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Fundraising

Fundraising: The Dos and Don'ts

February 15, 2024
2 min read
Practical advice on raising capital: what to do, what to avoid, and how to navigate the process without losing your sanity.

Fundraising is hard. Here's what we've learned from both sides of the table.

Do: Prepare Thoroughly

Before you start fundraising:

  • **Know your numbers**: Revenue, growth, unit economics, churn
  • **Have a clear story**: What problem are you solving? Why now? Why you?
  • **Understand your market**: Size, competition, trends
  • **Know what you need**: How much? What for? How long will it last?

Don't: Wing It

Investors can tell when you're not prepared. It shows a lack of discipline and attention to detail—two things you need to build a great company.

Do: Start Early

Fundraising takes longer than you think. Start 6-9 months before you need the capital. This gives you time to:

  • Build relationships
  • Run a proper process
  • Negotiate from a position of strength

Don't: Wait Until You're Desperate

Desperate founders get bad terms. If you're running out of cash, you have no leverage. Start early.

Do: Create FOMO

A competitive process helps you get better terms. Talk to multiple investors. Create urgency. But be genuine—don't lie about interest.

Don't: Overpromise

Be realistic about your projections and timeline. Overpromising and underdelivering destroys trust.

Do: Be Transparent

Share the good and the bad. Investors appreciate honesty. If you're struggling, say so. They might be able to help.

Don't: Hide Problems

Problems don't go away when you hide them. They get worse. Be upfront about challenges.

Do: Ask Questions

Fundraising is a two-way street. Ask investors:

  • How do they add value?
  • What's their investment process?
  • How do they work with founders?
  • What's their track record?

Don't: Take the First Offer

Unless it's exceptional, don't take the first offer. Talk to multiple investors. Compare terms. Negotiate.

Do: Get Legal Help

Term sheets are complex. Get a lawyer who specializes in venture deals. It's worth the cost.

Don't: Sign Without Understanding

Understand every term in your term sheet. If you don't understand something, ask. Don't sign until you do.

The Bottom Line

Fundraising is a process. Prepare thoroughly, start early, be transparent, and don't rush. The right investors are worth waiting for.