Remember that old commercial with the owl and the Tootsie Roll pop. The commercial asks the question how many bites does it take to get to center of a tootsie roll pop. Maybe its because I am near the end of my fundraising cycle, but this commercial had me wondering about how many VCs does it take to get to a term sheet?
Everyone has a different answer so I thought that I would ask several prominent entrepreneurs about their experiences. I talked (emailed) to 7 startup CEOs in Seattle. The questions were:
1. Average number of VCs that you approached per each round for Series A: ___ Series B:___ Series C: ____ Series D and higher ____
2. Number of total term sheets that you received per round for Series A: ___ Series B:___ Series C: ____ Series D and higher ____
3. Total amount raised per round: Series A: ___ Series B:___ Series C: ____ Series D and higher ____
4. Please indicate whether I can include your name/company in the blog post: Y or N
Overall, the data was very interesting. This is a small sample and data can be skewed. The categories were across several different verticals: Internet consumer, enterprise, and B2B software. Also, the results could be skewed because each CEO had different levels of experience as a CEO when they raised their rounds. But, this is an interesting proxy for the reader. The next time you see an entrepreneur smiling, seemingly without a care in the world, consider these numbers:
- 21 VCs for their Series A round
- 31 for the Series B round (hmmm, I wonder why everyone calls it the 'bitch' round)
- 23 for Series C - the numbers dropped amongst the group on average
- On average each round generated ~ 2 term sheets. It was interesting to note that a couple of the respondents that had lower numbers of total VCs that they talked to actually had 3 term sheets per each round. This implies that they must have been consistently harvesting relationships as well as focusing on quality conversations.
- I didn't publish how much they raised because there was a huge variance between the raise amounts per round. The median amount raised was around $45M across the Series A, B, and C rounds. There was one friend of mine in the D range that would have thrown the numbers way off (huge round). I'd be interested to look at more data across more verticals. I wouldn't be surprised to look at the timing of when the money was raised -- usually you don't want to raise money when you need to so that is a factor as well as general economic conditions.
Raising money is tough work. You hear no 90% of the time. The best operators play off like its not a big deal but it really isn't that fun. It is a sales process and it is time consuming. I want to thank the folks that contributed to this post (everyone asked to be anonymous).