With a drier-than-usual investment scene, founders are looking for more effective ways to reach the right venture capitalists. To that end, in recent weeks, thousands of founders have applied to raise capital through a common application, but instead of hoping to get into a university, they hope to raise capital from major investors. The platform they have been using is seed checkslaunched by venture capitalist and growth marketing entrepreneur Julian Shapiro about a month ago. Founders are invited to apply using a 1-minute form that requests a deck, note, and region. The application is then sent to 16 investors, including Conviction’s Sarah Guo, Mercury’s Immad Akhund and CapitalX’s Cindy Bi, all of whom have unilateral or individual check writing capabilities.
There aren’t many restrictions, though the group only invests in startups valued at less than $20 million (a quick scan of the filings suggests that most of those that apply are valued between $5 million and $10 million). Also, the Seed Checks team does not invest in any CPG or DTC products. Applications are reviewed every two weeks, and if a startup is of interest, the founders will receive a response within two weeks of submitting the deck. So far, the tool is resonating: after launching on Twitter and Product Hunt, Seed Checks received 2,000 requests over 2 weeks.
SmartPass co-founder pedro luba, which is creating a digital hall pass for schools, was part of the first batch of applications. The founder is going through the fundraising process for the first time since he decided to turn Smartpass from a side job into a full-time startup. Since he applied to Seed Checks, he has initiated conversations with four of the investors in the cohort.
Luba found out about Seed Checks by scrolling through TikTok. Until then, the process of sending mass emails to many investors at once was more informal. The closest thing to a common app-style pitch process was via superconnectors in Silicon Valley, which would connect you with 10 investors in a single email thread (talk about FOMO).
“Fundraising is a full-time job, it’s time-consuming, and I want to get back to building,” Luba said. “It’s not that this isn’t fun, but that’s not why we’re building a company.”
Some are not so enthusiastic about the idea of automation. Sanjay Goel, founder of NachoNacho, first had second thoughts about the idea of any platform trying to scale fundraising. He changed his perspective when he saw the “very smart” investors involved. He’s interested in whether the caliber will help this effort scale better, but as a three-time founder, Goel still believes fundraising is “a relationship-based activity.” The entrepreneur, who also invests, says that platforms like Seed Checks can be a source of business flow, but he would not like it to be the only one.
Shapiro sees the platform filling a gap in a market dominated by accelerators that offer standard treatment and programming in exchange for shares. Seed Checks is receiving applications from founders who historically did not apply for accelerators because they did not need the help or introduction to a broad swath of investors; they only wanted access to the faces of the platform. The platform isn’t the only one testing the common style of app presentation. Afore Ventures launched a common application program in January; for the past 8 weeks, it has received 1,600 startup requests, or about 200 requests per week. The group of investors has grown from 10 investors to 30, to 52 individuals or companies.
Bi, a sole general partner building CapitalX, has yet to make any investment from the initiative, but said Seed Checks is more effective than your own inbox in landing the flow of new deals. He adds, “the combined brand is much stronger than just one.”
“People who wouldn’t normally recommend me, a family doctor with a $250,000 check, would now refer to a group of venture capitalists with the potential to get [a million dollar] check,” he told TechCrunch. “It is more efficient for the founders. “Why didn’t other smaller funds do this before?”
Follow up on Bi’s comments: While co-investing is common among early-stage venture capitalists due to the large size of checks and the popularity of party rounds, efficiency is of ongoing importance among investors. Especially considering how single GPs are struggling in the current LP risk averse landscape, focusing on a group rather than individuals could help to block out all the noise.
“I know a lot of investors who are basically investing in the best of what’s going on in their inbox, like the top 10% deals that come in their inbox,” Shapiro said. Many, he says, are “not proactively” pushing projects to attract deals to them, whether it’s building an audience on Twitter or posting videos on YouTube, or in the case of independent GPs, investing in a complete marketing apparatus that helps to get ahead. of more entrepreneurs.
When Shapiro sought out the 16 investors who would make up Seed Checks, he said he was able to convince them to join because of the lure of combining their collective social audiences for better business flow. “By putting our faces together, we got higher conversions from the founder submitting submissions and certainly much better offers,” he said. Shapiro himself no longer directs people to his own website; he just sends them to Seed Checks.
Another tool that gains strength is CV sheetbuilt by Ali Rohde Outset Capital and Shapiro. The duo created a website that posts lists of investors based on their startup stage, location, or vertical. It’s like a more refined, easy-to-find Crunchbase, Rohde explained. The problem with any tool that helps with investor access is that it can be difficult to track changes in taste buds. In fact, TechCrunch once tried to create a guide for active venture capitalists, called The TechCrunch List. He died.
Rohde said the VC Sheet is different from the TechCrunch List in that it focuses explicitly on helping provide insights into the early-stage risk market; and instead of offering only proptech-focused investors, they opt for listings as New York’s most active pre-seed investors.
“For founders, it doesn’t make sense to get a really holistic deep look at the early stage funding ecosystem because they’re going to go through it once. So, find out who you need, go ahead, build again,” he said. “Over and over again, we’re on these calls, talking to founders, and they ask us who they should talk to, so it actually makes sense that we spend some real time putting together that central repository, it doesn’t make sense for a founder to do that”.
Both the VC sheet and seed checks are free to founders and investors; they are not trying to become businesses either or charge for access. That could play a role in your success because of accessibility.
Shapiro says that VC Sheet is trying to solve a larger structural problem around the ability of founders to find the fit between investors and startups, while Seed Checks is about getting in front of more than a dozen investors. with priority and ease.
“Seed checks are not trying to be a giant fix in the VC ecosystem, they are not being offered as a panacea,” he said. “It’s just another outlet for founders…a reflection of where fundraising could go for greater efficiency and access.”
If you have a juicy tip or a clue about what’s happening in the corporate world, you can reach out to Natasha Mascarenhas on Twitter. @nmasc_ or on Signal at +1 925 271 0912. Requests for anonymity will be respected.
