VC investment process (behind the scenes)

VC Investment process is a 4-month long process from the first call till the time money is reflected in the bank account. If they really like you and you are running out of funds, know that this process can be completed within 1 month as well. However, the investor would not do that because they might have to potentially sideline other startup deals. On the other hand, unforeseen complications might extend the process beyond the standard timeframe. Therefore, allocate a minimum of 6 months for fundraising.

Week 1 (The First Call): You have just had your first call with a fund. The individual you engage with becomes your startup's "champion." This champion acts as your advocate within the fund until the funding round concludes.

After the first call, your champion would allocate typically an hour to de-brief the pitch. She/he would not question the facts presented but evaluate if the information presented stitches well together and makes complete sense. She/he would then decide whether the deal is worth pursuing.

Irrespective of the decision, the champion typically discusses the opportunity with other team members in the weekly meeting (mostly to confirm the bias, tbh). In this meeting, your champion would pitch your startup idea and persuade other members, who might support or raise concerns. Ultimately, it's your champion's decision that will count. 

Week 2-8 (More Calls): Now you are getting into a space, where everything accepted at its face value before would be validated. To do this, investors would like to get into supporting data and facts.

For example: they would like to validate your approach to calculating market size, and evaluating your financial models and underlying assumptions. They will cover each aspect one by one right from tech, IP, to CAP table and fundraising milestones. The investor might also request you to facilitate a call with current/potential customers and/or investors who are also evaluating the investment opportunity. 

Consider this stage as preliminary due diligence, the duration of which depends on your ability to address their queries promptly.

If everything stacks up and is validated, you will be offered a term sheet (do not celebrate yet).