I am a big believer in prepping – it saves both time and money. I have been very lucky to get excellent mentors who helped me get fit to be ready for these intense and exciting months in Silicon Valley (see them in my previous blog post). And now just days after my graduation/Demo day I have summarized a checklist for the bare minimum before you book your trip over to the Silicon Valley.
In my Batch 20 of #500strong 36% of the companies are from outside of the US – from Thailand, Hong Kong, Latvia, Estonia, Brazil, UK, Australia, Russia, Ukraine, Nigeria, India, Canada and France. These companies whose roots come from abroad need to level up with their US batch mates in understanding the local context and be ready for US investor requirements. San Francisco once again in 2017 ranked in the top 10 of the most expensive cities of the world – you will save not only time, but also tons of money making the right moves when the time is right.
Here is my 5-point checklist for young startups from abroad prior to packing their bags to go for a fundraising adventure in the Silicon Valley:
- Your startup must have already raised a small capital from your local venture capital firms or angel investors.
Let’s face it – if you plan to raise funds in San Francisco, you must have a track record of being able to nail fundraising at home – in your home country or better yet – regional level. Having a local/regional investor in your cap table gives your startup the credibility of being familiar with budgeting, reporting and forecasting requirements already, and also that somebody else believes in your startup, not just your mom. Also you probably will not have personal funds to support all the following check-list points below meaning that you will have the need financially to dig into other pockets to prove your product before you jet off to San Francisco.
- Your product has been publicly launched.
Presenting and defending an idea that would start off in the US market as its first stop for a foreign start-up does not seem very likely to most US investors. In fact more and more investors require already the next check-list item on my blog – that you can prove that your product has gained traction already.
- Your product has gained traction in US
Coming from a small country such as Latvia has its pros and cons for fundraising – it is a relatively non-expensive country for experimenting your concept of product, but on the cons side – it will not mean much for US investors if you cite 5 small local companies as your current clients.
As romantic as Europe is for the US consumers most of the investors prefer that you play on the field that they know best. Having a well-prepared battle plan for capturing the US market will do wonders during your investor meetings. Showing actual market competence will be the most credible of all tools and that can only be achieved through actual experience on the ground – again a very demanding task you will have to do in the prep phase of your startup even before you can get your hands on the US investors. Not to forget the tiny, but time consuming pre-requisites of having a US phone number and a Delaware incorporated company.
- Your CEO reads, writes and speaks fluent English and is able to present your company to US investors, strategic partners, and clients in a clear, competent and confident manner.
Seems like stating the obvious, right? But in a country where English is not the official language this skill should not be overlooked. If you struggle with expressing yourself in English then don’t even bother going to the Bay before upgrading your English.
- be ready for never ending networking and rejections, a lot of rejections.
Finally, the level of energy that it takes to just be present and make the most use of networking cannot be overestimated. I came to San Francisco very well prepared, I had my sales manager here for over a year already and had made multiple personal sales and other meetings in the past years. But still I did not have the fundraising network that I needed, so I had to start from scratch. There is no shortcut to immediately finding the right fit investors for your industry – there will be a lot of research and trial and error to be done before you even get the access to the right people for that. Plenty of online resources are available on which strategies have been chosen by fundraising gurus around here – but all of them are united in saying that fundraising will wear you out and you shall have to invest a lot of your time in screening and prepping even before you get a seat at the right investor table.
Sure, you might hear about startups racing ahead without having the above points checked, but either that is not true or a rare exceptions. And Once your checklist is complete – you are halfway done then – now the next step is to shut yourself down from the business for the next 3 months – you will need to spend weeks setting up meetings before you even start fundraising. But that deserves a couple of more blog posts!