Should I Engage an Advisor or Intermediary in Order to Raise Money?

If you have not raised money from a VC firm before, it’s a good idea to have on your side an experienced advisor or intermediary, such as an accountant or financial advisor. Your advisor should have existing relationships with VCs and an ability to use his or her network to get to the right people. While it’s possible to do an email broadcast to every VC in the world (there are only about 3000), this generally does not produce results, and VCs find it annoying. They rarely invest in companies who are not connected to someone they know, or connected to an associate of someone they know. In other words, if you are unable to figure out how you are connected to them through your network, or your advisor’s network, they probably wouldn’t want to invest in your company.

An intermediary can also help you prepare the documents required at each stage of the VC funding process. Developing a teaser is easy enough, but you may need help in preparing an information memorandum or negotiating a term sheet for the first time. You will certainly need a lawyer to help you translate the term sheet into a shareholders’ agreement.

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