How to Prepare for a Seed or Series A Raise
By Tom McCollum, ACA · Former KPMG Corporate Finance · Compass & Ledger
The short answer
- Start 12–16 weeks before your first investor meeting.
- Size the round to 18–24 months of runway, not to the valuation you'd like.
- Model your dilution, including SAFEs and the option pool, before you negotiate anything.
- Make the deck, model and accounts agree with each other. Investors check.
- Fix the legal and tax issues that slow down due diligence now, not after the term sheet.
Most rounds that stall don't fail on the idea. They stall because the numbers don't hold up once an investor starts pulling on them. This guide covers what to prepare, in what order, and the problems we see catch founders out most often.
1. Work back from your first meeting
A raise often takes three to six months from first meeting to money in the bank. Preparation should start well before that.
| When | What to have done |
|---|---|
| 16 weeks out | Historic accounts closed and reconciled; round size decided |
| 12 weeks out | Financial model built; dilution modelled |
| 8 weeks out | Deck, executive summary and valuation view complete |
| 4 weeks out | Data room built; Q&A pack written; pitch rehearsed with the numbers |
| Week 0 | First meetings |
Founders who compress this into two weeks usually end up rebuilding materials mid-process, which is exactly when investors are forming their view of you.
2. Size the round from runway, not valuation
The most common mistake is working backwards from a valuation: "we want $15m pre-money, so we'll raise $4m." Investors work the other way. They want to know what the money buys, and whether it gets you to the next round.
Plan for 18–24 months of runway after the round closes, because the next raise will take months too. A worked example:
- Net burn today: $120k a month, rising to $210k as you hire, so an average of about $165k.
- 21 months of runway: $165k × 21 ≈ $3.5m.
- A 15% buffer for slippage takes it to about $4m.
Then check that $4m gets you to milestones a Series A investor will pay for, such as revenue, retention or unit economics. If it doesn't, the round is the wrong size, whatever the valuation.
3. Understand your dilution before you meet anyone
Two things surprise founders more than anything else.
SAFEs stack. With post-money SAFEs, each holder's ownership is fixed, and founders absorb the dilution from every SAFE that follows. For example, $500k at a $5m post-money cap is about 10%. Add a later $1m at an $8m cap, about 12.5%, and you've sold roughly 22.5% before the priced round starts. Many founders think of it as "about 15%" until the conversion is modelled.
The option pool shuffle. Investors often ask for a bigger option pool, created before their money comes in. Say you raise $3m at a $12m pre-money valuation, and the term sheet requires a 10% post-money pool. That pool is worth $1.5m and comes out of the pre-money, so your effective pre-money is $10.5m, not $12m.
Neither is unusual or unfair, but you should know the numbers before you negotiate, not after.
4. Make the numbers agree with each other
Investors compare your deck, your model and your accounts. If they tell different stories, the conversation turns from your business to your numbers.
On one engagement, a consumer brand going out for a priced round had three different gross margins: one in the deck, one in the model and one in the historic accounts. The deck left out fulfilment and payment costs; the accounts included them. None of it was dishonest, but it took an investor about ten minutes to find. We reconciled all three to a single, defensible figure before the raise.
Check these before you go out:
- Revenue in the deck (bookings, ARR, GMV) is clearly defined and reconciles to revenue in the accounts.
- Gross margin includes every cost of delivering the product.
- Customer and retention figures match across every document.
5. Build a model investors can interrogate
Investors don't expect your forecast to be right. They expect it to be believable, and built so an analyst can test it quickly.
- Driven, not extrapolated. Revenue built from customers, pricing, conversion and retention, not last year's figure plus a growth rate.
- Three statements that tie. Profit and loss, balance sheet and cash flow that reconcile. Cash is the first thing checked.
- Monthly for at least 24 months, then annual.
- All assumptions in one place, labelled and easy to flex.
- Scenarios. Base, downside and what happens to runway if the next round is six months late.
6. Know what actually sets your valuation
At seed, the price is set mostly by the market: round size, typical dilution (commonly around 15–25%) and investor demand. A discounted cash flow valuation won't set a seed price, and presenting one as if it does can cost you credibility.
It matters more from Series A onwards, alongside comparable companies and recent transactions in your sector. What helps at every stage is a clear view of where your valuation should sit and why, so you can hold your ground on terms.
7. Clear the due diligence issues now
These routinely slow US deals down, and every one is cheaper to fix before the term sheet.
- IP assignment. Every founder, employee and contractor who built the product has signed an IP assignment, including work done before the company was formed.
- 409A valuations. Options granted without a current 409A valuation can create tax problems for employees.
- 83(b) elections. Founders with vesting stock filed within the 30-day window. Missed elections are hard to fix.
- Sales tax. Selling into several states can create registration obligations you haven't met.
- Cap table. Every issuance, SAFE and option grant is documented, and the cap table matches the legal records.
- Company structure. Most US VCs expect a Delaware C-corporation; converting mid-raise adds weeks.
8. Build every document from one source of numbers
What you'll need:
- Pitch deck, with financial slides pulled directly from the model.
- Executive summary of one to two pages.
- Financial model, investor-ready and clean.
- Data room, organised the way investors review it: corporate, financial, commercial, legal, team.
- Q&A pack with written answers on margins, burn, runway, customer concentration and your key assumptions.
If the model changes, everything downstream should change with it. That consistency is what makes a founder look in control of the business.
9. Rehearse the numbers, not just the pitch
Founders rehearse the story and get caught out on the follow-ups: "What happens to runway if hiring slips?", "Why does margin improve in year two?", "What's your payback on paid acquisition?" Run a mock session with someone who will push on the model before an investor does.
Frequently asked questions
How long does it take to prepare for a seed round?
Allow 12–16 weeks of preparation before your first meeting. With clean historic numbers it can be done faster. We do it in 30 days.
How much should I raise?
Enough for 18–24 months of runway and to reach the milestones your next investors will pay for, plus a buffer.
Do I need a financial model for a seed round?
Yes. Pre-revenue companies still need one showing costs, hiring, burn and runway. Investors use it to see whether you understand your own business.
What slows down investor due diligence most?
Inconsistent numbers, missing IP assignments, undocumented option grants and cap tables that don't match the legal records.
Get investor-ready in 30 days
We build the model, valuation, investor deck, data room and Q&A pack from one source of numbers, and support you through investor questions during the raise.
Thirty minutes. No pitch. Your situation, and what we would do about it.
If we are a fit, we will say so. If we are not, you will hear that too, and where to look instead. Either way you leave with a clearer picture of what good finance looks like for your business.