Getting serious about Series B: 3 documents that will help founders control the narrative

I have now been an investor for two years after 15 years of entrepreneurship. If I had instead been an investor for two years and then gone out on my own, I would have saved myself a lot of heartache!

I have spent most of the last two years investing at Series B and helping portfolio companies prepare for this first “growth-y” round. There is a marked difference in what a Series B company is expected to look like versus a Series A company. As an entrepreneur, you have limited time to project that maturity to prospective funds.

This is one of the lessons I wish I understood when raising a Series B, so I hope you find this advice helpful when you navigate your larger raises. In this column, I will cover the key materials and collateral that will help you communicate your ideas successfully across a partnership.

A key complication as you progress from seed to Series A and then to Series B is that the bigger check size invariably means more people are involved in getting to a “yes.” Every venture firm has its own idiosyncrasies in how it votes, but understanding that you are truly “dating” the entire firm when you get to larger rounds is a vital insight that I never appreciated. This means you need to understand how to create materials that survive a brutal game of telephone from associates out to prove their smarts to founding GPs managing insane travel schedules.

A good strategy memo becomes the guideline for how the entire diligence process unfolds.

A Series B data room can be overwhelming. You want to proactively manage the order in which people access information and focus their attention on a few key documents that they can return to when they fall down a rabbit hole. Founders should think of three primary documents as their “holy trinity”: the deck, the strategy memo and the forecast model. These documents should do most of the heavy lifting for capturing people’s attention and ensuring that information is transferred within the partnership with high fidelity.

You want people to focus the vast majority of their attention on these three pieces of information. This is a great way to control the narrative and ensure that what you want to be transmitted is received by the other parties.

An elegant strategy memo is your most important document

Over the past few years, the strategy memo has emerged as a key part of initial diligence packages. Some people refer to it as a company-written investment memo, but I prefer the “strategy memo” title, because it’s not really an investment memo, which comes with scenario analyses, exit plans and other sections that would be awkward and a bit presumptuous for a company to externalize.

I have also heard it referred to as a “narrative deck” — basically a detailed, written version of your pitch. I also do not think this fully captures a great strategy memo, as it is more than just the deck. I see the deck almost as a derivative of the strategy memo.