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Top 5 Learnings from Raising a $10M Series A in 2023

Top 5 Learnings from Raising a $10M Series A in 2023

Last Updated:  
March 18, 2024

Mad Rabbit recently announced the closing of our $10M series A financing. Funding markets have been stagnant for the better part of the last 15 months, and so we at Mad Rabbit feel especially blessed to have been able to gain the confidence of the investor community despite difficult economic conditions. This fundraise was our biggest, longest, and most difficult to date -- and we learned a lot throughout the process.

Below are my top 5 learnings from orchestrating the process for Mad Rabbit. These learnings are tactical in nature and can be applied to most any fundraising process.

Relationships are Everything

No one needs money until they need money. The number one most important thing you can do in your fundraising journey, should you choose this path, is to cultivate genuine relationships with investors that you truly want to partner with.

In startups, there are two types of partners; operating partners (you), and capital partners (investors). You don’t want to partner with an operating partner you don’t like, and the same goes for capital partners you don’t like. After all, you will become married to this person(s)!

Not only will putting effort into forming relationships help you more quickly understand the kind of person you want to partner with, but it will also enhance your ability to actually put money in the bank for two reasons.

First, investors like to give money to people they trust, and trust is earned not given.

Second, as you are forming your relationship, the investor will see your business grow over time. It is a lot more impressive to an investor to have met you at $1 in revenue and watch you grow to $10 in revenue than it is to meet the same person for the first time at $10 in revenue.

Be Cognizant of Terms Beyond Just Valuation

Valuation is one piece of the puzzle. It is important, but a lot of times investors are happy to give founders their ‘headline valuation’ that they are looking for, and then bury very aggressive terms deep into the documentation. These terms can be extremely meaningful one way or the other, and are much harder to understand than a plain old valuation. Good legal counsel is invaluable, but even then it can be hard for you as a founder to really wrap your head around what they are telling you if it is your first time seeing some of these things. 

Moral of the story, if an investor gives you your desired valuation, be aware that it may not be as good as it seems.

Understand Capital Markets & Your Role in Them

Perhaps one of the most important ‘step 1’s’ of fundraising is to understand the current state of the capital markets before launching your fundraise. This goes somewhat hand in hand with #1: ‘Relationships are everything.’

Keeping in touch with investors can help you understand the current appetite of the markets. There is no better example of the dynamic nature of equity markets than the last 12-16 months - as we all watched firsthand how investors go from demanding growth to demanding profitability seemingly overnight.

When you are about to launch a fundraise, you are the sell side in the market place. If you show up to the market with something no one wants, you will have an awfully hard time selling your equity (raising funds). In a lot of ways, this is the same thing as finding product market fit for a software company. Understanding the current state of capital markets requires you to talk to your customers -- buyers/investors -- to find what they are looking for. This way, when you bring your deal to market, you can be confident that it will attract some attention.

Keep in mind that you are competing in said market for capital. Therefore, it is not enough to have a company that is ‘good’ - your deal also has to be attractive. From an investor’s perspective, there are bad prices for good companies. Famously, if you had bought Walt Disney Co in 1998, you would have waited a frustrating 15 years before breaking even on your purchase, despite Disney being one of the most successful companies / brands of all time. Price your deal appropriately, and you will find yourself in more meetings, getting further into diligence, than chasing some sort of fantasy valuation that no sophisticated investor would ever actually participate on. 

In summary, Step 1 is to understand what the market wants. That could be growth, profitability, or any other set of KPIs. Step 2 is once you have engineered your business to look a certain way, bring it to market and put out a deal that is going to get bites from the buy side.

Beware the Cashless Investor

This is especially relevant in today’s capital market climate. It sounds obvious that every investor should have money, but you would be surprised how many investors will waste your time just to ‘get smart’ or ‘burn calories’ on your industry. A couple hours with a founder can accelerate someone’s understanding of an industry by years if they have not dabbled in the space, and generally speaking, the investor is much better off having taken your time than not -- even if they were never really going to invest. 

Ask investors how much of their fund they have deployed. How much is left? How many companies are you looking to invest in with that? How much is reserved for follow on into upcoming rounds of existing portfolio companies? Asking these questions will help you understand who is actually able to invest into your company.

Seek to Understand if your Business is a Fit for a Specific Fund

There are many different kinds of Venture Capital / Private Equity / Family Office funds. Generally speaking, let's define each of the aforementioned fund types. (Note: Technically, these are all just different spots on the private equity spectrum).

  • Venture Capital: Funds that do minority investments seeking outsized returns. Often these funds abide by the power law, and are looking for one or two investments to 1000x their money and make it worth it for the whole fund.
  • Private Equity: Typically more disciplined, may look for bigger ownership percentages, take more control via board seats or implementing management teams
  • Family Office: Generally very flexible. These are the kinds of funds that can write $100K checks or $20M checks. They get their money from wealthy families and therefore have a less strict investment mandates, giving them their flexibility. 

Every fund you talk to will have a different investment mandate, and a different target MOIC. MOIC stands for multiple on invested capital. 

Understanding MOIC is critical, and I eventually got to the point where it was the first question I would ask in every pitch: "What MOIC are you underwriting investments to?” Or in other words, how many "times" your money are you expecting to make on this check? 

For example, let's say you want to raise at a $30M valuation. After speaking with a VC and asking their MOIC, they tell you 20x. In order to move forward, there better be a very clear and convincing path to your company getting to a $600M valuation. If there isn’t, you're wasting your time.

On the other hand, if you are raising a round at a $30M valuation with the goal is to ultimately sell your business for $100M, talking to an investor seeking 2-5x MOIC may be worth continuing discussions.

Bringing It All Together

Ultimately, there are a variety of factors that contribute to whether or not your business is a potential fit for a fund. A quick wrap up of the pro tips below: 

  • Ask direct questions to identify if your industry is one your prospective partner has previously invested in
  • Make sure you understand your investor's expectations on timeline to returns
  • Seek legal counsel to demystify and unclear terms
  • And finally, carefully identify whether or not MOICs make sense, and if you feel confident in returning on the MOIC you agree to.


Are you scaling your brand to prepare for a funding round? Book a demo of Triple Whale today to unlock the insights necessary for the most informed decision-making possible.

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