Decided you’re going for gold? ‘Venture Capital 101: The ins and outs of raising an investment round
Part two of our three-part series with Icehouse Ventures Partner, Jo Wickham.
In Part 1 of this series, we covered the basics of venture capital: why startups consider it, and the various financing routes available HERE. If you’ve decided that venture capital is the right route for your startup, Jo shares a few key tips to set you up for success.
Planning: Go Slow to Go Fast
In the startup world, speed is often glorified. But when it comes to raising capital, careful planning can pave the way for a smoother, faster process later - failing to plan is planning to fail! Whether you’re raising a seed round based on future potential or a growth-stage round supported by past performance, a clear fundraising strategy will save you time and help you avoid mistakes when you’re deep into pitching. Once you’re in full fundraising mode, momentum becomes key—hustle until the money’s in the bank.
Timing Is Everything
They say "always be raising", meaning it’s smart to stay on investors’ radars even when not actively seeking funding. One of the largest raises in our portfolio this year was accelerated by keeping every prospective investor on a monthly newsletter, demonstrating consistent progress and momentum.
But when’s the right time to officially start your round?
Runway Matters: Start when you have plenty of runway, factoring that fundraising can take 6–9 months. Negotiating when you’re desperate may foster doubt in your execution and put you on weaker negotiation footing. Starting early signals that you’re strategic and prepared, rather than scrambling for cash.
Milestone Momentum: Raise funds around hitting key milestones that validate your progress. One wise founder raised promptly after completing their seed stage milestones ahead of time and budget, only for a manufacturing issue to trigger a product recall right after the round closed. Because the company was well-capitalised, they weathered the storm. Had this issue occurred pre-round, it could have been a fatal setback. If these issues do arise pre-round, try and wait until they’ve been resolved, or you can present a clear recovery plan.
Consider seasonality & market conditions: Holidays like Christmas and the summer are dead zones for fundraising in New Zealand, so plan accordingly. Also be aware of market conditions, if economic conditions seem favourable, take advantage of the moment if you can.
Where possible, make sure your team can handle daily operations while you focus on fundraising. Business momentum during fundraising can be the difference between an interested investor and a committed one.
Target the Right Investor
Not all VCs are created equal. Build a list of investors who align with your stage, sector, and needs and target them methodically.
Stage Fit: Some investors focus on early-stage companies, while others have expertise in later stages. This should also be a proxy for being able to write an appropriately sized cheque for your round. Make sure your target VCs match your company’s current needs.
Sector Experience: VCs with experience in your sector bring more than capital; they offer insights, networks, and strategic support that can be valuable to your business. They may be able to move more quickly or will rely less on third-party signals to validate your team.
Long-Term Partnership: Look for investors who align with your vision and have a history of supporting companies through the ups and downs.
Portfolio and Network: Can they introduce you to potential customers, partners, or talent? Do they have any direct competitors in their portfolio? VCs invest in outliers, not a set of hedges so typically won’t invest in competing companies.
Due Diligence on Investors: Speak to other companies that have already received investment to understand what it’s like working with a particular VC. Ultimately, you’ll build a relationship with an individual Partner more than a firm, so choose someone who genuinely believes in your company and can drive your investment across the finishing line with the strength of their conviction.
Warm Introductions: If possible, seek warm introductions, which carry more weight than cold outreach and often lead to more genuine, productive conversations sooner. Face-to-face meetings are also great for fast-tracking trust and rapport. However, be mindful of who makes an introduction for you, and avoid intros from investors who have already signalled they aren’t likely to invest - their referral might unintentionally send the wrong message to others. Choose trusted connections who believe in what you’re building to keep the momentum positive.
Create Competition: Aim to have at least two investors genuinely excited about your vision. This sense of competition can help increase demand and create a sense of scarcity, which often drives interest from others. Potential investors don’t want to feel they’re missing out on an opportunity that others see value in. However, stay authentic; overstating interest or fabricating urgency can damage your credibility. Instead, focus on conveying your vision confidently and transparently. Keeping investors informed about the genuine progress of your raise can naturally build FOMO while maintaining trust.
Run conversations in parallel to avoid the pitfall of relying on one investor and having to start over if they decline. Even if you have a preferred investor, engaging multiple helps you assess their best and worst features by comparison and inform a view of what’s “normal”. Coordinate investor interest as a batch to increase the chances of multiple offers arriving at once.
The Pitch: Making a Winning Case
The pitch is your chance to tell your story and showcase the strength of your team and vision. There are plenty of online resources for pitch deck templates to help with content so let’s focus on tips for pitch etiquette instead.
Simplicity: Present a compelling story that’s easy to understand. No matter how complex your business, the adage “if you can’t explain it simply, you don’t understand it well enough” sits in investors’ minds. If investors aren’t excited about the potential of your business after 10 minutes, you’re in trouble. Answer questions clearly and succinctly, allowing time for investor questions to build comfort.
Composure: Stay calm and receptive to feedback. Passion is valuable, but showing that you can listen thoughtfully, even to tough questions or critiques, reflects resilience and adaptability. If you’re able to take feedback in your stride, it shows that you’re focused on building the best version of your company.
Tailor Your Pitch: Research each member of a VC’s investment committee and customise your pitch. Show them that you’ve done your homework, ask questions and let them know why you specifically want them to invest.
Be Prepared: Ensure you have a polished pitch deck and a well-organized data room ready for investors. The more streamlined and thorough your materials, the quicker you can engage potential investors and spark competitive interest. Include a solid financial model that clearly outlines your projections and growth assumptions. While VCs may not hold you strictly to these figures down the line, they’ll want to understand your underlying assumptions and evaluate how realistic they are. Highlight the key value drivers of your business, and consider modelling different scenarios to show adaptability under various conditions.
Ambition: Share your long-term vision alongside short-term goals. Outline clear milestones that will increase investor value and show ambitious potential but also be realistic about what you can achieve in the short term.
Realism about Later Rounds: Often, founders who close a seed round easily assume future raises will also be smooth, but every variable may have changed—from market conditions to available capital. Be prepared for a different journey at each stage.
Project Confidence: Investors look for founders who believe in their vision. Commit to what you want to build, not what you think an investor wants to hear. Be authentic, confident, and transparent—don’t oversell or gloss over challenges.
Don’t Bring an Entourage. Ideally, only founders and co-founders should be in the room. Investors want to connect with the team they’re backing, not advisors.
Trends, Not Data Points: “The pitch” isn’t a single interaction or conversation, it’s a series of engagements over time – often across multiple people within a firm. Treat every opportunity as a chance to build relationships and win people to your cause.
The goal here is to get a term sheet from a lead investor. Ideally, your top choice, but any term sheet can help create urgency and show other investors there’s genuine demand.
The Investment Process
The investment process includes negotiation of a term sheet, further due diligence, and investment documentation. There are a lot of resources on how to negotiate and structure good investment so we won’t delve into that here. Here are some tips on how to keep the process streamlined:
Skip the NDA: VCs typically don’t sign NDAs, except when dealing with trade secrets or IP. That confidential information can typically be reserved until you’ve signed a term sheet (which also includes confidentiality clauses).
Hire Good Advisors: Find a lawyer experienced in VC deals. They can guide you on what’s market standard and streamline the process.
Organize the Process: A highly syndicated round can feel like herding cats. Clear timelines and expectations can make a difference. Lean on your lead investor to help minimize duplication in due diligence.
Focus on Key Issues: This is your first project with your investors, so how you work together now sets the tone for your future relationship. Thoroughly disclose any issues you are aware of to minimise the risk of warranty claims down the track.
Urgency: Money isn’t truly secured until it’s in the bank. Keep closing a top priority, maintaining patience and persistence.
Plan B
If things don’t go as planned, be prepared with backup options. This could mean negotiating a bridge round, reducing burn rate, exploring debt options, or even getting creative with cost-saving measures. Flexibility in these situations can buy you time and provide new opportunities. Sharing these plans with investors doesn’t signal defeat, but shows that you are pragmatic and plan for the worst case scenarios.
Raising venture capital is more than securing a cheque—it’s building a partnership. The right VC will support you through both smooth sailing and rough waters. Be transparent, choose investors carefully, and negotiate thoughtfully to lay the foundation for a productive and supportive relationship.