# How a startup raises venture capital

> A process map exported from forks.world (https://forks.world). Author: Brian. Source: https://forks.world/p/cmv21nu4j002al206oyn1bv9w
> It describes who does what, in what order, and with which technology. Read the plain-language sections first; the JSON at the end is the exact, complete data.

## Summary

- 17 steps across 2 layers
- Persona: Founders, Angels and seed funds, Venture capital firm, Lawyers

## Pain points

Where this process hurts, worst first:

- **Negotiate and sign the documents** (How a startup raises venture capital; painful): Legal fees come out of the money raised

## How to read this file

- A process is made of **layers**. The main layer is the top level; any step of kind `subprocess` opens a detail layer with its own lanes and steps.
- **Lanes** are either persona (people/roles) or technology (systems). Each step belongs to one lane; `using` lists tools a person uses for that step.
- Step kinds: `start`, `task`, `decision` (its arrows carry the answer as a label), `subprocess`, `end`.

## How a startup raises venture capital

Lanes:
- Founders: person / role (id `founder`)
- Angels and seed funds: person / role (id `angel`)
- Venture capital firm: person / role (id `vc`)
- Lawyers: person / role (id `lawyer`)

Steps, in the order they run:

1. **Build a prototype and find the first users** [subprocess; Founders; id `v1`], links to the published process "Idea to customer: from a problem to a thriving product" (https://forks.world/p/cmv0ieh4v005ojw06nqht8zpy; full text at https://forks.world/api/public/cmv0ieh4v005ojw06nqht8zpy/export)
   - then Raise a small seed round from angels
2. **Raise a small seed round from angels** [task; Angels and seed funds; id `v2`]
   - then Show growth with real numbers
3. **Show growth with real numbers** [task; Founders; id `v3`]
   - then Build a pitch deck and a target list of firms
4. **Build a pitch deck and a target list of firms** [task; Founders; id `v4`]
   - then First meeting with a partner
5. **First meeting with a partner** [task; Venture capital firm; id `v5`]
   - then Does the partner want to go deeper?
6. **Does the partner want to go deeper?** [decision; Venture capital firm; id `v6`]
   - if "Yes" go to Due diligence on the product, customers and numbers; if "No" go to Ask for feedback and pitch the next firm
7. **Due diligence on the product, customers and numbers** [subprocess; Venture capital firm; id `v7`], opens the detail layer "What investors check"
   - then Does the whole partnership agree to invest?
8. **Does the whole partnership agree to invest?** [decision; Venture capital firm; id `v8`]
   - if "Yes" go to Issue a term sheet: price, ownership and control; if "No" go to Ask for feedback and pitch the next firm
9. **Issue a term sheet: price, ownership and control** [task; Venture capital firm; id `v9`]
   - then Negotiate and sign the documents
10. **Negotiate and sign the documents** [task; Lawyers; id `v10`] ⚠ PAIN POINT (painful): Legal fees come out of the money raised
   - then Wire the money
11. **Wire the money** [task; Venture capital firm; id `v11`]
   - then Spend it to grow, then raise the next round or go public
12. **Spend it to grow, then raise the next round or go public** [subprocess; Founders; id `v12`], links to the published process "How a company goes public with an IPO" (https://forks.world/p/cmv21ntm80025l2064owvw1on; full text at https://forks.world/api/public/cmv21ntm80025l2064owvw1on/export)
   - (no next step recorded)
13. **Ask for feedback and pitch the next firm** [task; Founders; id `v6a`]
   - then First meeting with a partner

```mermaid
flowchart LR
  subgraph l_founder["Founders"]
    n_v1[["Build a prototype and find the first users"]]
    n_v3["Show growth with real numbers"]
    n_v4["Build a pitch deck and a target list of firms"]
    n_v6a["Ask for feedback and pitch the next firm"]
    n_v12[["Spend it to grow, then raise the next round or go public"]]
  end
  subgraph l_angel["Angels and seed funds"]
    n_v2["Raise a small seed round from angels"]
  end
  subgraph l_vc["Venture capital firm"]
    n_v5["First meeting with a partner"]
    n_v6{"Does the partner want to go deeper?"}
    n_v7[["Due diligence on the product, customers and numbers"]]
    n_v8{"Does the whole partnership agree to invest?"}
    n_v9["Issue a term sheet: price, ownership and control"]
    n_v11["Wire the money"]
  end
  subgraph l_lawyer["Lawyers"]
    n_v10["Negotiate and sign the documents"]
  end
  n_v1 --> n_v2
  n_v2 --> n_v3
  n_v3 --> n_v4
  n_v4 --> n_v5
  n_v5 --> n_v6
  n_v6 -->|"Yes"| n_v7
  n_v6 -->|"No"| n_v6a
  n_v6a --> n_v5
  n_v7 --> n_v8
  n_v8 -->|"Yes"| n_v9
  n_v8 -->|"No"| n_v6a
  n_v9 --> n_v10
  n_v10 --> n_v11
  n_v11 --> n_v12
```

### What investors check (detail of step "Due diligence on the product, customers and numbers")

Lanes:
- Venture capital firm: person / role (id `vc`)
- Founders: person / role (id `founder`)

Steps, in the order they run:

1. **Talk to customers** [start; Venture capital firm; id `d1`]
   - then Review revenue, costs and growth
2. **Review revenue, costs and growth** [task; Venture capital firm; id `d2`]
   - then Check who owns the code and the company
3. **Check who owns the code and the company** [task; Venture capital firm; id `d3`]
   - then Meet the team
4. **Meet the team** [end; Venture capital firm; id `d4`]

```mermaid
flowchart LR
  subgraph l_vc["Venture capital firm"]
    n_d1(["Talk to customers"])
    n_d2["Review revenue, costs and growth"]
    n_d3["Check who owns the code and the company"]
    n_d4(["Meet the team"])
  end
  n_d1 --> n_d2
  n_d2 --> n_d3
  n_d3 --> n_d4
```

## Full data (JSON)

```json
{
  "title": "How a startup raises venture capital",
  "maps": {
    "m_root": {
      "id": "m_root",
      "lanes": [
        {
          "id": "founder",
          "name": "Founders",
          "type": "person"
        },
        {
          "id": "angel",
          "name": "Angels and seed funds",
          "type": "person"
        },
        {
          "id": "vc",
          "name": "Venture capital firm",
          "type": "person"
        },
        {
          "id": "lawyer",
          "name": "Lawyers",
          "type": "person"
        }
      ],
      "steps": [
        {
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          "kind": "subprocess",
          "lane": "founder",
          "link": {
            "id": "cmv0ieh4v005ojw06nqht8zpy",
            "scope": "public",
            "title": "Idea to customer: from a problem to a thriving product"
          },
          "next": [
            {
              "to": "v2"
            }
          ],
          "uses": [],
          "label": "Build a prototype and find the first users"
        },
        {
          "id": "v2",
          "kind": "task",
          "lane": "angel",
          "next": [
            {
              "to": "v3"
            }
          ],
          "uses": [],
          "label": "Raise a small seed round from angels"
        },
        {
          "id": "v3",
          "kind": "task",
          "lane": "founder",
          "next": [
            {
              "to": "v4"
            }
          ],
          "uses": [],
          "label": "Show growth with real numbers"
        },
        {
          "id": "v4",
          "kind": "task",
          "lane": "founder",
          "next": [
            {
              "to": "v5"
            }
          ],
          "uses": [],
          "label": "Build a pitch deck and a target list of firms"
        },
        {
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          "kind": "task",
          "lane": "vc",
          "next": [
            {
              "to": "v6"
            }
          ],
          "uses": [],
          "label": "First meeting with a partner"
        },
        {
          "id": "v6",
          "kind": "decision",
          "lane": "vc",
          "next": [
            {
              "to": "v7",
              "label": "Yes"
            },
            {
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              "label": "No"
            }
          ],
          "uses": [],
          "label": "Does the partner want to go deeper?"
        },
        {
          "id": "v6a",
          "kind": "task",
          "lane": "founder",
          "next": [
            {
              "to": "v5"
            }
          ],
          "uses": [],
          "label": "Ask for feedback and pitch the next firm"
        },
        {
          "id": "v7",
          "kind": "subprocess",
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          "next": [
            {
              "to": "v8"
            }
          ],
          "uses": [],
          "child": "m_diligence",
          "label": "Due diligence on the product, customers and numbers"
        },
        {
          "id": "v8",
          "kind": "decision",
          "lane": "vc",
          "next": [
            {
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              "label": "Yes"
            },
            {
              "to": "v6a",
              "label": "No"
            }
          ],
          "uses": [],
          "label": "Does the whole partnership agree to invest?"
        },
        {
          "id": "v9",
          "kind": "task",
          "lane": "vc",
          "next": [
            {
              "to": "v10"
            }
          ],
          "uses": [],
          "label": "Issue a term sheet: price, ownership and control"
        },
        {
          "id": "v10",
          "kind": "task",
          "lane": "lawyer",
          "next": [
            {
              "to": "v11"
            }
          ],
          "pain": {
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            "level": 2
          },
          "uses": [],
          "label": "Negotiate and sign the documents"
        },
        {
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          "kind": "task",
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          "next": [
            {
              "to": "v12"
            }
          ],
          "uses": [],
          "label": "Wire the money"
        },
        {
          "id": "v12",
          "kind": "subprocess",
          "lane": "founder",
          "link": {
            "id": "cmv21ntm80025l2064owvw1on",
            "scope": "public",
            "title": "How a company goes public with an IPO"
          },
          "next": [],
          "uses": [],
          "label": "Spend it to grow, then raise the next round or go public"
        }
      ],
      "title": "How a startup raises venture capital",
      "parent": null
    },
    "m_diligence": {
      "id": "m_diligence",
      "lanes": [
        {
          "id": "vc",
          "name": "Venture capital firm",
          "type": "person"
        },
        {
          "id": "founder",
          "name": "Founders",
          "type": "person"
        }
      ],
      "steps": [
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          "kind": "start",
          "lane": "vc",
          "next": [
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              "to": "d2"
            }
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          "uses": [],
          "label": "Talk to customers"
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          "kind": "task",
          "lane": "vc",
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          "uses": [],
          "label": "Review revenue, costs and growth"
        },
        {
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          "kind": "task",
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          "next": [
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              "to": "d4"
            }
          ],
          "uses": [],
          "label": "Check who owns the code and the company"
        },
        {
          "id": "d4",
          "kind": "end",
          "lane": "vc",
          "next": [],
          "uses": [],
          "label": "Meet the team"
        }
      ],
      "title": "What investors check",
      "parent": {
        "map": "m_root",
        "step": "v7"
      }
    }
  }
}
```