Lessons from raising a pre-seed round we're proud ofhttps://withtopknot.medium.com/announcing-topknots-raise-1261ee173126
Last week we shared that Topknot (https://topknot.app) had raised a $650K pre-seed from a group of exceptional investors. I wrote a blog post to announce the round: https://withtopknot.medium.com/announcing-topknots-raise-1261ee173126We were most proud of who joined us on our journey. We committed to building with and for BIPOC and LGBTQ+ women from our inception, and ultimately our round reflected that intention. There's one part of the blog post that got particular attention from fellow entrepreneurs. It read: "We want to say unequivocally that [this fundraise wasn't] an accident. We were thoughtful about from whom we took intros, how we talked about our work, and who got an extra nudge via email when the distractions of this fall sunk in. Every little bit mattered." I thought it would be useful to share a bit more about our tactics here.- Intros: I entered fundraising in the extremely privileged position of having worked in VC. My network was well established; many of the reach outs to funds I made came directly from my email. Of course, there were others in my network who offered to introduce me to funds with whom I had no or limited connection. Interestingly, I found that some intros immediately went through, while others lagged. In particular, a fellow entrepreneur's intros to funds that passed came back with blazing speed. When I talked to these funds, they frequently started by lamenting to me that they'd passed on her company previously. She clearly held their respect, and given the nature of her work I knew that funds who were interested in her company would likely give Topknot a good look. So, instead of casting a wide net, I went back to her time and again for intros. I made it super easy -- a forwardable email that required her only seconds to pass along. This tactic ultimately saved me time. They say less is more, and in this case one killer intro-er made a huge difference. I am grateful.- Talking about our work: One question I got asked frequently while pitching was "Why women?". Personal development is relevant to all people, no? And of course it is, but I explained the reason we were starting purposefully with women first is that my cofounder, Brook, and I have spent our careers crafting learning experiences that truly meet the needs of the learner. For Brook, it was supporting teachers who may or may not have technical expertise to embrace being a lead learner in their classroom in order to offer their students computer science. For me, it was teaching AP-level STEM courses while reinforcing foundational academic skills; lessons about limits in my AP Calc class had a healthy dose of the basics of fractions. What we know is that it's not just curriculum, but honoring the learner's experience, motivation, resilience, etc. While I could get more philosophical, the point here is that our answer was deeply personal, and frankly not what people expected. Maybe the adage "It's not what you say, but how you say it" works here. Overall, I found answers unique to me and our team resonated more with investors than those that were generic.- Extra nudges: When I started our fundraise, I thought we had to have everything wrapped by the election. As the deadline loomed, the likelihood of meeting that timeline slipped. Election week -- woof -- was truly distracting. Few of my prods got through. But we started gaining speed in November and I could see the light at the end of the tunnel. Two of the funds I was most excited about, though, we getting left behind. So I did a bold thing and emailed them, said the round was happening, and that I wanted them in. People talk about creating FOMO, but this wasn't my intention. I think the sincerity of my message resonated. Both came in, and I am thrilled. I know it's hard to balance the 'silent no' with the 'still interested, but distracted and could be a yes', but what I've learned is it's worth reaching out, especially if conditions have changed.Take from this what works for you. No two companies' raises are the same. I'm happy to answer any more questions this sparks.(Also, if you want to follow our journey -- or start yours! -- go to http://topknot.app.)
This is incredible, thank you for sharing Claire!
@claires Is there now an expectation that for the next round, the funds that contributed to the pre-seed round will then get priority, and receive equity? Also, what is the tolerance for failure like in the pre-seed round? Are they expecting that only 1 / 100 (as opposed to 1 / 10) are successful? Congrats on this accomplishment!
Thanks for this question and I hope that you don't find this answer unsatisfying, but it truly depends on the fund, their typical check sizes, and the evolving relationships. But first, yes, all will receive equity for this investment and I'd say all have high risk tolerances. We're planning to execute such that all want to double down on their investment, but I'd say that's a generic goal. If things are going well, people to continue the ride.
This is incredible Claire! Well done and congratulations. If you don’t mind me asking, what kind of traction did you have before you started fundraising or was it not necessary? Also with the rise of coaching platforms and networks for women what did the investors see differently for topknot?
Thanks for these questions. At the time, we had limited traction — maybe 150 pilot users. We had just made a key hire, though, and had momentum on our side. To the second question, hard to say entirely but most pre-seed deals are about teams and we had a strong point-of-view of programmatic design and deep experience in education, and a world class engineer. I hope more companies in the space get funded; there’s so much cool, and needed, innovation out there.