The Right and Wrong Way to Do a Preemptive Round

Liran Belenzon
6 min readJan 26, 2022
Photo by Matt Duncan on Unsplash

If you’re a startup CEO, you have probably heard the term “preemptive round” in the past. While the concept — getting investment offers before officially asking for them — is widely known, I can say after two preemptive rounds that the common theory around how to pull them off is wrong.

The quintessential scenario for a preemptive round is having a VC (venture capital) or PE (private equity) firm come and present you with a term sheet before you even embark on the fundraising process and put hundreds of hours of work in.

The more accurate reality is that few such firms will provide a term sheet before running a full fundraising process, so you still need to do some work. But it’s roughly 30% compared to a full process, which is why your investors and founders love preemptive rounds. You can save a lot of time, get the same valuation, and share your vision and strategy with fewer people.

However, if you want to increase your odds of achieving this, you need to ignore the standard advice and do what really works.

What I learned between our Series B and C

The first time I ran a preemptive round, for our Series B, I hated it. I followed the advice I got from investors and was not impressed compared to running a full fundraising process. The advice I got was “talk to a few investors only, tell them you plan to fundraise in the future but for the right price will raise now, and don’t have your materials (deck, models, etc.) ready because you are not really fundraising.” So I did just that.

I flew to the Valley, met seven investors, talked to them about the company, and sent some messy materials because we weren’t officially fundraising. While we raised our B round within three weeks by following this process, I think it was more luck than the process itself. We got only one term sheet compared to multiple for our A round. Multiple term sheets meant that we were negotiating from a position of strength. Conversely, raising our B felt like doing something half-assed and not representing our company properly.

So when it was time to raise our C round, we decided to combine the best of both worlds, the preemptive round, and the full fundraising process.

So how did we do it?

First, define the milestones and validate them with your target investor list

After we completed our Series B in 2020, the board and I defined the next set of milestones to hit to raise our next round. We wrote them down and ensured we all aligned on them. We weren’t sure if we wanted to raise again but wanted the option to do so. Aligning on milestones saved time by preventing useless discussions about fundraising and allowing us to focus on execution.

The next step was to validate the milestones with potential C round investors. We started by making a list of 20 investors we believed would be a good fit. We set up meetings with them earlier in 2021 and shared where we were and where we wanted to be before our next raise. We then simply asked: if we hit the following milestones (of which there were three), would that be sufficient for them to invest? They all said yes. This was crucial because it ensured we were focused on the right goals.

We agreed to touch base again in Q4 as that was when we aimed to achieve our goals. They all wanted to stay in touch throughout the year, but we pushed most to talk again in early Q4. This was crucial for the preemptive round, as you will see soon.

Second, get everything ready like normal fundraising

Not having all of your materials ready for your next round doesn’t set you up for success, whether it’s a preemptive or regular round. Having a robust deck, financial models, customer reference calls, technology overview deck, and more, will allow you to control the story of your company, achieve high conversion rates of meetings to term sheets, and run a very fast process as you will have everything needed for due diligence. It will also allow you to tell your company’s story with conviction as you will have done your homework and have answers to all the difficult questions that come.

This was my number one learning from doing our previous preemptive round. Thinking about that round as not really fundraising impacted my readiness to fundraise and the quality of my pitch. This time we practiced and showed up with our A-game even when not officially fundraising.

Third, tell them what it really is and run a process

By this stage, you should have your milestones validated and all materials ready to go the moment a VC or PE firm wants to invest.

Here’s how the preemptive round came together for us.

We did not plan to raise in Q4 2021. We needed a few more months to hit our milestones and planned to kick off fundraising in Q1 2022.

In August, we started getting our fundraising materials ready so we were good to go if we hit our milestones earlier.

In October, we had catch-up calls with a few investors. These were the same investors we validated our milestone in Q1 2021 with. On one of our first catch-up calls, one investor was so impressed with our progress that, even though we were a few months from hitting our milestones, they said they were okay with the risk and wanted to dig in now and potentially invest in Q4. That’s when the preemptive round officially kicked off!

We learned from our B round, so we first created a process and competition for the preemptive round. Since we had all of our materials and customers ready to talk to investors, that was not a problem. We went back to our list of investors and selected nine more investors we wanted to speak to as part of the preemptive round process. We didn’t reach out to the entire list because we weren’t sure that we would be able to raise now and didn’t want to jeopardize our Q1 fundraising if the Q4 round didn’t work out.

We reached out to the other nine investors with the following message:

Hi X,

I hope all is well. Things have accelerated over the last few days. We are very close to hitting our yearly milestones. In addition, a company in our space is going public, which made investors even more bullish about the market.

I had catch-up calls with a few investors this week, and even though we are not fundraising right now, they are very interested in investing now to preempt the C round. I am expecting to get a term sheet soon.

I really enjoyed our conversations this year and would love to work together. I wanted to reach out and see how we can potentially make that happen.

Looking forward to hearing from you,


When we did connect, we didn’t say what we said at the B round or what most recommend for preemptive rounds: “we’re not really raising.” Instead, we said that while we’re not running a full-blown fundraising process, we’re open to raising now for the right price with the right investor, and we are only talking to a handful of investors we really want to work with. That message resonates much better than the one we used at our B round. It made this process feel exclusive.

The outcome: Multiple term sheets in two weeks

It took two weeks from the catch-up meetings to get a term sheet. And we got multiple in that period. Furthermore, all investors were tier one.

The process was intense but short. We leveraged the multiple term sheets to get a valuation we were really happy with. The price was 25% higher than the initial offer. The round closed within four weeks from the signed term sheet. Overall, we saved the company a lot of time and got the resources we need months earlier.

This is the process we will follow in the future for preemptive rounds. My takeaway is that the narrative of “we’re not really raising” is BS. I know founders use it and then send a fully baked data room. Let’s just say what it really is: you’re fundraising, but only opening it to a small, select group first to see if they want it done fast before opening it to everyone else.

To summarise, here’s the preemptive fundraising process that we’ve found works better than the typically recommended “we’re not really raising” one:

  1. Set milestones and validate them with a target list of investors
  2. Schedule catch-up calls with a few investors for just before you think you will hit your milestones
  3. Before those meetings, get all of your materials ready
  4. When one of the investors leans in, leverage that to run a mini process with ten investors

I would love to hear about your experience running a preemptive round in the comments below.



Liran Belenzon

CEO of BenchSci, husband, father and constant work in progress