L-R: Melanie van Norden (CEO), Ralf Hendriks (Investment Manager LIOF), Ralph Hunnekens (Investment Manager LIOF), Rogier van den Berg (CTO)

Fundraising tips from a female founder who successfully raised her first Seed Round.

The things I would do differently

On a rainy Thursday, specifically the 20th of April, I signed the official investment contracts at a prestigious notary building in Maastricht, The Netherlands. A grand wooden table was the setting for this momentous occasion. We celebrated with sparkling prosecco, and although I knew this was just the beginning of a new chapter, it felt like running across a finish line.

Pictures from the transaction at VHN Notarissen in Maastricht, The Netherlands

I say running, but picture me stumbling. Nearly one year prior to signing the documents, I made the decision to fundraise. And I can tell you, running a company, next to raising a 450k Seed Round (and trying to still be there for good causes I support as a volunteer) has been nuts. It was too intense, too energy-consuming, and often frustrating.

Looking back (and forward to our series A), there are many things I would handle differently next time. Sharing them with you might prevent you from making the same mistakes.

Fundraising takes you 1.5 years per round (not 8 months)

The simple fact: I planned wrong. A Seed round would only take me 8 months to raise and, for safety, I made sure I had a runway of 12 months.

I was WRONG. You need more time. For various reasons.

6 Reasons why you should start fundraising early

Reason #1: I live in Europe. We have many holidays. So be sure to calculate in 6 weeks extra weeks for summer vacation, 2 weeks of fall vacation, 2 weeks of Christmas vacation, and 2 weeks of spring vacation. You will be working your ass off during these weeks, but there will be no pitching rounds scheduled with angel networks, and when you are talking to (government-backed) funds: you can’t push forward during the holidays because decision makers, investment managers, and angel syndicates will take off. That adds an extra 12 weeks (3 months) to your planning.

Reason #2 why you need more time, and what I also should have done differently: I started networking with investors when I felt ready for an investment. So I started networking 1 year too late. I didn’t dare to reach out to investors before because I did not know what to concretely ask for (and all this happened during the COVID-19 lockdown), but building trust takes time. I am very aware of that with customers, but I underestimated that with investors. That’s why, next time, I deliberately schedule networking with investors into my workweeks, so I’m ready for a potential Series A in 2 to 2.5 years.

Reason #3 why you might need more time: Especially because I don’t live in the Amsterdam-Startup-bubble, but in the more remote area of Limburg, I must put in extra time and effort to build up a network because Startup-savvy-investors are a lot rarer where I live. So a tiny tip: if you are not yet in the moshpit, be sure to get in and do it in time!

Reason #4 you want to start early: building trust goes both ways. Investors must trust you, but you must also get a feel for the different investors that are out there. I’ve spoken to people who did not match my values. Don’t bring yourself into a position where you must take a bad deal from someone you don’t trust because your runway is gone. I spoke to Joyce Knappe, Founder of Pro Parents and she first mapped her ideal investor profile, then she talked to 80+ investors (before ever pitching to them), after that, the real pitching started. She was first evaluating investors to see if they matched her criteria. I was too late to do this for my Seed round, but I will do so for my Series A.

If you ask me: fundraising prep starts 1.5 to 2 years before you want to close the deal.

These long-term preparations don’t mean you fundraise for two years straight. Asking for money and pitching might start 12–14 months before closing the deal. But you need the extra time to practice your pitch on investors. Without having created one slide, you still can get a feel for what oneliner and what 2-minute story gets them lean over to you closer.

I struggled for a long time to explain clearly what our company Embrosa does to investors. Customers understood me, but telling the story to impatient investors without experience in our work field was a completely different ballgame. It took me three months to craft my pitch, and I needed lots of help. I wish I had casually practiced my pitch at informal networking events with investors one year earlier.

Reason #5 to start early: When starting early, you also have enough time to learn. Be sure to learn about fundraising, pitching, captables etc. Attending the funding morning training of The Next Women helped me greatly. The four 3-hour sessions and pitch training were immensely valuable. I recommend you find something like this in your area too and be sure to read up on books about fundraising. I listed a few at the bottom of this blogpost that helped me.

Reason #6: When you attend networking events to meet investors, be sure to get contact details of other startup founders too. Preferably the ones that are a bit ahead of you in their journey. You need them later in the process, to check with them whether the terms in your investors’ termsheet are acceptable or that you should/can push back more. Of course, this all depends a bit on whether you’re in a ‘buyers’ or ‘sellers’ market, but not all investors, termsheets, and shareholder agreements are as startup founder friendly (as they say). If you don’t have any experience for comparison's sake, be sure to tap into the crowd's wisdom. I hired an awesome Lawyer to help me, but a simple founders-WhatsApp group would have helped me a great deal too. And especially when you are not living in the center of a startup bubble, be sure to put in the extra work and connect with the right people early on.

Rogier van den Berg (CTO) and Melanie van Norden (CEO) — Co-founders of Embrosa

A few final pieces of preparation advice before I share my timeline:

Clear you calendar, prep your network

Fundraising is a time-consuming task that requires a significant investment of your time. Unfortunately, this means that you may have to sacrifice spending time on other activities, such as socializing with friends, and your spouse may end up watching Netflix solo on numerous occasions. It’s essential to acknowledge and embrace this reality while also informing your loved ones in advance. I recommend focusing solely on fundraising to avoid spreading yourself too thin.

Fundraising is also rough for the team too. Luckily, our CTO Rogier van den Berg has kept the tech stable and moving forward during fundraising (Thank you my wonderful co-founder). That’s why I would also prefer if Embrosa had a COO working alongside me as CEO, when we fundraise for our Series A. It is just challenging to balance expanding revenue, acquiring new customers, keeping existing customers happy, answering team-questions, and simultaneously delivering on investor to-dos. Having co-founders that keep the tech bug-free, customers happy, and who can spend time on sales while you focus on pitching to investors is recommended. (We are hiring a COO, are you our late-stage co-founder)?

Find a mentor

Find experienced entrepreneurs, preferably with fundraising experience, to be your mentor and advisor. I had several people coaching me. Without them, I would not have closed this Seed round.

Warren Hammond gave me the courage to step outside my comfort zone. He put it to me plain and simple at one point: “You can continue to run Embrosa without seeking investments. But you and Embrosa have the potential to expand and develop this boutique niche marketing tool into a scalable and successful company. If your ultimate goal, as you say, is to exit for 100 million, you need to take a leap of faith and be prepared to face the possibility of failure.” With Warren’s encouragement and guidance, I overcame my self-confidence issues and dared to reach out to potential investors. Without his support, I would not have dared to pursue my aspirations.

My friends, Koen and Dennis, who built up Kode Venture Building while I was fundraising, thoroughly examined and questioned all my financials, numbers, and business cases. Although it’s tempting to present an overly optimistic outlook to investors in spreadsheets, it’s crucial to strike a balance between ambition, realism, and practicality. During the eight months of fundraising, I revised my budget four times until I arrived at a less conservative and more compelling version, ultimately securing the deal with my current investors. However, even during the final stages of closing, I had to create another version that was a midpoint between restrained and ambitious. This process of continuous refinement is essential for closing a deal, and be prepared that it takes a lot of your time to do so.

I am extremely thankful for the guidance of Janine Tillema, an experienced entrepreneur who served as my advisor. With her help, I was able to develop a compelling pitch deck and story, which she reviewed thoroughly, at least ten times. She skillfully eliminated any unnecessary or repetitive information, and through many lengthy conversations and brainstorming sessions over the phone, she prepared me for the tough investor inquiries that would arise during fundraising rounds, pitch events, and Q&A sessions.

My friend Bertrand van Leersum whom I met before he joined Borski Fund, has been extremely helpful whenever I had questions about investment conditions, deal structure, the financial startup landscape, and whether certain situations were normal. For example, when investors presented me with a ‘take-it-or-leave-it’ thing in the term sheet, Bertrand advised me on when to push back and when to accept it with grace.

Flip-thinking: Investors who don’t invest are often very smart free consultants

Every investor that gave me time to talk to them and asked me questions offered me priceless advice. Sometimes, when an investor really didn’t grasp our business or business model, their n00b-beginner-mindset-and-questions, helped me refine my explanation of the business.

At other times, I had the pleasure of speaking to true experts, who successfully exited their SAAS-software-company or B2B-marketing-agency in the past, and they gave me valuable tips. Every talk with every investor is an opportunity to learn, not just to ‘sell’ your company.

Get a thick skin

Rejection is never an easy pill to swallow, and I’ve certainly had my fair share of ‘No’s’ and ‘Not nows’. It stings even more when the ‘No’ or ‘Not now’ comes from an investor you have a great connection with. In my case, this was Arches Capital. I had high hopes of partnering with them to take Embrosa to the next level, but unfortunately, the timing wasn’t right for them to get involved (just yet). It hurts. But you’ll get over it. And who knows, maybe the ‘No’s’ will come on board in the next round.

Truly, every meeting, every NO and YES, has helped my business advance, and helped me grow personally. Most investors I’ve talked to are very experienced entrepreneurial experts who I could currently not afford with Embrosa. I am grateful they offered me a bit of their time for free.

Start your learning journey yesterday

You need to be able to do or know about many things during the fundraising process. When starting early, be sure to spend time learning more about the bits and pieces fundraising entails:

• Learn more about your numbers. Know your financials and numbers by heart (not only your MRR and burn rate);
• Learn more about your sales pipeline. Measure exactly how long every step takes to turn a lead into a customer. I didn’t have this data readily available, and it made landing an investment a lot harder;
• Learn more about how a cap-table works and how you calculate valuations;
• Learn more about how to come to your valuation. As a rule of thumb, in every round you’ll give away 15–25% of your company. If you raise 500k, your company will be valued pre-money at 1.5M to 2.8M. Is this in line with your current MRR and industry/type of company multiple? If your ARR times 5 or times 10 matches the pre-money valuation (given this 15–25% rule of thumb), you are getting in the right direction. (ARR * industry multiple | when your ARR is EUR 150,000 and the average multiple of your industry is 10x, your company is worth EUR 1,500,000)
• Learn to prepare scenarios: what if you dilute more in the short term, giving you a longer runway or a greater possibility to make a dent in the universe right now? Or what if you raise less capital now, you keep a higher percentage of the company, and you raise again in 1–2 years against a higher valuation? You need to deep dive into your captable and business model spreadsheets to answers these questions for yourself.
• Learn while reading books. Books I recommend reading: Startup Funding (Dutch), Why Startups Fail (English), Scale-ups and Downs (Dutch), Straight Talk for Startups (English), Build the Damn Thing | How to start a successful Business if you’re not a rich white guy (English)
• Learn while listening to podcasts: Podcasts I enjoyed listening: Masters of Scale podcasts (English), The Pitch Show (English), Masters of Scale Courses App (English), Startup (English)
• Learn reading newsletters: I recommend subscribing to (Dutch): Frank Appeldoorn of Arches Capital.

So what is the timeline I will adhere to for our Series A?

Deal-day minus 2 years

1. Build up a network of investors
2. Send regular business updates to connected investors
3. Describe your ideal investor profile
4. Map and evaluate investors based on your ideal profile
5. Get your mentors/advisors
6. Practice and refine your oneliner and 2-minute story
7. Get in contact with other startup founders
8. Organize team to push forward without your daily interference
9. Plan your cashflow for the next 2 years. Make sure you don’t run out of money before you land your next round.
10. Read books about investing. Learn as much as you can.

Deal-day minus 1.5 years

1. Craft and refine your pitch deck.
2. Craft your business plan, make it realistic yet ambitious.
3. Determine your own valuation.
4. Create a data room you can easily share with investors.
5. Make scenarios for dilution, how much do you want to give away and what amount do you want to raise.
6. Set up meetings with ideal investors.
7. Get feedback on your valuation, business plan, and pitch deck.
8. Update your website. Investors will check it out.

Deal-day minus 10 months

1. Divergent period, pitch to many investors.
2. Take in the NOs and learn from them.
3. Do your investor homework. Answer their questions swiftly.
4. Get a second, third and fourth meeting with interested ideal investors. Make sure you move forward to the YES.
5. Manage your runway. It might take another 6-12 months before the investment lands in your bank account.

Deal-day minus 8 months

1. Convergent period. Make your short list of investors.
2. Get to the next step in the decision making process / pitch process of your ideal investors
3. Check references investors, do investor due diligence
4. Solve any issues with co-founders (step back / other roles) and re-organize shares if need be.
5. Decide if and how you want (to dilute for) an ESOP. Get approval from your current investors on a (bigger) ESOP.

Deal-day minus 6 months

1. Get your first formal YES. Get your first investor on board, preferably a lead investor who creates a term sheet for you / with you.
2. Find a good lawyer to support you (if I may give you a tip).
3. Get a term sheet from your lead investor.
4. Read all legal paperwork really thoroughly, cross-check terms with other startup founders and your lawyer. Don’t just sign things to get it over with. Be wise and negotiate on good terms.
5. Get more YES-es from other participating investors.
6. Keep all interested parties on board.
7. Keep everybody (team, current investors, and new investors) informed about the process.
8. Keep your eyes on the runway; what if investors pull back and it takes another 8–10 months. Can you manage? If not; cut costs to survive.

Deal-day minus 4 months

1. Raise the full round.
2. Get the term sheet signed.
3. If you already have investors on board, get their formal approval on the term sheet.

Deal-day minus 3 months

1. Keep your eyes open for any unexpected abrupt surprises. An investor who said ‘yes’ may change her/his mind or something unexpected comes out of the term sheet negotiations. Be prepared! Don’t sink your investment due to unforeseen events.
2. Lead investor will do Due Diligence.
3. Negotiate which notary you will use.
4. Read all legal paperwork really thoroughly, and cross-check terms with other startup founders and your lawyer.

Deal-day minus 2 months

1. Again: Keep your eyes open for any unexpected abrupt surprises. Make sure you keep everybody on board until the end.
2. Create new Shareholders Agreement (SHA) with lead investor
3. Get approval on SHA of all parties.
4. By-laws are altered to match the new Shareholders Agreement.
5. Get approval of all parties on the new by-laws.
6. Again: Read all legal paperwork really well. These terms and contracts determine the future of you, your business, your role in the business, and also your (personal) liability.

Deal-day minus 1 month

1. Book a date at the notary.
2. Make sure all investors are known to the notary.
3. Get formal approval for the new investment round and investment deal from your current investors.

Deal-day

1. Land investment.
2. All legal docs are passed and signed.
3. Receive investment money in the bank. Make a screenshot of your bank-account.
4. Get invoice from your lawyer and notary. Pay them with a big smile.

Deal-day + 1 week

1. Be proud: You made it!
2. Get press release out.
3. Get all formal documents to investors.
4. Plan your first Shareholders meetings.
5. Get approval on topics to report on and how your reports looks like.
6. Execute the business plan and grow you shall!

Good luck landing your investment. And I haven’t done this often, so this is just my experience after landing one Seed deal. N=1. Your journey might be different, but still, I hope that my learnings are valuable to you too.

Warmest regards,

Melanie

Melanie is the CEO and co-founder of Embrosa. Embrosa enables global brands to advertise hyper-locally around the brick-and-mortar stores that sell their products.

Melanie founded Embrosa together with Rogier van den Berg.

Two funds ( LIOF and LTIF) and 5 Angels invested together 450k Euros in Embrosa’s Seed round in April 2023. Lead investor LIOF is the regional development agency for the province of Limburg in The Netherlands and supports innovative entrepreneurs with advice, network, and financing. LTIF is the Limburg Technology Investment Fund (LTIF). LTIF invests primarily in startups with a focus on AI and robotics.