For several years, I have been building a personal, private list of venture capital funds that invest in the UK technology space. Please note that this is a list of active VC funds, sorted by vintage date, not of VC firms. My private list dates back to 2000 and has over 300 funds on it.
Recently, I started recording all this information in an easy to use online database. The database lists all VC funds relevant to the UK market that have been launched since March 2007 (that I can find/know of). It can be found here. I haven’t had the time to backfill all funds launched since 2000, but it is a start:
Congratulations, you just closed a funding round, and the money is in the bank.
Before you become very excited, I suggest you take this piece of advice very seriously: DON’T SPEND THE MONEY
Or at least, don’t overspend. If you raise $10m, this can last you 18 months or it can last you three years or maybe even five. If you spend all the money too fast, all sorts of bad things will happen:
– You will have the need to raise more money, meaning your shareholding will get further diluted.
– The post money valuation of you company increases, increasing the size of a meaningful exit for your investors. Don’t get me wrong, building a large company is a good thing. But having the absolute need to build a company that is larger than the opportunity really allows for can cause a company to fail unnecessarily. I have seen that happen in the past, it is not fun at all. Build the biggest company that you can build, but give yourself the luxury to make your investors happy even should the company only sell for a comparatively modest amount of money.
This concludes the VC Fund Raising Manual. Last thing from me is: Good luck.
This article is part of a series, you can find the index here.
When you are out VC fund-raising, getting a term sheet from a VC firm is the crystallizing moment of your relationship with that firm. If you sign it, you are very close to getting the funding. But before you sign it, you need to negotiate it.
Negotiating a term sheet is difficult, largely because you don’t know what the real market value of your company actually is. How do you establish that? The VCs see lots of deals, they know the market better than you do. How can you equalize that position? There is only one solution to this problem:
Unless you have multiple term sheets on the table at the same time, you have no way of assessing what the real market value of your company is. Also: being able to walk away from a deal will put you in a much stronger negotiating position.
Imagine it like looking for a new job. Ideally, you want multiple job offers at the same time, so you can choose the best one. It is the same with VC funding.
The secret to successfully raising funding is that all communications that you have with VCs must lead to a point in time where all the different people give you a term sheet. In the best scenario, you get them all on the same day. If not, then you get them in the same week. Getting them all in the same month is most likely too far spaced apart. In order to be able to receive multiple term sheets at the same time, you have to start talking to VCs at the same time. Ideally in the same week. Pursue VCs in parallel, not in sequence.
For all other aspects of how to negotiate a term sheet, I suggest you visit Venture Hacks. I think the picture below speaks more than a 1000 words about how useful that site is for ‘hacking’ a term sheet, enjoy: