Startups

How much time does it take to close a Seed or Series A on average?

Marian Melnychuk Senior .Net Developer – Upwork

October 2nd, 2016

I completely understand every startup has its own story when it comes down to fundraising. However, I was wondering if there is an average amount of time in place that is normally takes to close an early stage financing round. Thoughts please?

Tom Duffy

October 2nd, 2016

it depends on the budget and the team we have been very good at getting 1st monies 

Michael Burack

October 2nd, 2016

Think about funding as a hunt in a thick forest for a food producing plant...

Scott McGregor Advisor, co-founder, consultant and part time executive to Tech Start-ups. Based in Silicon Valley.

October 2nd, 2016

This varies by stage and investment climate. CB Insights newsletter updates published estimates regularly. Note averages don't include companies who are still searching for funds.

Jose Gonzalez

October 2nd, 2016

Great question

Dave Lemley Consulting Technologist

October 2nd, 2016

In our case it took about 6 mo from starting to pitch, to having cash in the bank.  That was 2009, for first time entrepreneurs.  I imagine this is highly variable, though, and is probably faster if this is a deal with investors with whom you've had a previous relationship.  Ours was comprised of some local VCs, and the usual angels and friends-and-family.

Dane Madsen Organizational and Operational Strategy Consultant

October 2nd, 2016

Plan 6 to 9 months if you have an experienced team member.  If you have not done it before, plan 12 because you will waste the first three months figuring out who your target investor is. Once you have a term sheet (and get as many as you can - do not stop looking until a check has cleared the bank), it will usually take 3 months to close.  And do not be fooled with the firms that say "we are fast to close" because it is fast to them, not to you.  If you end up having a cash shortfall due to the delays, this is/can be used as leverage to renegotiate or even cancel the transaction. 

Anonymous

October 4th, 2016

Difficult to answer, for reasons of variability in circumstances. 

In my experience, pitching an idea to raise the first £150,000 only took less than 2 months, but that was mainly due to most investors being within an existing network (and an insanely attractive tax break in the UK - SEIS - that makes investment at this level almost a 'no brainer.')

Since then (two years ago) we continued to raise funds on a semi-continuous basis (basically at around £50k a pop), but we have now reached a point where we need a final seed round to ramp up our product build and marketing. We started out with that process - i.e. a more formal raise (of £400k) - at around June time this year, and we have only just had verbal confirmation of the investment approved this week (with existing investors.) I'm hopeful we will take delivery of this investment by late-November, after all the due dil has been done.

So...yeah, 4-6 months sounds about right. Unless you're on top of your game in terms of product/market fit, team creds, understanding investor behaviours, it could take you forever. Literally. Either way, be prepared for a long haul,

Steven Wolk Principal, Strategic Investment Consulting

October 9th, 2016

To get serious money (not F&F or small angel) you should plan on at least 6 months and possibly 9 - 12. That assumes you have a reasonable business, and a good story and presentation material (1-2 pager, deck, f-model), and good management. 

You'll need to create a strategy for targeting the investors who are interested in your sector, stage, and geography. You need to reach them and convince them to listen to you. Then you many need to modify some parts of your company (e.g. management), and go back for multiple meetings. Then you get a term sheet and begin negotiation. Assuming all goes well the investor does their due diligence and you get an agreement and possibly more negotiation. Then you get the money.

Of course there are many variables and everyone has heard the story of someone writing a check quickly, but those are the 1 in 10,000s. Don't assume you will be one of those.

Keep running your business to create value as much as you can during that time and if you achieve milestones that investors agree are the right ones, you should be fine.