It is as diverse as the startup world: Some companies have commitments and are “oversubscribed” within hours, others have to work hard to ultimately succeed in raising funds (let’s not forget that fundraising success does not mean business success), and others end up selling the company in the process.

Part of our mentoring program at AngelPad involves working with founders throughout their fundraising process and we ask our founders to closely keep track of their fundraising meetings as well as submit a survey back to us. The 13 AngelPad companies of the Winter 2011 session had over 350 meetings with VCs, Micro VC and Angels. On average they met with 27 investors  each – the range being 11 to 48.

Most of the meetings were with VCs (171), followed by Angels (140) and Micro VCs (46).  Broken down per company that is on average 13.1 VC meetings, 10.7 Angel meetings and 3.5 Micro VCs meetings.

The vast majority of companies succeeded in raising funds, many have not announced it yet though (so far of the AngelPad Winter 2011 session, only Coverhound, Shopobot, Crittercism and Astrid made announcements). Hopscotch was acquired.

Based on this experience, here is my take on the fundraising climate of the last quarter:

1. Seed is the new A: Rounds are larger, caps are higher – this should not be a surprise to anyone. However, to assume that every company is priced at 5M or more is a mistake. Many investors – especially angels – have dropped out of the market assuming the caps are out of their reach and that it is harder to make money. Very few angel investors are active in rounds north of $5M. It is however important for founders to be aware of the effects of a high cap in a seed round.
   

   Tweet“Seed is the new A: Rounds are larger, caps are higher”

2. VCs invest earlier: Most VCs are active at seed stage. Almost 50% of all AngelPad Winter 2011 fundraising meetings were with VCs, so anyone who says VCs are not investing at seed stage is not up to date. The majority of rounds in AngelPad companies have at least two VCs involved. This creates a unique challenge: VCs do not operate like angels and Micro VCs, they have a partnership process that takes time and effort. The average fundraising time has been considerably longer in rounds with multiple VCs.  Even the firms who claim that any partner can invest $ xxx without the partnership are slower to commit than angels and Micro VCs. One notable exception was Google Ventures – making offers to several AngelPad companies within 24 hours of demo day.
   

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   “The average fundraising time has been considerably longer in rounds with multiple VCs”

3. Caped Notes are the standard: Convertible Notes with Cap are still the most common funding form. They are easy, inexpensive and close faster.  However, many important questions regarding valuation, board composition and stock preferences are pushed into the future.  Priced rounds are becoming more popular again mostly because of tax incentives.  Most funds prefer priced rounds but “are ok with convertible notes”.  Founders almost always prefer convertible notes.
   

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   “Founders almost always prefer convertible notes”

4. Four Demo Days swamp every calendar. The large number of startups fundraising at the same time is adding complexity to the fundraising calendar. Demo days at AngelPad, 500 Startups,  YCombinator and Techstars NY, produced more than 100 companies fundraising at exactly the same time last April.  Founders who are not part of an incubator should try to navigate the demo day calendar and raise funds during “off-time” (YC’s demo day is on August 24th – from that day on startups compete with 64 well-prepared startups for meetings. AngelPad’s fall demo day is in late October).
   

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   Founders who are not part of an incubator should navigate around demo days and raise funds during “off-time”

5. AngelList is here to stay: AngelList has replaced the “executive summary”. Six months ago most of the investors on AngelList were Angels. This has dramatically changed. Almost every firm has a few partners or associates on AngelList and frequently use it to make introduction to other investors. AngelList has become so prominent that it is now common practice for startups to add a link to Angel.co to their company profile. AngelList  is also helping to introduce startups to lesser known and non-Silicon Valley firms in a scalable manner.
   

   Tweet a Quote
   AngelList has replaced the traditional executive summary for startups

One interesting side effect of high valuations and increased VC involvement is that traction and business fundamentals are “en-vogue” again. In 2010, one could raise money with little more than a demo and good credentials – those days are over.  Companies have to show strong traction and a clear path to revenue, especially consumer-centric ones. In my experience, “idea-stage” fundraising is at a complete standstill. With seed rounds north of $6M, most investors’ appetite for experimenting and “believing in a team” is pretty limited and suddenly we’re back to the healthy business basics of building something people want and will pay for.

(This post was origanally published at Vator.tv)

So, how do you become part of the Silicon Valley in-crowd?
First, there really is no such clique and if there is, it is incredibly transient.
Second, Silicon Valley is not an oligarchy, but rather a meritocracy!
And third, if you are smart, capable, intelligent, driven and socially not totally awkward, you can be part of the SV “in-crowd”.

Now, if you think you can email John Doerr, Paul Graham or Larry and get a meeting, think again. It is the equivalent of going to DC and trying to meet with Barack – it ain’t going to happen!
This post is about introductions to important people, but not the “Dignitaries of SV” .

Let’s get to it, how are you going to get quality introductions in silicon valley and become part of the in-crowd? Let’s assume you are planning to visit SV to meet with people for ideas/partnerships/funding/etc.

1. FIND 10 people you want to meet

• why do you want to meet this person?
• what do you want to convey/get/accomplish?
• why would this person want to meet with you?

Most people do not put enough work in this list. e.g. if you think you want to meet @ev or @biz from twitter b/c you have a location based twitter/[random api] mashup, you did not do your homework. Twitter recently bought GeoAPI, so guess what, those guys are a much better fit for you. I can not stress this enough: DO YOUR HOMEWORK FIRST!

2. FOLLOW them on twitter, FF, Plancast, Buzz or anywhere else you can (avoid facebook & linkedin for now, most people do not accept random followers there and it looks a bit desperate IMHO).

3. ENGAGE them on their favorite platform. RT their post, comment on buzz conversations, @reply on twitter, comment on blog posts. You know, the general “nice-stuff” one can do online.  Paul Graham once told me that he checks comments on HackerNews for people applying to YCombinator.

4. ADDRESS  them directly. This is a subtle addition to “3. Engage”. Now you actually are starting to have some kind of conversation.  e.g. I recently had someone email me about broken links on my site – that was helpful – we started to talk. Nothing big just a “snippet-conversation” that can be built on later. Obviously better if you have something meaningful to say.

4b. (extra credit) DO something for them. e.g. if you want to get Dave McClure‘s attention, do something forstartupvisa (his current pet project).

5. CONTACT them for a specific purpose. Write a good introduction email.

• everybody is busy! give them at least a few weeks advanced notice
• once they agree to meet you: offer a few dates/time/locations
• check their public calendars (e.g. plancast.com) to see where they are

So, you got this far – looks like you enjoy my post. Click here to

A few more random thoughts:

• try to meet important people early in the morning (a lot less likely to get canceled)
• try not to have lunch meeting – if you do, don’t eat (even if you are starving, smart to actually eat beforehand) who can eat, talk and listen at the same time?

• ask if they can think of anyone you should be meeting with
• confirm every meeting a day prior
• be on time. And by the way SF to Mountain View is not a 45 minute ride, it can be well over an hour
• leave room in your schedule. People will likely introduce you to others if they like you/your product or idea
• go to a few tech meetups while you are here
• check the startup digest for mixers
• consider contacting the venturehacks powerbrokers (they love to intro good people)

If you plan your trip well, you will feel like you are part of the in-crowd, I promise. If not, you did not do your homework and find the right people to meet. So start with your “dream list” of people to meet. And keep in mind: you are not asking for favors: Everyone is always looking for great people!

• soon-to-be founders look for co-founders
• founders look for good people to hire (and co-founders)
• journalists look for good stories
• angel investors look for the next big thing and potential advisory board seats
• VCs look for fast growing companies and merger/acquisition/partnership opportunities
• anyone is looking for good tech-geek conversation

If you want a meeting with me, start by (3) follow me (4)engage me, or (heck, I am not that important) just  send me a message @thomask or email (thomask AT Gmail).

Good luck! p.s. If you like this post, subscribe to my email list or rss feed via feedburner.I publish about 2 posts like this per month. Was this useful? please retweet it. Thanks!

Here is the “cold-email” (as in cold-call) format that I find most useful when being approached. I use this format myself if I can’t get an introduction. The example in italics is an imaginary email.

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2008 Silicon Valley Angel Investors

Moderator: Guy Kawasaki, Managing Director, Garage Technology Ventures
Panelists: Andy Bechtolsheim, Co-Founder and Chief Architect and Sr. VP, Network Systems, Sun Microsystems; Google’s first investor Ron Conway, Independent Angel Investor, former Founder & Managing Partner of Angel Investors LP Dr. Ian Sobieski, Managing Director, Band of Angels Fund

Link