Phase 1: Experiment with your own capital 💵
This phase was all about building the product with a very lean team. We utilized our own capital to get this going.
During this first phase, Lyzr was built as an AI Data Analyzer app, and I took it to potential customers to get their feedback.
Phase 2: The Pivot ↗
The AI Data Analyzer idea didn't get much traction. We also saw several YC companies building in this space pivot or shut down.
We pivoted to building Lyzr as an Enterprise Agent Framework to help businesses build reliable, self-learning AI agents.
During this phase, we initiated a 'Friends and Family' round, which saw participation from many 'first-time' angels and some leading industry executives, including Mark Goldberger Kenny Tucker @raghunandana.
Phase 3: Pitching to VCs 🎤
Raising a 'friends and family' round differs greatly from raising an institutional round.
You'll have to find the VCs who invest in your segment and reach out to them. If your pitch is sharp and exciting, you'll have a 10% response rate. https://www.vcsheet.com/ is a fantastic resource for investor discovery.
Below is the email I used for the cold outreach to VCs, back in May 2024:
"Sub: Lyzr - $1M cARR, raising pre-seed, in enterprise AI space
Hi VC,
Siva here. Founder of Lyzr - The Enterprise Agent Framework.
Enterprises and startups are building reliable, self-learning AI agents on Lyzr and running them locally on their own cloud, ensuring 100% data privacy and compliance.
We helped a large enterprise save 900 man-weeks ($3M in savings) with our autonomous agents.
We are at $1M Contracted ARR and are looking to raise a $2M pre-seed round.
Quick call?
Thanks,
Siva
Founder & CEO
Lyzr"
Phase 4: Partner presentations, IC meetings, term-sheet negotiations 📃
As soon as VCs respond to your outreach email, what follows is a 30-minute short call.
We pitched Lyzr to the associates, who brought in a partner for the next call.
If the partner likes the story and the business (in the early stages, it's always the founder-market fit), they'll invite you to present to their IC (Investment Committee). The IC gives a go-nogo on the deal.
We pitched to probably 10 ICs, had 5 'go' decisions, and closed with 3 VCs in the last round.
There is no set way to prepare for the partner meetings and the IC presentations. Just go with the flow, and don't be a jerk. 😀
Sharing our latest fundraise deck here - https://lnkd.in/e3KTsVJP
Phase 5: Actively raising a seed round 📈
Given that Lyzr is at $3M+ ARR (see my last post), we're now actively raising a seed round and are in talks with a few VCs who understand our vision and are willing to back us to fuel our growth.
We are working with a vision as grand as building the Snowflake of AI Agents.
Game on.
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