Is fundraising easy? No. Fundraising is brutal

Tl;dr: Fundraising is one of the hardest things you will ever have to do. I explain all the reasons so you know what you are getting yourself into

When I consult with founders (and even investors) on fundraising or pitch decks I almost always say something along the lines of “you know how hard it is going to be to raise, right? It’s going to be brutal, you need to be prepared to hear no a lot“.

People hear me but they don’t really internalise it. And frankly, they don’t believe me.

A client emailed me after a few months to ask for some advice and she said:

“The last pep talk you gave me was to be prepared for how hard it will be to raise. I sort of ignored you and it was only once I started talking to investors that I actually understood what you meant. This is killing me!”

The hardest thing in startup land is solving a problem a lot of people care about enough to pay you for your solution. The next hardest thing is getting funded to make it a reality. Ironically, if you figure out the startup thing, fundraising becomes a lot easier.

Caveat: I’m heavily simplifying things and painting a slightly bleak picture to prepare you. Not all VCs think/behave as I explain etc bla bla.

Firstly, no one has a clue what they are doing

Fundraising is just a means to an end. It’s honestly a stupid skill set. It’s like me making you learn Russian whilst juggling knives underwater before you can eat dinner. You’re like “But Daddy, I’m 3, can’t I has cheezeburger?” No, you’re going to have to waste time just so you can get the money to do your job.

No one knows how to raise before they have gone through the process. I don’t care if you did a Harvard MBA, worked in M&A or top consulting. No one actually teaches you how to raise money as a startup founder. It is different to investment banking and whatever example you can come up with.

Just because you can sell like a beast or you are a star developer, fundraising is egalitarian in that everyone starts at zero.

Furthermore, even people who have raised before still don’t know much! The more I learn about facets of raising the more I realise how complicated things can get if you want to go down rabbit holes (convertible notes start out easy, but can be more complex than priced rounds).

Secondly, learning to get good is hard and time intensive

What makes fundraising unnecessarily hard is that it’s a hard topic to learn.

At the start of 2000s there was basically no information about how VC worked. Some people including Venture Hacks (Nivi and Naval – Naval is pretty famous now), and a handful of VCs broke Omerta and started blogging by explaining the innards.  There’s more information around, but not enough. Don’t get me wrong, something is better than nothing, but there is a lot to learn and information is spread around the internet.

Next, the information on raising is often not that useful but it is recycled like hell. For some reason, everyone wants to make out they know about how to raise. So randomers will read a blog and base rewrite their new blog on that and not actual experience. Knowledge of pitch decks is one area that annoys me the most.

Let me be real. I know a lot about fundraising now, but it took a lot of time, and honestly, all I got was a Boy Scout badge which reads “I know how much I still don’t know”.

But let’s face it, blogs and books can only contain so much content (Brad Feld’s Venture Deals is a great primer).

What is going to frustrate you the most is that no blog or book can ever answer the questions you have for the specific situation you face.

You can’t hire the people that know the answers

Well, can’t you just pay someone to teach you? Sounds obvious right?

Not that easy.

Firstly, there just aren’t many people around that actually know what they are doing.  You can find charlatans at any startup event, but they aren’t who you want.

The only people that really know what they are doing are 1/ VCs who have better things to do, 2/ people who raise huge amounts of money that have no interest in you, and 3/ successful founders who do help founders, just very selectively.

I would add that there are people around who do have a clue, they’re just super hard to find and most either 1/ don’t have the resources to pay for them, or 2/ are too cheap to pay up for the solutions they need.

This leaves the vast majority of founders with few options.

You can’t really hire someone to raise it for you

When you are a unicorn, you can hire someone full time to do raising that really knows what they are doing. Investors are ok to deal with them.

When you are angel stage to around series-a, investors scoff at it. They want to talk to the CEO and to my next point… they expect you to be a pro.

I get asked “can’t you just help me raise, I’ll make it worth your while!” I’ve written a long blog, but the short version is investors don’t like advisors, they don’t want to talk to them, and they absolutely don’t want to pay a broker fee. Which is an important point. In the USA you technically need to have a broker/dealer licence (which is a pain to get). In the UK it is a grey area, but I believe you are “meant to be” registered with the FSA (which involves passing exams etc).

You can read about whether you can use a fundraiser in detail here: Should you use a professional fundraising advisor to raise your startup round?

Investors expect you to know how to raise

From one side, I honestly don’t understand why founders are expected to be experts at fundraising when it isn’t their primary role, but on the other side, to investors why do they want to deal with founders who don’t know. Annoying, but it makes sense.

Investors have limited capital and an almost unlimited number of founders asking for money. They meet two founders: 1/ knows the game, 2/ other doesn’t – who do you go with?

Nothing prepares you for how binary fundraising is

No formal structure, be it educational or corporate prepares people for the fundraising game.

In the real world success and failure is a spectrum. Things are a bit more grey and negotiable. If you miss an exam, you might be able to negotiate writing a paper to make up the grades. If you try your ass at a company and fail, well you won’t lose your job.

When you fundraise, you are either fundable (Read: Fundable startups are fundable) and get the cash you desperately need, or you fail flat out. Furthermore, you can’t ask the professor (investor) why you failed the exam (why they aren’t investing).

For the snowflake generation, soz, there are zero participation prizes.

Investors don’t care about you

Babies are pretty amazing. They have zero shame. They are the centre of their universe and everyone better pay attention or fear the wrath of crying!

Many founders revert to a childlike state in that they think they are also the centre of the universe too, though the baby is the startup and they are the mother. You see it in expectations of free whatever, why? “because I’m a startup founder”. Thing is, no one cares, least not investors.

Yes, everyone talks about being “founder-friendly” but people want to help the best. I am more likely to help someone that is going to be the next big thing than someone who asks me “how do I open the ZIP file?”.

There are so many startups that 1/ want money, and 2/ are flat out not fundable. The terrible founders (who didn’t put in the work) ruin it for the normal to amazing startups, just as spam made it hard to read normal emails before algorithms got effective.

I started out as a VC trying to help everyone and it was impossible. It is why I started my blog (add value at scale). Over time I increasing stopped trying to help ‘everyone’ because you can’t. You burn out. Then apply that to that top VC who has been around a decade and has had a million people try to get their attention.

The top investors such as a16z get around 2000 decks a year. Normal investors, maybe around 1000. Reading decks is a small part of their job and it is painful. The reality is that top investors find the best deals, they perhaps have an intern read inbound emails with decks.

I have 585 pitch decks on my site. Go read 20. You might possibly get to 5 before you lose the will to live. I give this exercise to founders all the time so they understand that they need to get to the point when they write a deck and send it to investors.

Investing is a funnel, just like how you do marketing to get customers. Starts out with a lot of whatever, then you build interest over time. Eventually you get customers. Only VCs do max 10 customers (investments) per year.

For a new founder, you’re more than likely going to be playing around at the top of funnel (being ignored) and occasionally breaking to a next stage.

The reality is investors don’t care about you till they do, because you’re just a statistic. The same goes for dating super hot girls/men on Tinder. Too much interest to care!

Investors have a very high bar

How do investors in a stock market make money?

They buy low and sell high.

VCs fundamentally do the same thing, the difference is that 95% of the stocks will suddenly go to zero leaving you with nothing, but there is a hope one stock “goes to the moon!!!!”. That’s totally insane right! Can you imagine the WSB threads on Reddit if that happened to stonks?

Welcome to VC. It’s a crazy place.

I’m not going to get into stats, but the short version is that survival rates of startups are terrible. Even for seed funded startups, the chance of a unicorn outcome is minuscule. The number I memorised was 0.00004%, but gosh knows what paper I got that from.

If you know most companies will fail, even with amazing teams, what would you do? You would triple down on finding the absolute best teams possible, with the most rad traction because that’s maybe is the only way you can sleep at night to justify you threw $8m at something nuts which you only know will work out in 5 years.

VCs look for the Stanford CS scholar on paper who worked at Google and Facebook because it feels safer, and pattern recognition. That’s less than 1% of people.

That’s not 99% of people. That’s statistically you and me.

But we can go further. If you had exits, are a deep expert in an industry etc, you have an advantage. Why wouldn’t you bet on them over someone else?

If you were a valedictorian in high school and didn’t get your target school, you will hate fundraising. Working hard isn’t enough.

There aren’t many investors and fewer that will invest in your space

I can tell you from personal experience that it is hard to find investors.

Let’s start with angel stage. The earliest one. I’ve been out to drinks with people who run really large angel investing platforms and they told me it was hell to find the investors and their business is super hard (my inference is they regret starting it!). I know a lot of people and if you said Alexander go raise $500k now, I’d have to think. Angel investing is super personal. I’d have to spend time getting to know people again.

If you said who are the top ten best investors, that’s easy. I can spin them off… but they won’t respond to you.

I know in 2020 there were 4.4 million new companies started in America alone. In 2019 there were 13.7m people who met the criteria of being an accredited investor (not that they invested, just they are legally able to). There is something like 1500 VC funds in America. I found a survey with a small sample size that said 0.5% raised expansion capital from a “VC” (I think it means non personal/family/grant/gov, so external funding). I think that’s high but it’s still 1 in 200 companies raise money. There’s 3x more potential investors that are legally able to invest in startups, but still only 1 in 200 raise money.

Now let’s say you are awesome and are working in healthcare. Jim works in Google and is the boss in AdEx. Jim might not invest in healthcare because he doesn’t understand it.

Just because people can invest, doesn’t mean they will invest in your space.

You might say “whatever, I’ll try anyway because I’m awesome”! but you’re 99% going to fail and just get more demoralising nos.

Investors won’t be honest with you

A long time ago I was ignorant about VC and I thought I could logic out something better. With my fresh view, I could challenge how the top VCs in the USA invested. The truth is I just didn’t know what I didn’t know.

After I challenged my assumptions I learned that things are done for a reason. You might not like how are things done, but there is a reason for it.

There are two crappy truths in investing, 1/ VC is a hit driven business, 2/ no one knows what will work.

Mark Z wrote “Twitter drove a clown car into a gold mine” as he didn’t understand it. I still don’t. Why would you invest in Twitter if you went back in time?

Smart founders love feedback but will rarely get it. Why? The old guard know about optionality and possibly founder egos?

Let’s do this with how “Jim VC” does it and how I do. Mary is the founder.

Mary meets Alex

“Mary, I don’t see how this works. There is no network effect to make your CAC affordable. I see issues in your tech. You’re smart, so look, if you can fix these things come back to me” whatever. Actually, this is nice feedback. Pretend I was a bit more rude maybe?

Mary meet Jim VC

Mary – Nice to meet you. We would like to see more traction. Please update me on your progress.

How does Mary respond?

Honestly, most founders are fragile. Alex says something to upset Mary and she holds a grudge. Result? Alex has no optionality. He can’t get in the deal later if Mary becomes a hotty.

Jim VC says nothing. He doesn’t help, but he doesn’t offend. He has an easy way to slide into Mary’s DMs a year later once he hears Kleiner is interested. Mary does like money to close her round so if she gets a nice term sheet, why not? Jim didn’t technically do anything wrong.

There’s more to it than that, but do you get what I mean?

The actual point is that you are going to pitch Jim VC and you will likely learn nothing. You will at best get some BS platitude. Many investors might not even respond to you for a meeting.

After 3 months of talking to people, hearing platitudes and softer nos you are none the wiser. You don’t know what you did wrong. You don’t really know if they said no. All you know is you are running out of runway and your soul is slightly crushed.

It’s easy if you are borderline fundable to be lulled into being the frog in boiling water. You have meetings but nothing is really happening, but you got meetings so wtf? All the while you run out of runway and your traction suffers since you aren’t focused on growing.

Investors don’t know what they’re doing and they learn slowly

As a founder, you have a cloudy view of the future at best. For some reason, you think VCs will know better, but honestly, they’re betting on you being smarter than they are.

I don’t want to crap on all investors as people on Twitter so casually do. People love to call VCs idiots and it’s just not true. Professional investors for the most part have a CV you can only dream of. They are not dumb. The difference between a successful and a loser is survivorship bias, other than the rare exceptions who earned the title of legend.

The big issue in VC is no one knows what the next big thing is. Hold on, maybe in enterprise SaaS at a later stage you can do analysis and conclude this will win, but pick anything consumer at angel stage and who knows?

I know a lot of people who knew the founders of Airbnb at angel stage, playing ball and were like “airbedandbreakfast” get a better name bro. Look at the Uber pitch deck and it is a joke.

Early-stage investing takes 7 years to validate if you are right or wrong.  That’s insane.

Most investors are generalists and cover anything that looks sexy.  It’s so hard to just do “adtech” as there isn’t the deal flow. You come along with your insurtech thing and how does Joe VC process your deal? He either gets it, or he looks to someone else to get it and will buy in out of FOMO. I can tell you every time I got an ad tech deal I would just send to Rahul (He’s doing so well right not btw) and say “is this interesting?” But at least I was honest in asking (or should I have been more selective?).

What I continually teach founders to help them understand investing is that there is no investing school. I could hire you now and call you a partner and now you get to be all judgemental! I’m going to say you have 9 million and you get to invest 3m a year for 3 years. That is one deal a year. What if I explained this as you are going to see 1000 startups, and 5 are going to get crazy interest, You don’t know when it will happen, all 5 could be in one day and close the next day so you have to move fast. But you can only do one deal. You’re going to freak out and do irrational things you would have called bonkers before.

It’s really easy to hate on VCs, but if you can understand how hard it is, you can learn to be more zen about engaging with them to get your own round done.

This leads to investors doing weird things, but for rational reasons to them (they think?)

I honestly believe everyone has deference to money of any size and is generally cheap with giving it away.  I remember hearing stories about how cheap the Rothschilds were, or at least taught to be penny-wise. I’ll go to a “Wallmart” with someone that makes $20m a year and we will buy the value product so as not to waste money, but also spend $100k on a lad’s weekend. The same person will say let’s start a company that will make £100 a month because they love their hobby.

It doesn’t matter if you raise $5k or $5m, to an investor, that act of investing is a very personal thing. It’s not just money, it’s a micro intellectual footprint tied to their ego that can be traced on social media (unless deleted). Over time someone on Twitter will trawl up the dead bodies and judge you if you get big for your boots and haven’t had some big exits of late.

When you raise from an investor, it’s not just about you. At the far end of not caring about you, “logo shopping” at Y-Combinator was/is a real thing. Meaning investors solely throw money at you at a premium so they can put you on linked/website to show they are “in the club”.

Now let’s say you have money and all your friends invest too. They want to do something which doesn’t make sense. Will you opt-out of the club? Now, what if you love something and they don’t get it? Will you really sell the deal, or will you conform to social norms as most do?

I’ve been to angel events and I can tell you there is one key dude and maybe two others. The other 100 are smart at their job but will only invest if the key dude does. It’s hive mentality.

There is a huge assumption investor are together here, which they are normally not. So what you get is someone who cares about their $ investment, regardless of size, probably doesn’t really understand the sector, doesn’t have 30 years of investing to have seen 4 cycles of investment and almost guaranteed hasn’t made a model to understand their return profile, and has never led an investment themselves.

What is going to happen? What they tell a founder will flitter based on their mood. Maybe one day they are confident and sell their friends. The founder suddenly thinks this person is bringing not only 100k, but 500k, so they think about expanding the round. The next day the banker reads a broker report that the industry may have slow macro factors so as a trader they lose conviction and the founder calls go to voice mail for the first time.

This investor who thought he was going to be a rainmaker for his friends suddenly has a change of mind. It wasn’t his intention to lead the founder astray, but well, it was easier when the startup looked sexy and carried no baggage.

You the founder are just thinking WTF just happened. Investors think the same thing sometimes.

Most investors are looking for someone else to say yes first

If you are raising an angel round, the most important thing you can do is tell a story.

Given the stats, the angel is losing his money. All you offer is a story he can tell his friends at the country club. Let’s be honest, Angel Jim is likely bored and want’s to live vicariously.

Angel investing is a weird, rich person hobby. But that’s the point- it’s a hobby. It’s only an occupation for a select few.

If you tell an angel you just got in a sexy thing but the round is closed so they missed it, what do you think a pushy person would say? They’d still ask “can you get me in?”

To say that professional VCs are immune to FOMO and social proof is moronic. FOMO and social proof are the single largest drivers of someone at $20m ARR raising at a $1b valuation.

This sexy land of being the hot cheerleader is not the norm.

For most, a quick no is a heaven, despite the short term ego hit.

Startups typify optionality. Options are based on being more valuable the more time goes on. The more time goes on the more you can the opportunity to define success. This is why you raise less at an angel round than a series-B. The risk is dramatically different.

The 7th layer of hell for founders is blowing months on an investor and not knowing where they are – it’s called a long no. The norm is investors being indecisive.  You’re good enough but not clearly so. Founders don’t want to hear a no, so they will tolerate anything but. The irony is this is the antithesis to how you built your startup. If a user page is broken, you fix it. Founders don’t have the same attitude with raising – likely because you don’t have the experience to know to course correct.

Investors can move fast. I heard a VC at a big name say at a party “Sure, I can write a $30m check within 24 hours if I need to.” However, it’s illogical for VCs to move fast otherwise.

The more that time goes on, the more information is available. If your valuation won’t change in 3 months, why not wait 2 months and 29.5 days? They get three more months to evaluate you. If you die before then, so what – there’s 1000 other companies raising. Investors make few decisions, but want the max amount of information to make a decision.

The surest way to get an investor to invest is FOMO by illustrating you have opportunities with competitors they respect. Most startups aren’t getting a tonne of competing term sheets though.

Possibly the only way to see if an investor you’ve been trying to close is interested is to ask them what they need to know to make a call then give it to them. Then say “There you are”. If they ask for more information, they’re messing you about and you need to move the flark on. They should respect you have better things to do than be their research monkey.

My thesis is that all investors are 1/ lazy/busy), 2/ assume other people know more or did the work they don’t want to do.

For every one investor that steps up to do a deal there are 200 others waiting.

I just got off a call with a smart founder doing hardtech. He’s super connected in the Bay, but he’s doing hardtech and something hard. He has a huge list of “let me know when there is a lead” and had a lot of interest with some of the top VCs, but he doesn’t have a lead. We discussed how to approach the raise differently to bring the round together and it involved some lateral thinking and new plans. But all he needs is one person to write the lead $3m check and he can get the other $5m he needs…

This is the kind of drama you’ll face getting your deal done.

You’ll be infuriated by dumb things being funded

It’s a bad idea to read TechCrunch when you’re raising. You’re going to see so many companies getting funded and the insane numbers they are doing. No one likes to think they are dumb, so you’ll think “if them, why not me?”

You need to be optimistic but grounded in some version of reality.

What will kill your soul after you keep being told no so many times is the superbly stupid things that get funded.

What’s the dumbest startup that got funded?

Yo!

Yo, the simple app that just sends a “yo” to your friends, has closed $1.5 million in seed funding with a $10 million valuation and is finally ready to talk about its investors. They include Betaworks, Mashable’s Pete Cashmore, and the founders of China’s Tencent, among others.

Yes, you read that right. The app literally just sent “Yo” to friends.

On the large scale, we have Wag. They raised $300m in 2019 for their dog walking startup and I just thought what the flarking flark? They failed too, but for a while, I used this as an example to teach people that “if you have the unit economics, VCs will fund anything. They didn’t start their firm to invest in dog walking but will”. Clearly, they didn’t though.

Don’t read TC when you’re raising. It will wither give you irrational expectations, or deflate you.

Founders aren’t honest about their raises when they announce

Founders flarking love to announce their fundraise in the media to feed their egos. Smart founders keep the flark quiet as they don’t want new competition.

Don’t believe what you read. I only learned this after a very long time. Founders lie to everyone, including the journalists that wrote the article.

On the basic front, you’ll notice that if a round was small or it was a down round it is “undisclosed”.

What’s sneakier is how rounds get announced years later, or the “series-a” was actually three rounds combined.

I just read my home boy raised a large round in TechCrunch. Then I thought back to the last time we went to a shooting range and he told me how much he raised like 2 years ago. The amount was what he told me then. I haven’t asked him about it yet…

Be careful about using public benchmarks for your own raise as you can’t trust them.

Your company is dependent on raising so the stress is high

If you are just starting out, perhaps the investment is key to getting you going. For those with staff who aren’t profitable, your existence depends on closing the round. That’s stress!

  • You don’t have people you can share with
  • You don’t feel you can share with your team, but they’re asking questions about payroll next month
  • You thought the whole thing would be tied up in a month
  • Investors seem interested, but no one says yes??
  • You can’t get the model to work
  • Your pitch deck isn’t quite right
  • You messed up those questions, but when do you work on them?
  • Will Mom stop asking all these questions!

You have all sorts of questions weighing on your mind and the thought of actually working on your startup just doesn’t seem like a priority.

You need the money or you’re in trouble.

Ironically, you need to put in the time to raise, but the process of raising is killing your startup as you pursue the solution.

It is hugely time-intensive

One of the reasons I tell founders they need a cofounder is fundraising.

Fundraising takes up a lot of time, did you consider how you are also going to manage all your minions as you do so? (Read: Sole founders are bad. You can’t build a billion dollar despicable me startup)

Investors expect your startup to keep growing as you raise. If you’re smart you’ll plan to raise during a growth period so you have updates to show to keep people excited.

Cool, so how are you going to devote your attention to raising and growing? The reality is that you can’t and most startups fail at this.

If you haven’t raised before, I’m not sure you appreciate how intensive it is. You think you just have one meeting today- did you consider the time to:

  • Research the partner and firm so you can pretend you really care about them? “Oh, I liked that deal you did in x”
  • The time to drive over and back
  • You arrive a bit early, right? You don’t want to be late
  • Sending a follow up email and agonising on getting it just right
  • The investor asked for clarification about your search volume. Not you need to research those keywords and make a PowerPoint slide
  • Flark, what time is it now?

The ideal solution is to have more than one founder and enough resources so the CEO is responsible for making bank whilst progress is made.

What you might need to do is more complex and prioritise growth whilst fitting in VC meetings… But you know how to do this, right?

It is far harder than you think it is

You see startups raise all the time, so you assume it’s just like whatever, a bit of work and it will be done.

Lolz.

  • What fundraising structure?
  • How much are you raising and what are the milestones?[
  • What terms are standard?
  • All the material bla, I can go on

You’re ignorant presently and you’ll have optimism! But you’ll learn enough to realise you had no idea. You’ll eventually come to realise that not only is it harder, but it’s far harder than you could possibly have anticipated. At each stage of evolution your confidence will decrease. The final nail on the coffin is the continued disappointment of hearing a soft no. You’ll eventually wish for a quick death with each investor… “just tell me no if it is a no…”.

Anything that can go wrong will

Some founders can raise with a click of the fingers. Do not ever assume that is you. You know if it is.

Everyone else needs to prepare for war. “This is Sparta!” Assume the enemy will flank you and whatever learnings from Sun Tzu (Don’t think flanking was in the book, but you get my point).

I recommend reading about the Stockdale Paradox (Read: The Stockdale Paradox for startups)

“You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be.”

The lower your expectations, the harder it is to be disappointed. The more prepared you are, the better you have a chance to win a battle on your path to the final war.

Always assume a deal will die up till the point the money is in the bank and investors are asking about how to plan board meetings.

Up to then, everything that can go wrong will.

  • Just because you signed a term sheet does not mean you will get rugged pulled
  • Just because an investor says they are in, doesn’t mean the wife will say “Dave I flarking told you, no more angel investing!”
  • Just because you have 5 meetings, doesn’t mean the corporate innovation lab wasn’t mind raping you… and will be launching their competing product soon

Plan for failure. Don’t invest too much time in anyone. Assume someone will screw you. That’s a horrible way to live life, but it’s how to live a fundraise. There’s too much at stake.

Finally, never believe a deal that’s going really well will actually close, and stake your startup’s survival on it. That is Russian Roulette with 5 loaded barrels.

Assume investors are Chad’s- super hot, but not reliable. They tell you they love you, but they could disappear off to Burning Man when they are meant to be your plus one to your sister’s wedding. Chad doesn’t mean to be a bad guy, it’s just his nature. Think the Scorpion crossing the water fable.

See investors allocate money and have 3 years to blow it. You need to make payroll. Investors are playing a long-ass board game and you’re live streaming on Twitch.

You’re going to ignore me though.

Some VC will come riding in on a white steed and you’ll think “this isn’t so hard, I’m different and special. It’s going to be easy for me. He loves me!”. When you end up knocked up in a trailer park you’ll rationalise “it was my fault not his”.

Assume Chad will break your heart and you might have developed a plan-B (oh, just remembered that’s a product in the USA) to extend your runway to buy yourself time to find another investor (or be profitable).

Positivity is key, but you aren’t used to getting told no so frequently

I helped my buddy raise 3x what she wanted. Ignoring my awesomeness, honestly, I believe it was her infectious energy.

I know a billionaire that takes amphetamines before big meetings.

Most people live mundane lives. That’s why people end up “at da club”. They want a break from reality.

You come along and you are a delight. You get +5 charm buff to your stats with new dialogue options other gamers don’t see.

Fundraising is the slowly enveloping darkness from the Ring on Frodo. If you let it take over, you end up like… go on what’s his name?

You have to fight Sauron. Sauron is “no”, he is the continued letdowns that jade you so you approach new investors like they aren’t the one to save your Middle Earth.

You only need one YES to be a success.

The Secret, or whatever that culty book is called (A date bought it for me) is about getting what you put into the universe. There is truth to it with investors.

Apply this mentality to each meeting with a VC:

  • Take each meeting with investors as a learning opportunity.
  • Drink three cans of Red Bull. Jump around. Build up your energy. Be ready to put on a show!
  • Assume the answer is no, but you’re still the star on Broadway and they are the audience and you’re a pro who will put on a show (there are no small parts)
  • You are only there to learn to put on a better show next time. Ask for feedback, engage with them like fans, but you’re “used to reading the critic reviews” (water off a duck’s back)
  • Assume they will buy to see your next show, so ask without shame. If they won’t buy, ask what they’d love to see next from you

You are going to get a no when you meet a VC (until you don’t).

Be a performer and not a founder who has no BATNA.

You will never be told NO so many times in your life than in fundraising.

The only guy who can relate to “NO, ew, getaway” outside of raising is the one who takes photos of him squatting on his bedpost and DMs it to celebrities with the message “please post on your Twitter to humiliate me”. (I watched a show last night and the female comedian said she was DMd that…). So gross!

Rejections don’t mean you suck

If you are raising you need a reality check. Most startups are not fundable and by definition, half of founders are below average.

  • The top 0.5% of tech startups will probably get funded, they just might not be happy with from whom. It’s a luxury problem.
  • The top 1% will work hard and probably close a round.
  • The top 5% will get meetings of varying quality. Who knows what happens next?
  • The top quartile has a chance with the snowball on the edge of hell who doesn’t feel toasty yet.
  • Everyone else has the same chance of Rudy playing for Notre Dame as a starter. Maybe one gets a game.

Do you know the commonality of everyone other than in the sexy beast land of 0.5% who are being courted harder than the prince in some TV show I clearly don’t watch who has 20 chicks hoping to build a ‘celeb career’ off winning the show, regardless of who Chad is?

The founders have no idea if they will actually get funded.

They have varying levels of hope and optimism, with an inversion on the level of ignorance/competence.

I’m making up numbers, but the top 25% of founders have a chance, especially if they can make up for things with sales ability.

The bottom 75% may not know it, but for the purposes of raising, I have to be harsh here, ignore them given how, like, stats work.

What is so hard about raising is not knowing if you will get funded- and that even if you don’t you might have got funded if trends were different.

From the 0.5% on to the “have a shot” 25% you just never know. People actually win the lottery and they are frequently Hillbillys (or what we call in Ireland, Knackers). You laugh at it as empirically lottery winners end up at the same lot in life, but VCs fund terrible companies all the time on a global basis. So who knows?

So let’s focus on “normal founders” which is likely you- top 25%. Not celebs, and not morons. You are smart, have put in the work and are taking raising seriously.

You have three outcomes with investors:

  • Yes (super rare)
  • No (Rare)
  • Loprum ipsum dolor (who the flark knows?)

Assume everything other than a yes is a question mark since no can be converted to yes. Yes is less than 1% of startups, so the rest are a no.

To get a yes from a VC is a big deal. Probably larger than that Harvard MBA acceptance (pre-covid obviously).

If you are in a position of even getting meetings with a VC you have done something pretty special. More meetings without a yes is still an accomplishment.

Given so many startups flat out are not VC fundable, even getting one meeting says something.

Then consider that just because you are not VC fundable doesn’t mean you can’t build a business and make millions. The bar for VC is just different.

Now, let’s bring in investors:

  • They follow trends
  • They are susceptible to social influences
  • They don’t know what will work

Let’s say one loses their mind and invests in your crazy startup and things work out because of that capital- you would have failed without. Did you actually suck, or was it the fact that someone funded you that made you a success?

Clearly, it was still you.

But is the investor smart, or did they make a rookie mistake that worked out? Of course the VC will be on Medium humble bragging hoping to be retweeted.

If VCs pass on you, they can make you feel like you are not good enough and question if you should pivot or quit.

VCs are on a pedestal so founders assume they’re more experienced, insightful and whatever else. If they say boo, there must be a reason. If they say you aren’t for them, maybe you aren’t for anyone else too, because like “he should know, right?”

I read a post yesterday about the fact that US VCs are struggling to find partners to expand to Europe. Lol, tell that to founders who have been listening to the advice of VCs that US VCs aren’t interested in. And boom, do you really suck, or do you just listen to debatably bad opinions?

Look, no VC is “dumb”, there’s just a scale of quality. You need to listen to feedback because everyone has read the same investment Bible. But the feedback could just mean you suck at pitching, not that your business model is flarked. A no is a means to realising you need to explain market sizing better. That’s a huge learning opportunity, not a reason to lose faith.

If you can’t even get a meeting though, that ‘might’ be an issue though.

It helps to be rich already

To an extent, startup is a luxury the rich and/or frugal who saved for years can afford.

I had a client this week who has a budget of $500k to get going. To some that is small, to others that is a fortune.

If you are a younger and broker founder who is a direct competitor feel free to go into a crying room at Bumble and stay there till you understand tough sharzle for picking a market with competitors.

Figure out how to be better and smarter with less. Then what to do when Instagram steals and improves your new “story feature” and leaves you for dead.

Founders with resources can hire people like me to help them raise more than you. Who cares if it is fair. That’s life.

Conclusion

No one was born knowing how to fundraise. The great thing is that you can learn to do it.

If you pay attention to all the ‘horrible’ things I said you only have yourself to blame now.

Fool you twice and shame on you.

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