. Investment Stages: Series A, Series B Recent Investments: Newsela HopSkipDrive Nvoicepay To learn more about Women’s VC Fund Fund check out their Visible Connect Profile. True Wealth Ventures Location: Texas, United States About: Investing in Gender Matters. We see value in the impact of women. True Wealth Ventures invests in smart female entrepreneurs, from consumer health innovators to sustainable product pioneers. Women-led companies have proven they deliver higher returns. It’s time to invest in new perspectives. Thesis: We like to be the first institutional investors at an early stage (usually Series Seed) with first checks up to $1M, and we often take a board seat. We generally reserve over half of our investment capital for follow-on investments. We look for companies where the founders see an acquisition exit opportunity within 3-5 years at a valuation of $100 million or more. Investment Stages: Seed, Series A, Series B Recent Investments: UnaliWear BrainCheck Dermala To learn more about True Wealth Ventures check out their Visible Connect Profile. LGBT Capital Location: Harrow, England, United Kingdom About: LGBT Capital is a specialist corporate advisory and asset management business serving the LGBT consumer sector. Thesis: Is principally focussed on the LGBT Consumer segment as a credible investment sector and to demonstrate the business case for advancements in LGBT equality and inclusion globally. To learn more about LGBT Capital check out their Visible Connect Profile. BLCK VC Location: San Francisco, California, United States About: Connecting, engaging, empowering, and advancing Black venture investors by providing a focused community built for and by Black venture investors. To learn more about BLCK VC check out their Visible Connect Profile. Transparent Collective Location: San Francisco, California, United States About: Transparent Collective is a non-profit organization helping underrepresented founders access the growth resources and connections. To learn more about Transparent Collective check out their Visible Connect Profile. Forum Ventures Location: New York City, San Francisco, and Toronto, United States About: B2B SaaS; Future of Work, E-commerce enablement, Supply Chain & Logistics, Marketplace, Fintech, Healthcare To learn more about Forum Ventures check out their Visible Connect Profile. Start Your Next Round with Visible We believe great outcomes happen when founders forge relationships with investors and potential investors. We created our Connect Investor Database to help you in the first step of this journey. Instead of wasting time trying to figure out investor fit and profile for their given stage and industry, we created filters allowing you to find VC’s and accelerators who are looking to invest in companies like you. Check out all our investors here and filter as needed. After learning more about them with the profile information and resources given you can reach out to them with a tailored email. To help craft that first email check out 5 Strategies for Cold Emailing Potential Investors. After finding the right Investor you can create a personalized investor database with Visible. Combine qualified investors from Visible Connect with your own investor lists to share targeted Updates, decks, and dashboards. Start your free trial here. Related Resources: The Rise of Women-Led VC Firms (+ a List to Keep an Eye on) 10 Angel Investors to Know in Los Angeles

Getting regular, high-quality, and actionable data from portfolio companies is important. It allows investors to make better investment decisions, provide better support to companies, and share meaningful insights internally across the firm and with LPs. This practice should also be highly valuable for founders. They should be able to share wins and challenges and seek support from their investors. The reporting process should only take companies 3 minutes to complete (if not, something may be wrong with how the investor is asking for structured data or the reporting company may not be as familiar with their key metrics as they should be). Below are some best practices to make sure you get: High response rates from companies Structured data (comparing apples to apples) Actionable insights Set Reporting Expectations Early On ✔️ Tip: Set expectations during the onboarding process (if not sooner) It’s way easier to set reporting expectations with companies early on (and with fewer companies) rather than changing your reporting requirements a few years into your relationship with portfolio companies. Some investors choose to outline their reporting expectations in a side letter as a part of the investment documents. It's recommended that investors also have a dedicated conversation around reporting expectations during the onboarding process. Related Resource: A Guide to Onboarding New Companies to Your VC Firm When and How Often to Collect Portfolio Data ✔️ Tip: Collect data at a predictable frequency Set the expectation that you will be sending a Request for company data the same time every reporting cycle. Visible has data that shows that Mondays are great due dates and if you’re sending out quarterly Requests for data, we suggest giving your companies 2-4 weeks after quarter close to get their information back to you. Don’t randomly switch between the 10th, the 30th, etc. This makes it difficult for founders to prioritize your reporting requirements and gives the impression that your due dates don’t really matter. Visible makes scheduling data Requests and subsequent reminders a breeze for investors. Investors can select the due date, email notification dates, and customize the messages that will get sent out to portfolio companies. ✔️ Tip: Collect data at an appropriate frequency We recommend the following cadences. This is 100% customizable as every fund is different. Weekly – Companies in an accelerator program Monthly – Pre-seed investments Quarterly – Pre-seed, Seed, Series A, Series B + investments What Data to Collect from Portfolio Companies ✔️ Tip: Less is more Don’t send a Request asking for ‘nice to have’ metrics. Only ask for the information you really need and are going to use. We suggest starting small, getting a rhythm, and expanding the data as needed. Metrics ✔️ Tip: Ask for only 5-15 metrics Depending on how closely you work with companies, ask for 5-15 metrics and no more. If you’re not taking actionable next steps based on a metric (ex: reporting to LP’s, providing more hands-on support, informing investment decisions) then it's likely you don't need to be asking for it. The most common metrics investors ask for include: Revenue Cash Balance Cash Burn Headcount Runway Related resource: Which Metrics Should I Be Collecting from Portfolio Companies View examples of data Requests in Visible. ✔️ Tip: Use a metric description to reduce back-and-forth If you are asking for Burn and don’t provide context, you might get 15 different variations. Should it be negative? Should it be trailing 3 months or the current month? Should it include financing? Be descriptive about what you want. Qualitative Questions to Ask Portfolio Companies ✔️ Tip: Define what type of information you're looking for As an investor, it's a great idea to give companies the opportunity to share support requests on a regular basis. Consider including a description to clarify what type of support your firm can provide companies. Additionally, most investors also ask for companies to report narrative highlights and lowlights from the question. It's important to clarify what type of information you're actually looking for so companies are not wasting time sharing information an investor is not actually going to use. Implementing a Portfolio Monitoring Platform ✔️ Tip: Notify your companies two weeks in advance Introducing Your Companies to Visible As the most founder-friendly solution on the market, we ensure that requesting data is a frictionless process for founders. This means founders don’t need to create an account in order for Investors to get value out of the platform (ie: No log-in required!). Still, it's a great idea to give your companies notice about the adoption of Visible so they can keep an eye out for the first Request that will land in their inbox. Feel free to use our Intro Copy Template to notify your companies about the adoption of Visible two weeks in advance of your first Request deadline. Customize Your Domain Investors can white-label the automatic emails that are sent from Visible so that the emails use their firm's domain. You can also customize the sender address to anyone at your firm. Visible's Customer Support All Visible customers get world-class support and a dedicated Investor Success Manager. We provide an efficient, hands-on onboarding experience, training for new team members, and support on an ongoing basis. Visible is trusted by over 350+ VC funds around the world to help streamline their portfolio monitoring and reporting.

Being a founder is difficult. Managing the day-to-day as a founder while trying to secure capital for your business can almost feel impossible. Thankfully, there are different tools and techniques that founders can use to systemize their fundraise to focus on what truly matters, building their business. One of those tools is a startup funding proposal. In this guide, we’ll break down what a startup funding proposal is and how you can leverage it to build momentum in your fundraise. What Is a Startup Funding Proposal? A startup funding proposal is a document that helps startup founders share an overview of their business and make the case for why they should receive funding. A startup funding proposal can be boiled down to help founders layout 3 things: What — what does your startup do How — how does your startup or product help customers accomplish what they are seeking Why — why does your startup need funding and why should an investor fund your business Related Resource: How to Write a Business Plan For Your Startup Types of Startup Funding Proposals Like any business document, there are many ways to approach a startup funding proposal. Ultimately it will come down to pulling the pieces and tactics that work best for your business. Investors are seeing hundreds, if not thousands, of deals a month so it is important to have your assets buttoned up to move quickly and build conviction during a raise. Check out a couple of popular types of funding proposals below: Traditional Startup Funding Proposal The most traditional or “standard” standard funding proposal is generally a written and visual document that is created using word processing software and/or design tools. A traditional proposal is great because it allows you to share context with every aspect of your business. For example, if you include a chart of growth you’ll be able to explicitly write out why that was and what your plan is for future growth. This document is generally designed to fit your brand and will hit on the key components of your business is structured and predictable way. We hit on what to include in your proposal below. Startup Funding Proposal Pitch or Presentation The most common approach we see to a fundraise or proposal is the pitch deck. Pitch decks take the same components as any proposal and fit them into a visual pitch deck that can be easily navigated and understood by a potential investor. Pitch decks are not required by investors by are generally expected and are a great tool that can help you efficiently close your round. To learn more about building your pitch deck, check out a few of our key resources below: Tips for Creating an Investor Pitch Deck 18 Pitch Deck Examples for Any Startup Our Teaser Pitch Deck Template 1-on-1 Proposals (Elevator Pitch) A 1 on 1 proposal or an elevator pitch is the quickest version of any proposal. Every founder should have an elevator pitch in their back pocket and is a complementary tool to any of the other funding proposals mentioned here. As the team at VestBee puts it, “Elevator pitch” or “elevator speech” is a laconic but compelling introduction that can be communicated in the amount of time it takes someone to ride an elevator, usually around 30 seconds. It can serve you for fundraising purposes, personal introduction, or landing a prospective client.” Email Proposal Another common way to share a startup funding proposal via email. While the content might be similar to what is seen in a “traditional” funding proposal this allows you to hit investors where they spend their time – their inbox. The format will follow a traditional proposal with less emphasis on visual aspects and more emphasis on the written content. Check out an example from our Update Template Library below: Related Resource: How to Write the Perfect Investment Memo Investor Relationship Hub Lastly, there is an investor relationship hub or data room that can be used to share your proposal with potential investors. A hub is a great place to curate multiple documents or assets that will be needed during your fundraise. For example, you could share your funding proposal and your financials if they are requested by a potential investor. Related Resource: What Should be in an Investor Data Room? What to Include in Your Startup Funding Proposal How you share your funding proposal might differ but ultimately the components are generally closely related from one proposal to the next. However, be sure that you are building this for your business. There is no prescriptive template that will work for every business. Project Summary First things first, you’ll want to start with a summary of your project or your business. This can be a high-level overview of what your proposal encompasses and will give an investor the context they need for the rest of the proposal. A couple of ideas that are worth hitting on: What your company does and how it’s different from existing solutions to pressing problems. Existing market gaps and how your product covers them. The importance of your product in your industry and how it improves the industry. Existing resources and manpower, investment requirements, and potential limitations. Current Performance and Financial Report Of course, investors want to see how your business has been performing. The data and metrics around your business are generally how an investor builds conviction and further interest in your business. We suggest using your best judgment when it comes to the level of metrics or financials that you’d like to share. A couple examples of what you might share: Current assets and liabilities MVP presentation for companies still in the ideation stage Appendix with financial reports Related Resource: ​​Building A Startup Financial Model That Works Existing Investors and Partners Inevitably investors will want to know who else you have raised capital from and partnered with in the past. Include a brief description of the different investors you have on your cap table and be ready to field additional questions if they have any. Pro tip: The first place an investor will go to when performing due diligence is your current investors. Make sure you have a strong relationship and good communication with your current investors. Market Study and Sales Goals Investors will also care about your customer acquisition efforts and want to make sure you can repeatably find and close new customers. A couple of things that might be important to include in this section: Product pricing and information Revenue targets and goals Customer acquisition model and efforts Sales and marketing related KPIs Stories or testimonials from happy customers Current Valuation, Investment Requirements, and Expected Returns This is an opportunity to lay out your cap table and explain your current valuation, investment requirements, and what future valuations could look like. As always, we suggest using your best judgment when it comes to what level of detail you’d like to share about your cap table. Potential Pitfalls and Solutions There is an inherent risk when investing in any startup. It is important to make sure potential investors are aware of this. Layout the common pitfalls your startup might face and stop you from achieving your goals. Next, lay out the solutions to these problems and how you plan to tackle them if/when they arise. 8 Startup Funding Proposal Samples and Templates Below are 8 proposal templates to help you kick off your next fundraise. Note that some of these are technically investor updates and not designed for first-time fundraising. Keep in mind that a startup funding proposal could also be utilized for additional funding after the first round of funding. 1. An Investment Summary Template by Underscore VC Underscore VC is a seed-stage venture fund based out of Boston. As the team at Underscore writes: “As part of this, we strongly recommend you write out a pitch narrative before you start to build a pitch deck. “Writing the prose forces you to fill in the gaps that can remain if you just put bullets on a slide,” says Lily Lyman, Underscore VC Partner. “It becomes less about how you present, and more about what you present.” This exercise can help you synthesize your thoughts, smooth transitions, and craft a logical, compelling story. It also helps you include all necessary information and think through your answers to tough questions. Check out the template here. 2. The Visible “Standard” Investor Update Template Our Standard investor update template is great for communicating with existing investors. If you are regularly sending Updates to their investors they should know when you are beginning to raise capital again and can almost be treated as an investment proposal. Check out the template for our standard investor update template here. 3. Sharing a Fundraising Pitch via Video Videos are a great way to give the right context to the right investors in a concise and quick way. Video is a great supporting tool for any other information or documents you might be sending over. For example, you can include a few charts or metrics and some company information and use the video to further explain the data and growth plans. Check out the template here. 4. Financial Funding Proposal The team at Revv put together a plug-and-play financial funding proposal. As they wrote, “A funding proposal must provide details of your company’s financials to obtain the right amount of funding. Check out our funding proposal template personalized for your business.” Check out the template here. 5. Investor Proposal Template for SaaS Companies The team at Revv put together a template to help founders grab the attention of investors. As they wrote, “With so many Investing Agencies, this Investor proposal will surely leave an impact on your company in the long run.” Check out the template here. 6. Startup Funding Proposal Sample Template.net has created a downloadable funding proposal template that can be edited using any tool. As they wrote, “Get your business idea off the ground by winning investors for your business through this Startup Investment Proposal. Fascinate investors with how you are going to get your business into the spotlight and explain in vivid detail your goals or target for the business.” Check out the template here. 7. Simple Proposal Template Best Templates has created a generic proposal template that can be molded to fit most use cases. As they wrote, “Use this Simple Proposal Template for any of your proposal needs. This 14-page proposal template is easily editable and fully customizable using any chosen application or program that supports MS Word or Pages file formats.” Check out the template here. 8. Sample Investment Proposal for Morgan Stanley Another example is from the team at Morgan Stanley. The template is commonly used by their team and can be applied to most proposal use cases. Check out the template here. Connect With More Investors and Tell Your Story With Visible Being able to tie everything together and build a strategy for your fundraise will be an integral part of your fundraising success. Check out how Visible can help you every step of the way below: Visible Connect — Finding the right investors for your business can be tricky. Using Visible Connect, filter investors by different categories (like stage, check size, geography, focus, and more) to find the right investors for your business. Give it a try here. Pitch Deck Sharing — Once you’ve built out your target list of investors, you can start sharing your pitch deck with them directly from Visible. You can customize your sharing settings (like email gated, password gated, etc.) and even add your own domain. Give it a try here. Fundraising CRM — Our Fundraising CRM brings all of your data together. Set up tailored stages, custom fields, take notes, and track activity for different investors to help you build momentum in your raise. We’ll show how each individual investor is engaging with your Updates, Decks, and Dashboards. Give it a try here.

Braughm Ricke is the Founder and CEO of Aduro Advisors — a premier fund administrator, selected by Fund Managers for its purpose-built software platform, FundPanel.io, and highly-trained service team led by industry veterans. Braughm joined Visible.vc on May 10, 2022 to discuss best practices for engaging with and reporting to limited partners. A summary of the insights from the webinar is captured in a report co-created by Visible and Aduro. The topics covered in the report include: The importance of the LP Reporting LP Reporting Best Practices Updates as a Fundraising Strategy LP Reporting Content Breakdown [Template] Quarterly LP Reporting Update Visible for Investors is a founders-first portfolio monitoring and reporting platform. Schedule time with our team to learn more.

“The future of work” is a broad and evolving topic, for this article we will cover it in the context of how founders are creating and solving for our rapidly changing working world as well as where and how VCs are investing in it. At its core, the future of work revolves around how technological advancements, socio-economic shifts, cultural changes, and evolving business models are transforming the nature, location, and experience of work. For founders, this signifies a wide array of potential opportunities to innovate within, and for VCs, there lies huge investment opportunities. Predictions for the Future of Work: Where VCs see the biggest opportunities The “Future of Work” is expected to be more flexible, decentralized, sustainable, and human-centric, all underpinned by advanced technology. For founders, aligning with these predicted trends could prove beneficial in securing VC interest and investment. AI and automation will transform many jobs. AI is already widely being used to automate tasks and will grow as new use cases and technology evolve, this could lead to some job displacement. However, AI is also creating new jobs, such as AI developers and engineers. VCs are investing in companies that are developing AI-powered tools to automate tasks, improve productivity, and make work more efficient. Expert Opinion: McKinsey & Company, among others, has highlighted the accelerating adoption of automation and AI across industries, from manufacturing to services. Opportunities: Startups developing intuitive AI interfaces, low-code/no-code automation platforms, and solutions for job displacement caused by automation (like re-skilling platforms). Democratization of Entrepreneurship. This refers to the leveling of the playing field, enabling more people from diverse backgrounds to start and scale businesses thanks to recent developments in technology, such as AI. The “Future of Work” isn’t just about how we work, but also about how we create, innovate, and bring ideas to market. What once required a substantial capital investment or technical expertise is now accessible to anyone with an idea and internet access. No longer do entrepreneurs need to understand coding to build a digital presence. Expert Opinion: Lower barriers to entry in business, thanks to digital tools, will lead to a rise in micro-entrepreneurs and niche businesses. This viewpoint is supported by platforms like Shopify and their growth trajectory. VC Opportunity: Tools supporting small-scale e-commerce, localized marketing platforms, and solutions catering to niche digital businesses. Skills development and education will be essential for success. As the world of work changes rapidly, it is increasingly important for people to have the skills they need to succeed. VCs are investing in companies that provide skills development and education programs to help people learn new skills and stay ahead of the curve. Expert Opinion: With the pace of technological advancement, lifelong learning is becoming essential. Leaders like Thomas Friedman have emphasized the importance of adaptable and continuous learning. Opportunities: Micro-credentialing platforms, industry-specific upskilling courses, and experiential learning tools leveraging AR and VR. The gig economy will continue to grow. The gig economy is growing rapidly, and VCs are investing in companies that are making it easier for people to find and book freelance work. This includes companies that provide freelance marketplaces, job boards, and payment platforms. Expert Opinion: The gig economy is expected to grow but evolve to offer more security and benefits to freelancers. Experts like Diane Mulcahy have discussed the shift from the traditional 9-to-5 to more flexible work structures. Opportunities: Platforms providing benefits and insurance for freelancers, gig work management tools, and specialized marketplaces for niche skills. Investment Landscape: Capital Flowing into the Future of Work As of Q3 2023, the future of work 100 has collectively raised $30 billion in capital from VCs, with a total valuation of over $211 billion, according to Future of Work 100 Report. Top Investors Y Combinator Index Ventures General Catalyst Kleiner Perkins Accel Top Categories (starting with the largest) Recruiting HR Learning Collaboration Wellness Notable Deals Rippling $500 million Series E in Q1 2023 Total Funding Amount: $1.2 Billion Rippling is a human resource management company that offers an overall platform to help manage HR and IT operations. Guild Education $264.7 million Series G Q2 2022 Total Funding Amount: $643.2 Million Guild is a learning platform that offers classes, programs, and degrees for working adults. These fundraises suggest that VCs are still very bullish on the future of work sector, even in the face of a challenging economic environment. Future of Work Categories The “future of work” is dynamic, and the areas of focus will evolve as new technologies emerge and societal needs change. VC investments will continuously shift to adapt to these changes, seeking out innovative solutions that address the most pressing challenges and opportunities in the world of work. As of now, these are the categories we found to be of most interest to VCs and Founders alike, as they solve for and support the way we work today and in the future. Remote and Distributed Work With the proliferation of digital tools and the effects of the pandemic, remote and hybrid work models have become more prevalent. Virtual collaboration tools (e.g., video conferencing, project management software). Virtual office environments and platforms. Remote team-building and culture-enhancing solutions. Digital security tools tailored for remote work setups. Human Resources and Talent Management AI-driven recruitment platforms that ensure a better fit between candidates and companies. Employee engagement and performance tracking tools. Solutions for remote onboarding, training, and continuous learning. Automation and AI The rise of automation and AI has the potential to transform many job roles and industries. Robotic Process Automation (RPA) for automating repetitive tasks. AI-driven solutions for data analysis, customer service, and other business functions. Job re-skilling and up-skilling platforms, recognizing the need for workers to adapt. Gig Economy and Flexible Employment As more people pursue freelance, contract, and part-time work, there’s a growing demand for platforms that facilitate this kind of employment. This includes: Freelancer marketplaces. Tools for gig workers, such as invoicing, insurance, and benefits platforms. Platforms for micro-tasks or crowd-sourced work. Employee Well-being and Productivity The emphasis on work-life balance and employee well-being is growing. Mental health and well-being platforms tailored for professionals. Productivity-enhancing tools, including time management and focus-enhancing software. Physical wellness platforms, including virtual fitness and ergonomics solutions. Lifelong Learning and Continuous Education The rapid pace of change means workers need to continually update their skills. Online learning platforms, both general and industry-specific. Corporate training and development tools. Credentialing and certification platforms. Decentralized Work Platforms With the rise of blockchain and decentralized technologies, there are new models for work and value creation, such as: Decentralized autonomous organizations (DAOs) where members collaborate without a traditional hierarchical structure. Platforms that allow for tokenized incentives or compensation. Diverse and Inclusive Work Environments Recognizing the value of diverse workforces, there’s a push for tools and platforms that promote diversity and inclusion, such as: Recruitment software that mitigates biases. Platforms that connect businesses with diverse talent pools. Tools that foster inclusive communication and understanding within teams. Culture and Engagement in Distributed Teams Platforms for virtual team-building activities. Tools that help maintain and communicate company culture in a remote setting. VCs Investing in the Future of Work Khosla Ventures Location: Menlo Park, California, United States About: At KV, we fundamentally like large problems that are amenable to technology solutions. We seek out unfair advantages: proprietary and protected technological advances, business model innovations, unique approaches to markets, different partnerships, and teams who are passionate about a vision. Investment Stages: Seed, Series A Recent Investments: Volta Labs WorkWhile Emi To learn more about Khosla Ventures, check out their Visible Connect Profile. Menlo Ventures Location: Menlo Park, California, United States About: We are investors and company builders—we know what it takes to turn a budding idea into a scalable business. We work with early-stage founders to find product-market fit, develop go-to-market strategies, scale their organizations, and support them as they grow. Investment Stages: Pre-Seed, Seed, Series A, Series B, Growth Recent Investments: TruEra OpenSpace Siteline To learn more about Menlo Ventures, check out their Visible Connect Profile. Social Capital Location: Palo Alto, California, United States About: Social Capital’s mission is to build the future. We do this by identifying emerging technology trends, partnering with entrepreneurs that are trying to solve some of the world’s hardest problems and help them build substantial commercial and economic outcomes. Our returns have placed us among the top technology investors in the world and act as a signal that we have generally been on the right track. Investment Stages: Seed, Series A, Series B, Growth Recent Investments: Palmetto WorkStep Asaak To learn more about Social Capital, check out their Visible Connect Profile. Hexa Location: Paris, France About: Hexa is home to startup studios eFounders (SaaS), Logic Founders (fintech) and 3founders (web3). It all started in 2011 with startup studio eFounders, which pioneered a new way of entrepreneurship, became a reference in the B2B SaaS world, and launched over 30 companies including 3 unicorns (Front, Aircall, Spendesk). Now, eFounders is part of Hexa, alongside its sister startup studios Logic Founders (fintech) and 3founders (web3). Investment Stages: Pre-seed, Seed, Series A, Series B, Series C Recent Investments: Kairn Crew Collective To learn more about Hexa, check out their Visible Connect Profile. s28 Capital Location: San Francisco, California, United States About: S28 Capital is an early-stage venture fund with $170M under management. We’re a team of founders and early startup employees. Investment Stages: Seed, Series A Recent Investments: OpsLevel Rudderstack CaptivateIQ To learn more about s28 Capital, check out their Visible Connect Profile. WorkLife Location: San Francisco, United States About: The first fund designed for builders, creators & individual contributors We’re operators with a deep network of creators, developer evangelists, product designers and engineers. We’re backed by the founders of Cameo, Spotify, Twitch, Zoom and platforms built for builders, creators, and individual contributors. Our advisors include Arianna Huffington, Michael Ovitz, Sophia Amoruso, Eric Yuan and other disruptors across all industries. Investment Stages: Pre-seed, Seed, Growth Recent Investments: Accord Tandem ChartHop To learn more about WorkLife, check out their Visible Connect Profile. Bonfire Ventures Location: Los Angeles, California, United States About: We bring experience and empathy to our founder’s journeys. Investment Stages: Seed, Series A, Series B Recent Investments: SKAEL Spekit Atrium To learn more about Bonfire Ventures, check out their Visible Connect Profile. Related Resource: 10 Angel Investors to Know in Los Angeles iNovia Capital Location: Montreal, Quebec, Canada About: Inovia Capital is a full-stack venture firm that invests in tech founders. Investment Stages: Seed, Series A, Series B, Series C, Growth Recent Investments: Talent.com Calico RouteThis To learn more about iNovia Capital, check out their Visible Connect Profile. Related Resource: 10 Venture Capital Firms in Canada Leading the Future of Innovation Bloomberg Beta Location: San Fransisco & New York City, California, United States About: Invests in powerful ideas that bring transparency to markets, achieve global scale, with strong, open cultures that embrace technology. Thesis: We believe work must be more productive, fulfilling, inclusive, and available to as many people as possible. Our waking hours must engage the best in us and provide for our needs and wants — and the world we live in too often fails to offer that. We believe technology startups play an essential role in delivering a better future. We can speed the arrival of that future by investing in the best startups that share these intentions. Investment Stages: Pre-seed, Seed, Series A, Series B, Series C Recent Investments: CloudApp StrongDM Tonic.ai To learn more about Bloomberg Beta, check out their Visible Connect Profile. SOSV Location: Princeton, New Jersey, United States About: SOSV is a venture capital firm providing multi-stage investment to develop and scale their founders’ big ideas for positive change. Investment Stages: Accelerator, Pre-Seed, Seed, Series A, Series B Recent Investments: MarketForce Novoloop TabTrader To learn more about SOSV, check out their Visible Connect Profile. Lerer Hippeau Location: New York, New York, United States About: Lerer Hippeau is a seed and early-stage venture capital fund based in New York City. Investment Stages: Seed, Series A, Series B, Series C Recent Investments: Palmetto Sardine Blockdaemon To learn more about Lerer Hippeau, check out their Visible Connect Profile. White Star Capital Location: New York, New York, United States About: White Star Capital is an international venture and early growth-stage investment platform in technology. Investment Stages: Series A, Series B Recent Investments: Swing Wrk RareCircles To learn more about White Star Capital, check out their Visible Connect Profile. General Catalyst Location: Cambridge, Massachusetts, United States About: General Catalyst is a venture capital firm that makes early-stage and growth equity investments. Investment Stages: Seed, Series A, Series B, Growth Recent Investments: Ponto Socotra Homeward To learn more about General Catalyst, check out their Visible Connect Profile. Tuesday Capital Location: Burlingame, California, United States About: Tuesday Capital (formerly known as CrunchFund) is a seed stage focused venture firm Investment Stages: Seed, Series A, Growth Recent Investments: Kueski NeuraLight Crabi To learn more about Tuesday Capital, check out their Visible Connect Profile. Forum Ventures Location: New York City, San Francisco, and Toronto, United States Thesis: B2B SaaS; Future of Work, E-commerce enablement, Supply Chain & Logistics, Marketplace, Fintech, Healthcare Investment Stages: Pre-Seed, Seed Recent Investments: Sandbox Banking Tusk Logistics Vergo Check out Forum Ventures profile on our Connect Investor Database Start Your Next Round with Visible We believe great outcomes happen when founders forge relationships with investors and potential investors. We created our Connect Investor Database to help you in the first step of this journey. Instead of wasting time trying to figure out investor fit and profile for their given stage and industry, we created filters allowing you to find VC’s and accelerators who are looking to invest in companies like you. Check out all our investors here. After learning more about them with the profile information and resources given you can reach out to them with a tailored email. To help craft that first email check out 5 Strategies for Cold Emailing Potential Investors. After finding the right Investor you can create a personalized investor database with Visible. Combine qualified investors from Visible Connect with your own investor lists to share targeted Updates, decks, and dashboards. Start your free trial here.

Raise capital, update investors and engage your team from a single platform. Try Visible free for 14 days. The way startups build and innovate changes every year. If you look back at just 20 years, 10 years, or 5 even years ago – the way startups work and innovate has dramatically changed. As the way startups innovate changes so do the tools and resources available to startups. Over the last 2 or 3 decades, SaaS (software as a service) products have continued to grow and take over the technology landscape. Related Resource: The SaaS Business Model: How and Why it Works Learn more about SaaS products and how they can build your business below: What are SaaS products? SaaS is short for software as a service. Salesforce, oftentimes considered one of the original SaaS companies, explains it as, “Instead of installing and maintaining software, you simply access it via the Internet, freeing yourself from complex software and hardware management. SaaS applications are sometimes called Web-based software, on-demand software, or hosted software. Whatever the name, SaaS applications run on a SaaS provider’s servers. The provider manages access to the application, including security, availability, and performance.” Before SaaS products, it required companies to buy expensive hardware and have a physical location for employees to access their software. With SaaS products, any employee with internet can access their software from anywhere in the world. Related Resource: 20 Best SaaS Tools for Startups Learn more about the benefits and types of SaaS products below: Why should startups use SaaS products? At this point, it is assumed that most, if not all, startups are leveraging SaaS products to build their company. SaaS products enable employees to access their software and tools from anywhere across the globe. Because of this it enables remote work and allows startups to hire the best talent anywhere on the planet. Additionally, SaaS products are robust and can be tailored to just about any business. This allows teams to build, communicate, and automate quicker than ever before. It also allows for teams to get set up and use a new tool quickly — in the past, this would be a long process that could take months but now can be solved in a quick onboarding or upload. Learn more about the specific benefits of leveraging SaaS products for your business below: Benefits of SaaS products We’ve alluded to the benefits of SaaS products throughout this post but there are a few key benefits that are especially worth mentioning: Save time with automation One of the biggest benefits of SaaS products is pure time save. Software products can take manual tasks and turn them into an automated process that can save countless hours. Cost efficiency Another major benefit of SaaS products is cost efficiency. Most SaaS products offer tiered pricing and annual discounts that can lead to huge cost savings for startups. As more startups implement SaaS tools the pricing and plans have evolved to help scale with companies as they grow. Easy integration Another benefit of the explosion in SaaS products is the integrations and the ease to set them up. Most companies will have a somewhat similar tech stack so there are natural integrations that have evolved that will help startups connect existing tools and automate even more processes. You can also check out tools like Zapier that help connect SaaS products. Remote work SaaS products only require access to the internet. Because of this, employees can work from anywhere. This might help enable a remote or hybrid work environment and allow employees to work from home or on the fly. Top SaaS Products for Startups As we’ve continued to mention, SaaS products and companies have exploded over the last few decades. Because of this, there are thousands of SaaS solutions to help common business problems. Learn more about some of the top and most popular SaaS products below: Team collaboration As more tools move to the internet, being able to collaborate with colleagues is a must. Team members need a place where they can comment, plan, and collaborate on ongoing projects. Team collaboration tools can be fully dedicated or built into existing tools (e.g. leaving comments on a Google Doc). Learn more about some of the popular team collaboration tools and resources below: Google Drive Notion Slack Project Management Going hand in hand with team collaboration tools are project management tools. Project management tools stay on top of any ongoing projects within your team. These tools are incredibly valuable in every aspect of the business building but especially when it comes to marketing and product teams. Marketing teams can use project management tools to stay on top of their marketing campaigns and efforts — for example, tracking everything from initial copy and inspiration to performance and tweaks. For product teams, project management is extremely important because it keeps the team on the same page throughout the development process. Learn more about some of the most popular project management tools below: Basecamp Notion Asana Marketing and social media A marketing and social media tool is table stakes for most startups. Email marketing, blogs, videos, social media, etc. make up most modern-day marketing tools. Having a place to manage and publish your different marketing efforts is a must. There are some tools that cover every aspect of marketing. On the other hand, there are dedicated tools that will help in specific areas of marketing (e.g. Buffer for social media posting). Learn more about popular marketing and social media tools below: HubSpot Sprout Social Buffer Hoot Suite Accounting Accounting and bookkeeping is another area that has been improved by software products. Accounting tools allow individuals that might not be an expert in accounting to get a good understanding of their financials. On the other hand, accounting tools can also be built out and robust enough for finance professionals. Learn more about popular accounting software below: Xero Quickbooks Online FreshBooks Customer Service As your company grows staying on top of your customer service is a must. Luckily there are hundreds of software tools dedicated to helping with customer service. Like marketing tools, there are some that will cover every aspect of customer service. There are also dedicated tools that will help with different aspects of your customer success efforts — e.g. knowledge base, email support, etc. Learn more about popular customer service tools below: Intercom HubSpot Front Customer relationship management Customer relationship management (or CRM) has turned into a must for most startups. CRMs are the hubs for managing communication and progress with current and potential investors. Customer relationship management tools generally offer add-ons and additional features that will help with other areas of your business. This can be helpful when it comes to cutting costs and finding a simple solution for your employees. Related Resource: 7 Essential Business Startup Resources Learn more about popular CRMs below: Salesforce HubSpot Pipedrive Content management system As software and tools have moved to the internet so have most businesses in general. Even if a business does not sell to customers directly via the internet, chances are they have a website. Having a place to manage your website and the content you are producing is a must. Content management systems (CMS) have become table stakes for any business that has a website and produces any level of content. Learn more about popular content management systems below: WordPress Webflow Contentful Human resources management As a startup founder, it is vital to stay on top of your employees and team members. Startups are in constant competition for both capital and talent. It is crucial to have a human resources management system in place to keep employees happy and supportive. Learn more about popular HR resources below: Gusto Zenefits Lattice Payroll and benefits As we mentioned above, startups need a system to engage with their employees. One of the aspects of successful employee onboarding is having tools in place to help with payroll and managing benefits. As SaaS payroll and benefits tools have become increasingly common, the options are countless. Learn more about popular payroll and benefits tools below: Gusto Zenefits Onpay Investor relationship management Startups are in constant competition for 2 resources — capital and talent. Having a game plan in place to attract both is vital. If you’re a startup that has taken on outside funding it is important to have a game plan in place to report and communicate with your investors. This will not only improve your odds of raising follow-on funding but will allow you to lean on investors for help with hiring, strategy, and more. Investor relationships and communication are our bread and butter at Visible. Related Resources: The Understandable Guide to Startup Funding Stages Valuing Startups: 10 Popular Methods 23 Top VC Investors Actively Funding SaaS Startups Boost your startup’s investor relations with Visible Adopting SaaS tools for your startup is a surefire way to build efficiency around every aspect of your business. In order to best tap into your investors, you need a tool in place to communicate and report to your investors. Give Visible a try to up your investor relations. Raise capital, update investors and engage your team from a single platform. Try Visible free for 14 days.

About Trey Trey Closson is the CEO and Founder of Amplio — a platform for proactively identifying the risks of tomorrow’s supply chain. Prior to starting Amplio, Trey spent time at Flexport and Georgia Pacific. Trey joins us to break down his first year as a founder and what he has learned from transitioning from operator to founder. Episode Takeaways A couple of key topics we hit on: The current state of the global supply chain issues How Amplio found their first customers How Amplio is using pilot programs to scale their customer base The importance of relentless focus Why founders should invest in community Why building a startup is a marathon, not a sprint Watch the Episode Give episode 6 a listen below (or give it a listen on Spotify, Apple Podcasts, or wherever you normally consume podcasts)

One thing that is important, as a startup founder, is to track your financial metrics each month to measure the health of your business. At Visible, we help you curate and send investor updates. We recommend you send these monthly. With our mission being to improve a founder’s chance of success, monthly updates are a huge part of staying on that path to success. Monthly investor updates help you keep your investors in the loop. They help to keep investors engaged and provide you a time to reflect on what work was done over the course of the month. Monthly updates are a great tool for accountability and gaining perspective on whether your startup is growing or not We strongly recommend you send monthly updates. Especially once you have raised venture capital Part of these updates should be an inclusion of charts/metrics that help you measure the health of your business. Your investors will enjoy getting updates and seeing your core metrics grow over time. You should also allow metrics to help you to understand what to prioritize within your startup. Your investors will care about seeing these because it shows how fast you are spending their money, but will also give you insights into a few different things. It will give you insight as to when you might need to raise money again. It will give you insight as to how much time you have to run the business while keeping your current expenses constant. It might signal you to hire more to get over key humps in the business, like developing your product or spending more resources on sales. It might show you need to be more efficient when allocating your marketing dollars. It might be the case that you should ignore these metrics altogether and just focus on what’s in front of you each day. Every startup is unique and we understand it’s not a one size fits all approach. Related Resource: What Should be in an Investor Data Room? The financial metrics we recommend tracking are: Cash on hand Burn Rate Run rate Revenue Revenue Growth Engagement metrics (churn, user growth, retention, this one varies) Cash on Hand Cash on hand is the amount of cash you had at the end of the month last month. This can be found on your Balance Sheet. How to track in Visible: Connect accounting integration (Quickbooks, Xero, etc.) Create chart with Total Bank Accounts as Metric Chart Period → Custom period: Custom period: Last 6 months & Previous Period Monthly Cash Burn Monthly burn rate is defined as the cash on hand at the end of this month minus the cash on hand at the end of the previous month. This will give you the difference of cash between the two amounts. Allowing you to know how much cash exited your account! How to track in Visible: Add an insight to chart Previous period change Chart on Separate Y-Axis Months of Runway Run Rate is a bit more complicated. Run rate calculates the amount of months you have left to run the company given your current cash on hand and monthly burn. This number depends on your burn rate staying constant. More than likely your burn rate will not remain constant (it will increase. Run rate is calculated by taking Cash on hand/(Monthly Burn Rate). This will yield you the number of months you have left to operate your business with expenses staying constant. How to track in Visible: Export Monthly Balance Sheets from accounting software into google sheets Manually calculate Monthly Burn (ex. Feb Cash – Jan Cash) Calculate Months of Runway Cash on hand/ Monthly Burn Rate Integrate sheet into Visible Add Months of runway to Total Bank Accounts Chart Save Chart Related resource: Strategic Pivots in Startups: Deciding When, Understanding Why, and Executing How Revenue Revenue is the amount of cash that you received in payments from your customers (over the course of the past month). How to track in Visible: Pull Revenue from your accounting integration Revenue is the top line of your income statement Create a chart Measure previous 6 months Related Resource: EBITDA vs Revenue: Understanding the Difference Revenue Growth Revenue growth is a true barometer for success for your startup. It shows how much your revenue has increased over the prior period. If you have revenue growth, it should signal to you that you are on the right track and continue to execute at a high level. How to track in Visible: Add an insight to chart Previous period change % Chart on Separate Y-Axis Engagement Metrics An engagement metric is something that is unique to your individual business. The manner of it would relate to the type of business your run (marketplace app, Saas product, or physical product). It should directly relate to your revenue growth. Things like churn/retention could be your engagement metric. For Airbnb, it could be the number of nights booked. For Uber, it could be # of rides completed per week. Having healthy engagement metrics should drive your revenue and allow you to feel good that you are building something people love. Tracking is Visible will vary based on your metric. Early on, just track it manually! Cash on hand, burn rate, and runway are very much metrics for your own sanity. These relate to the lifeblood of the business and how long you can be certain your company will be in existence. We recommend maintaining a conservative level of spend for the first few months after raising a seed round. It is much easier to increase spend than it is to decrease. By starting conservatively, you will have good context as to how much you can increase your burn rate to find the sweet spot for growth and trimming your runway. Revenue, revenue growth, and engagement metrics are really ways for you to measure how well you have done in the latest period. It is really important to decide as a team what your North star metric is and work towards that goal together. These sort of standard metrics will help align your team and work to accomplish your goals together. The goal with Visible as a product is to help you as a founder measure these metrics and update your investors. That way you can measure these core financial metrics (Cash on hand, Burn Rate, Runway) right off the bat when starting your trial with Visible. Setting you up for success after raising a Seed round. you will be set up for success to measure the proper metrics and keep your investors filled in. This way you can spend the majority of your time building a great product that people love. Related Resource: A Guide to Building Successful OKRs for Startups In conclusion, measuring the core financials of your startup (or business) is really good practice. It will help you maintain accountability and measure growth. We recommend you track the core 6 metrics each month of Cash on hand, Burn Rate, Run rate, Revenue, Revenue Growth, and market-specific Engagement metrics. These will help you to get the most out of your fundraising dollars and to maximize growth!

Many new ventures and new startups are formed by multiple individuals, collectively known as the founders. Sometimes long-time friends, sometimes former colleagues, other times like-minded individuals who came together specifically for the problem the startup solves. All of these different combinations of individuals, regardless of background, are startup founders and with that new title comes a new set of rules and responsibilities. New startup founders that are forming a business, often enter into a Founders Agreement. We’ve gone in-depth into the typical nature of a Founders Agreement, what it is, and what it can mean for your startup. Related resource: The Startup’s Guide to Investor Agreements: Building Blocks of VC Funding What is a Founders Agreement? A Founder’s Agreement is a contract. But not just any contract, a Founder’s Agreement is a specific contract that lays out the business relationships that the founders enter into and agree upon. The Founder’s Agreement contract specifically lays out the responsibilities, rights, obligations, and any liabilities of each founder. The Founder’s Agreement is in place to regulate matters that aren’t governed by any type of operating agreement or financial agreement with investors, but rather specifically ensures that each founder is clear on their specific role with and for the company. Related Resource: How To Find Private Investors For Startups What Are the Must-Have Items to Include in the Founders Agreement? Now that it’s been established that a founder’s agreement is essentially a contract dictating the founding team’s rights, responsibilities, and role within the company, let’s get a little bit more specific. Thinking through all the possible items that could be in your founder’s agreement, we recommend starting with at least the following 10 to ensure the key details of the business are specifically covered. Related resource: Investor Agreement Template for Startup Founders 1. Add Notable Names Including the Founders of the Company While it may seem straightforward, be as detailed as possible and list out every single founder of the company by name, title, and even a breakdown of ownership if applicable. Capture as much detail as possible about the founding team that the Founder’s Agreement pertains to. It is also helpful to outline any other notable names that are involved at the early formation of your company. For example, if you have any early friends and family investors, advisors in the space, founding customers, founding partners, or subject-matter experts involved in any type of POC or validation study, list them out by name and role associated with your company. If they have a financial stake, outline the percentage ownership stake they have in the business as well and note if they would technically be considered a founder under this agreement. 2. Document Your Business Structure Now that all key persons have been outlined by name and role, be sure to document the structure of your business. How your business is structured can affect the future of the company. Determine how your company will be structured – consider if it makes more sense for it to work as a partnership, LLC, C Corp, S Corp and consider all of the financial and structural implications that come with each option. Determining and documenting this from the beginning is key to building your business from a unified perspective and understanding. 3. Include a Broad Overview of Your Startup Outline the mission statement and an elevator pitch of your startup. A broad overview is helpful to ensure all founder decisions moving forward are aligned to the same vision and mission, with a clear direction of the goal your startup has to accomplish. As the company evolves and grows, pointing back to the agreed-upon overview in the founder’s agreement can help dictate that change and direction as well but will ensure decisions are made with the same foundation in mind. Related Resource: How to Write a Business Plan For Your Startup 4. Have an Expenses and Budget Report Having your finances in order is key to the success or failure of any business. In the Founder’s Agreement, outline where your finances stand. Outline in detail any funding your team has received as a seed investment. Next, outline your company’s operating expenses to ensure all output of money is explicitly documented at the founding of the company and all founders are hyper-aware of the existing spend and burn rate of the company. Finally, outline a foundational budget that each founder has explicit input into. This will ensure that no matter each founder’s unique role or responsibility, there is an agreed-upon budget, especially in relation to the expenses and burn rate of the organization. 5. Include a “Who is Responsible for What?” Section Depending on the makeup of your founding team, there may be a lot of different skill sets and ranges of expertise at the table. Having founders with many different backgrounds and skillsets can be a major advantage for your organization, however, with a versatile set of skills and a unified passion for the startup’s mission, it can be hard for founders to stick to the part of the business they own. Outlining a clear section that documents who is responsible for what in the Founder’s Agreement can ensure that every founder can contribute and master a key area of the business without trying to take on too much or double-dipping in another founder’s role or assigned lane. This will ensure the business scales effectively and every founder appropriately commits to what they will bring to the business. This section can also help define and structure the titles and growth path for each founder and the functional direction of the organization based on which roles are defined and taken on by the founding team first. 6. Management and Legal Decision-Making, Operating, and Approval Rights Piggybacking off of the responsibilities section of your founder agreement, be sure to outline the structure of management at your organization and the hierarchy of various decision-making. If you have a board or plan to have a board, make sure to outline their existing role within the organization. Having an agreed-upon set of rules determining the hierarchy of legal decisions, operation decisions, and final approval rights within the business is key as the company grows and may face big challenges ahead that require a clear, unified plan. 6. Add an Equity and Vesting Section In early startups, founders may not be taking much or any salary at all. This makes it critical to document and clarifies ownership of the business. The goal of every startup is certainly to grow a successful, thriving business. This could mean aspirations as big as an IPO or major acquisition. Establishing early on what percentage of the company each founder owns as well as the schedule that they will vest their shares, or receive full rights to the shares in the company. Having a unified equity agreement and vesting schedule baked into the Founder’s Agreement is key to outlining the years that each founder is needing to stay with the business to reach their full earning potential. This can help solidify the commitment of each founder to the business as well. Related Resource: Employee Stock Options Guide for Startups 7. Include a Salary Compensation Report Even if the salary of each founder is minimal or they forgo a salary as the business starts to save cash, It is helpful to outline a compensation report and even a compensation plan for the founders of the business. A compensation report can outline the initial compensation each founder takes. It can also outline the planned compensation increase for each founder as the profits of the business grow or more funding is granted to the business. Having agreed upon salary compensation documented at the foundation of the company can ensure all founders are aligned on what they are owed and what they are set to earn as the company scales. This will help with tracking financial growth and prevent any major mishaps or founder disagreements about salary and compensation. 8. Dissolution and Termination Clauses Even though most founders plan to stick with a company they found, that is not always the way things shake out long term. It’s important to think through and document what happens with each founder and their ownership and role with the copy under two unfortunate circumstances. Dissolution, or the dissolvement of effective closing down of the company, is something that many startups end up having to do if their company does not take off or has a positive growth trajectory. It’s critical to have documentation in the Founder’s Agreement that determines what will happen to any existing profit or patented ideas or technology in a case of dissolution so that all founders are aware and agreed upon that unfortunate outcome – this can save major legal disagreement down the line. Additionally, an agreed-upon termination clause is also a smart piece of information to include in a founder agreement. This can outline the scenarios of a possible founder exit and what will happen to their shares, intellectual intelligence, or technical knowledge in case of a voluntary or involuntary exit. While the reality for founders going into a new business may be with that company indefinitely, things do happen, and planning for possible dissolution and termination can save the team many headaches and heartache at the end of a business or time with a business. 9. Intellectual Property As part of the termination and dissolution clause, it’s a good idea to highlight all known and defined intellectual property and its ownership within the founder’s agreement. In a situation where a founder exits the business while it is still growing or at dissolution, it needs to be understood where the intellectual property, the ideas, and knowledge that is the foundation of the business, lies while the business is still operating and after. This can help prevent any founder from leaving to start a competitor while the business is operable and ensure that all ideas are documented to the correct owner in perpetuity. What is the Importance of a Founders Agreement? A Founders Agreement is extremely important for a number of reasons but foundationally, it provides a unified, agreed-upon set of rules and guidelines for the founding team to align on and build from. A few of the key reasons a Founder Agreement is so important are: Identifies each owner’s role – having clarity and unified direction on how each owner of the business (both founders and investors) will play a role in the evolution of the business from the very beginning is critical to the success of the business long term. A founders agreement makes ownership and ownership roles crystal clear. Provides structure for resolving issues among founders – Every founding team will have conflicts. Conflict is inevitable when building a business and making tough and risky decisions. Having a Founder Agreement can provide an easy rule book for conflict resolution and managing any issues within the founding team. Because every founder has agreed upon the Founder Agreement, it is a straightforward source of truth when inevitable conflict arises. Protects minority owners – Depending on the origins of the founding team and the company idea, ownership of the organization may not be completely even among founders. This makes the Founder Agreement extremely important to minority owners. It provides a clear outline of what they own, what they are entitled to, and the minimum and maximum responsibility they have to the business. This prevents majority owners from gaming the system by taking advantage of the minority owners’ agreed-upon contributions and responsibilities to the business. Signals to investors that you have a serious business – A Founder Agreement is a critical contract potential investors will look for when considering your business. Having taken the time to solidify the Founder Agreement is good luck for your business and founding team, showing you have a serious business and have thought through all possible points of conflict, future structure, and ownership balance across the founding team. This helps establish your business as a competent, and well-organized one for potential investors to consider. Related Resource: Valuing Startups: 10 Popular Methods How to Create a Founders Agreement Now that we’ve established the purpose for and critical elements of a Founder’s Agreement, let’s follow a simple process to create one. 1. Select a Template No need to start from scratch! Plenty of VCs, business schools, and other private companies provide templates for many different documents and contracts typically used when starting a business, including a Founder Agreement. Check out Visible’s template for this here. 2. Knock Out the Easy Sections First Start with the easy stuff. Your founding team should know your company’s purpose, mission, founder names, and roles and responsibilities. From there, work through the harder organizational and financial details. 3. Thoroughly Work Through the More Challenging Sections Don’t speed through the complicated aspects of the Founder Agreement. Take as much time as needed to work through financial, organizational, and termination details. Consult attorneys, fellow founders, existing investors, and industry peers as needed to ensure you are following the best possible practices and considering all the necessary elements to complete the more challenging, complex sections. You’ll be thankful you took the time to do these parts in a detailed manner when and if it is ever necessary to consult the founder agreement in a difficult scenario. 4. Consider Hiring a Lawyer if Necessary Legal battles are never fun. As mentioned above, while you’re taking your time and going over every detail of the complicated parts of the founder’s agreement, consider hiring a lawyer to consult on and help construct the elements with the most liabilities including salary and ownership pieces as well as termination clauses. Get as much legal advice as you might need, and unless you have in-house expertise on your founding team, a lawyer can be especially helpful in outlining the tax section (you certainly don’t want to mess that up at any stage of your business). 5. Seek a Second Opinion from Fellow Entrepreneurs Founder’s Agreements exist for a reason – they were born out of the mistakes and learnings of previous founders. Consult fellow entrepreneurs who have written and established founders’ agreements in the past. See what worked best for them or what they wish they had included in their founding agreements but did not. No need to reinvent the wheel here, learn from the best in your space. 6. Finalize by Signing Your Founders Agreement With a lawyer present if needed, set a specific date and time to finalize the signing of your FOunder’s Agreement with all founders present. Ensure all founders have enough time to read, review, and contribute to the said agreement so that on signing day you can celebrate finalizing this foundational piece of legal paperwork and the growth of your company. Learn More About Founders Agreements and Startup Funding If you’re looking for more information on Founders Agreements and Startup Funding, check out our other resources for founders on our blog and subscribe to our newsletter, the Visible Weekly. Related resource: The Startup's Handbook to SAFE: Simplifying Future Equity Agreements