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Hi John,

This week's newsletter features insights from Winston Mok, co-founder of Woosh Air, on how they were able to raise capital quickly during their first round, then had to take a little more time during their second round. Also, we share recent startup fundraising trends, an investors' perspective on raising a Series A today, and Hunter Walk's thoughts on why 2023 may be a year of correction for startup founders, investors, and customers. Dive in below and reply to let us know what you think.

Traction and visual storytelling are saviors during a tough fundraising year

Winston Mok, co-founder of Woosh Air, shares how he was able to raise capital to build a company within weeks during the pandemic, but has found out that showing traction can help him push even further with VCs.

I started my year with some ominous news from YCombinator: “No one can predict how bad the economy will get, but things don’t look good. The safe move is to plan for the worst.”

In 2021, I quit my job as a Google product manager to do what most founders do: solve a problem I couldn’t stop thinking about. During the 2019 California wildfires, air purifiers had sold out and  San Francisco’s air quality index was over 150, unhealthy for everyone. Then the pandemic hit, and working from home made me realize that the average home air filter is rated at Merv 6, which doesn’t catch smoke, bacteria, or viral carriers. This is why I started Woosh Air, a smart air filter system.

My company vision and story resonated with a lot of investors. Even before I had a working prototype, I raised my pre-seed round in 2021. The round happened very quickly, with the first million filling up within a week. Then another $250,000 came in just as quickly, and we were done.

Now I’m raising our seed round in a more challenging market, and I’m learning a lot about what it takes to fundraise in 2022. What I’m discovering is that while, yes, fundraising is taking longer than it did before, you can see success if you focus on a few things: traction, intentionality, and visual storytelling.

Let traction replace the instant, “Wow!” of 2021

It’s not as hot a market as it was last year—investors aren’t going to immediately say, “Whoa!” when you pitch your product. Now even seed companies need clear traction, demand, and a go-to-market strategy.

A large portion of my pitch is dedicated to building up to the traction slide, which is the showcase piece of the entire deck. Traction now seems to be 50% of my entire pitch. I emphasize our roll call, the partners we’re lining up, our potential sales, and our successful channels. Compared to our pre-seed stage, the current pitch deck has moved further away from the product itself.

This approach seems to be validated by DocSend research, which shows that investors are spending 28% more time on the traction section in 2022. In this fundraising environment, traction is the takeoff point. When you’ve done the work, the numbers will speak for themselves. So it’s not surprising that investors are also spending 56% less time on the solutions section for successful decks—if the traction is there, this is what’s mostly likely to get you funded after some preliminary interest.

That being said, I always make sure to end every investor conversation with a vision statement that’s pretty far out. I’ve spent a lot of time refining this section, so that when I describe my long-term vision, investors sometimes say, “Whoa, I didn’t know that was possible.”

Visual, tactile storytelling holds short attention spans during a pitch

Attention spans on the investment side are short these days. You need to know what pulls on the heartstrings and what doesn’t. 

My story is tied to the California wildfires. I have an eight-month-old kid, and I care deeply about the air they breathe. I also built my air filters with my own two hands—I didn’t hire people to do it. In meetings, I show my air filters quickly and make it clear to investors: “You’re talking to the person who built this with their own arms.” This is a story I tell visually alongside a shortened deck, because it’s what’s going to hold attention during a meeting. In your pitch deck, on the other hand, you need to keep it concise.

According to DocSend’s seed round report, investors are spending less time than ever reading through decks, which means prioritizing concise storytelling that doesn’t overwhelm investors with too many details. This is why I make part of my pitch like watching a mini TV show, where I actually show how Woosh Air filters are installed in people’s homes. My appearance on Shark Tank prepared me for this type of pitch, so that I can keep people excited.

For more on how to focus on getting to the meeting, and not a “spray and pray” of your pitch deck, read the full blog post by Winston Mok, co-founder of Woosh Air.

Pitch Deck Interest Metrics Update

Founders and investors began to get back to business last week: activity was up on both sides of the dealmaking table. VC activity rose by 31.88%, founder activity had no change, and VC time spent went up by 25.46%. It looks like 2023 may be off to a good start. We'll see next week.

Here's the full analysis of last week's activity.

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