- Strategic Partner Selection – engaged in company pitch, bid solicitation thru term sheets, and final selection based on qualitative and quantitative factors
- Term Sheet Negotiation – including favorable valuation, waterfall distribution, board control, investor blocking rights, and incentive equity plan
- Due Diligence – primary contact for anything finance-related including Quality of Earnings review by independent CPA firm and complete dataroom ownership
- Disclosure Schedule – led coordination, compilation, drafting, editing, for all company disclosures with respect to representation and warranties in final purchase agreement including dataroom maintenance
- Legal Review – including fine points of final agreements such as definition of “knowledge”, materiality qualifiers and threshold(s), distribution rights, and budget approval/control
- Closing – tirelessly pushed deal to finish line, coordinating resources of CEO, attorneys (both sides), Senior Leadership Team, VC Investors, accountants, bankers, and consultants.
This was the first external financing for Vital Proteins, having bypassed earlier needs through cash flow generated from operations and internal funding. A Series A financing round can be summarized as follows:
Series A: Scaling the product and getting to a business model. (AKA getting to true product/market fit)
- Purpose: With a series A you typically have figured out your product/userbase, and need capital to:
- Figure out or scale distribution. Your users may love your product, but you have not yet optimized all the ways to build a userbase.
- Scale geographically or across verticals. You have a product that works in one market (e.g. it works in the Bay Area), and you want to adapt it to other markets (lets launch it across the US or globally).
- Figure out a business model. If you are a consumer internet company, you may be getting lots of users, but may not have a clear business model that is working at this point (see e.g. Instagram).
- Amounts: Used to be $2m-$15million with a median of $3-$7 million. Series A amounts have gone up dramatically recently to more of a $7-15million raise being typical.
- Recent examples: Uber(cab) raising from Benchmark, Instagram’s raise from Benchmark
- Who invests: Your traditional venture funds (Sequoia, A16Z, Benchmark, Accel, Greylock, Battery, CRV, Matrix etc etc.). lead these rounds, leading to a pretty different dynamic relative to a seed round (more on this in another post). Angels may co-invest with VCs in the A, but they have no power to set the pricing or impact any aspect of the round.