Although 2021 is still far away, it has already seen a record amount of venture capital activity within the technology sector. Founders have more round sizes than ever before, but they must think strategically and critically about which companies to add to their portfolio.This year we have seen $292.4 billion in global venture financing, with $138.9 million in the United States. The capital growth is especially rapid for tech companies: In Q2, founders raised 15% more capital than they did last year. According to CB Insights's latest data,Not only are more companies raising money, but they also do so at a higher value. Today's median seed and Series A stage valuations are $12 million and $42million, respectively. This is up 20% to 30% over 2020. This is partly due to the increasing exits/M&A activity within the technology sector, a record amount of IPOs, a general bullishness surrounding technology, and low interest rates.Good VCs that are aligned to a startup vision create more value than their dollars.In a moment of record VC activity founders would do well to return to the basics and to focus on the principles behind fundraising when deciding who will sit at their table. Here are some tips for founders to help them get started.1. 1.Good VCs that are aligned to a startup vision create more value than their dollars. This value is usually created across a few functions, including sales, domain expertise, recruiting, and product. It all depends on the backgrounds of the fund's partners and the composition of their limited partners (investors).The right VC can also be an objective and trustworthy sounding board for CEOs. This can be a valuable asset as a startup navigates uncertainty as well as the challenges of scaling a young business. When evaluating multiple term sheets, founders should consider whether to optimize for VCs that offer the highest valuation or those who bring the greatest value.2. 2.Part of a successful fundraising process is holding VCs responsible for their diligence requests. Although it is not uncommon for VCs ask for a lot of information upfront, startups should share the information after assessing the investors' intent and appetite.Founders have the right to request additional data. They should check with potential investors about where the process is at and receive an indication of when they can expect next steps. Mark Suster said it best. Data rooms are the death knell of fundraising.
