When you start looking for advice on fundraising, you’ll see a lot of stuff online about deck templates, stories, and never giving up on a lead… Add on top of that your natural human tendencies, and you’ll come up with a whole host of things I DISAGREE WITH…
The following are 5 particularly controversial ideas that you would do well to incorporate into your own approach around fundraising. They either fly in the face of what your favorite VC / fundraising gurus say OR they feel like a personal affront towards your gut instincts.
Don’t worry, I vouch for all of them. If you have additional questions… feel free to reach out.
Here we gooooo….
I often come across people sharing deck or story templates for startups. You might have seen the one that claims to be "The Sequoia pitch deck template used to fund billions of dollars of startups." DocSend frequently publishes data-driven breakdowns of what slides are in decks that successfully raise capital. While these resources can be helpful, I believe templates are not the best way to construct a story or deck. Here's why:
All stories are different. Shoehorning your unique story into a one-size-fits-all framework doesn't do it justice. Each story has more interesting parts than others and a different flow to it.
The order isn't set in stone. You might have a really interesting team that hints at where the story is going because they're deeply experienced in a certain field. In this case, it makes sense to introduce the team early on. For others, the team slide comes at the end as a nice, positive bump.
Focus on the core concepts. Every startup story needs to cover four essential concepts that venture capitalists want to hear about:
As long as you cover these core concepts in a way that's easily understood and gets people excited quickly, it doesn't matter what slides you use or the specific order. Remember, everyone's story is different. Embrace your uniqueness and craft a narrative that truly resonates with your audience.
Sometimes, founders try to make their ideas more appealing by diluting them. They attempt to make the idea more "white bread" – more palatable to a wider audience. They'll describe why everyone's doing it and why it's definitely feasible. In doing so, they remove the craziness of the idea out of fear that investors will think it's too far-fetched.
However, the best investors – the ones excited about the space – want to hear your crazy idea. They want to know that you have a bold vision for the future. For example (shoutout to FWC5 alumni Sakiko and her company NOMOSU 🙂): “Imagine a world where sugar no longer exists because it's so poisonous to humans. The alternative we're developing is the only ingredient used in baked and packaged goods. Seeing someone eating sugar will be like looking back on people smoking on airplanes – completely unthinkable.”
That's a crazy thing to say.
Some founders might want to dampen the craziness of this story. They might say, "I think sugar is bad, and we need better alternatives. Our solution could be one of them. If we capture just 10% of the market, it would be huge." This hedged description is an attempt to be reasonable, but it lacks the deep belief and passion that truly captures an investor's imagination.
What investors want to see is a crazy idea driven by deep conviction and passion. They want to think, "It seems insane that we wouldn't have sugar, but this founder really believes it. If that did happen, wow."
Investors want to bet on crazy ideas because, at the end of the day, even if the idea falls short of its lofty goals, it could still turn into a massive business. A more reasonable idea, on the other hand, doesn't have that same potential for explosive growth.
So, embrace the crazy. Don't dilute your idea in an attempt to make it more palatable. Be bold and passionate about your vision, and you'll capture the attention of the investors who can help make it a reality.
Getting rejected while fundraising is never fun. No one likes being told their baby is ugly is unattractive or that they're not good enough. These feelings of rejection can lead founders to avoid conversations that might result in a "pass" or to hold onto hope that by lightly engaging with potential investors, they can eventually turn a "maybe" into a "yes." However, this approach isn't helpful for several reasons.
First, running headfirst into uncomfortable messages and hearing a pass clears your mind and helps you focus on the opportunities that could actually lead to investment. Having a clear picture of who's genuinely interested and where to spend your time can make a significant difference in convincing the right investors to say yes. Keeping a bunch of people who haven't said no yet but aren't really interested in investing is just a distraction that benefits no one.
Second, it's important to remember that when someone passes, it doesn't mean they've passed forever. Just because an investor says, "This isn't right for us now," doesn't mean it won't be right for them later. Seeking out a pass prevents potential investors from being part of a vague, ongoing process and provides you with clarity on who's genuinely interested.
The bold action of directly asking for a pass can also be an influential way to communicate with investors. Sending an "up or out" message – essentially asking if they're moving forward in the process or bowing out – can reinvigorate an investor who might have been on the fence. Here’s an example: "Hey, haven't heard from you in a while. Just checking in. Our process is continuing, we’re just cleaning up our CRM and need to be on top of what’s happening. I want to make sure I understand if we should spend more time with you. It's fine if you're not in the process anymore; just let us know." This confident approach can restart a conversation and even make the investor think, "They don't care about me. Maybe I should spend more time with this."
Seeking out passes during the fundraising process can be beneficial for both focus and investor engagement. Embrace rejection, and don't be afraid to ask for a pass – it might just lead to a more successful fundraising journey.
The idea here is that you should practice your pitch and gather data from the investors you're least interested in getting money from. However, this approach has some drawbacks.
Treating any investor as a mere practice run is a waste of an opportunity. Even if they're a tier 3 investor, you should always put your best foot forward and deliver a strong pitch. These investors might be the ones most excited to invest in you, and if they're the only ones willing to invest, you'll likely want to take their money. Instead of relying on live pitches for practice, seek feedback from friends who are VCs, have raised money before, or have valuable perspectives on the fundraising process.
Additionally, strictly tiering investors can unnecessarily stretch out your timeline. If you pitch to tier 3 investors in the first one or two weeks, followed by tier 2 investors in the next one or two weeks, and finally tier 1 investors in the last one or two weeks, you stretch out a process that should only last two weeks into three to six weeks. This extended timeline sacrifices calendar density for the marginal value of tiering your investor approach.
Using a tiered approach can also give founders an excuse not to do extensive work upfront. They may pitch to a handful of tier 3 investors first and then take more time to find tier 2 investors, rather than focusing on gathering all potential investors at once.
This doesn't mean you can't have some light favoring of scheduling meetings with less exciting investors earlier in your process while hoping to schedule meetings with more desirable investors later. However, if your favorite investor wants to meet on the first day of your process, don't push them back three weeks just because of a tiered approach.
To be clear, when I say this, I don't mean that your deck, your story, your numbers, your product aren’t important. Rather, preparation is the foundation that touches all of these elements.
You might've heard stories about fundraises happening seemingly overnight, with money pouring in after just a few texts. But the truth is, anything that looks super quick probably took a long time to come together. The key to such speedy success is the credibility of the person raising the funds, and their fundraising preparation is what got them there. They’ve been building credibility, establishing their track record, expanding their network, and driving traction.
A common question I get during workshops is, "What's the ideal timeline for preparing for a fundraise?" While it's tempting to provide a specific timeframe, I don't like giving people a very specific set-in-stone amount of time to do anything because everyone’s circumstances are different and the preparation process could be done to infinity and get more and more results. However, I did end up creating a fundraising timeline to help out.
When I think about my last fundraise, which happened pretty quickly, it's all thanks to the ten years I spent preparing. I didn't do it intentionally, but I was busy building important networks, working at a big tech company, and then at a venture capital firm. I consistently helped people in the industry without expecting anything in return – making introductions, advising, generating profits, referring new hires, and more. All of this built up goodwill, credibility, and reciprocity.
Trying to short-circuit the process that took me ten years or others a lifetime won't lead to immediate success. You still need to invest time in building your network, credibility, and awareness for your company. The goal is to do as much as you can in the little time you have, so when you actually start your live fundraise, there's a sense of familiarity, a better understanding of your progress, and more trust. That will all help you find investors that are willing to jump out of a plane for you.
Don't be fooled by stories of overnight fundraising success. Behind those tales is a foundation of preparation, networking, and credibility-building that takes time and effort.
Anyones more or less controversial than the others? Any controversial takes that you’d add? Jump in and let me know. Let’s get better together.