Oh man, where to begin. Here are a few things I learned the hard way from my first time fundraising in 2011 (3 months full time, a few all nighters working on the deck, closed $1M+).

It’s a power game. Every single aspect of it. The typical situation is they have power over you because you need money and they have money. Your job is to convince them that they need you more, because money is easy to find but future billion dollar startups are actually quite rare. In order to do this, you need to create a reality in which they are losing out on a limited time opportunity by not meeting you and then handing you a big check.

Borrowing a term from poker, the best way to walk out of the meeting with a firm commitment or big check is to walk in with “position” on the investor. Ways of having position include:
- warm intro from another investor who already put money in
- any chart showing a core metric (revenue, users, deals) going up and to the right
- any press

Basically anything that conveys a sense of momentum. Momentum is a huge part of the game as well. It’s critical to create a sense of urgency. Investors are pack animals. Getting the first close or “lead” is at least half the battle. After one person commits, it becomes much easier for others to fall in line due to social proof. Do whatever it takes to generate momentum and communicate that to investors. The train needs to be leaving the station by a certain date, are you in, yes or no.

Try to find a good candidate for a lead investor. You could do a “party round” of $1M with a ton of people all writing smaller checks from $25-200k. But in my experience this is a bad idea, because none of the investors have enough skin in the game to really dig deep and help you out if the shit hits the fan. And if this your first funded startup, the chance of shit hitting fan approaches 100%. You want at least one investor who is deeply, deeply committed to your vision and most importantly to you. This will help you navigate pitfalls and avoid a situation where, say, you raise a convertible note (debt) and after 1-2 years when you’re still trying to find product market fit, some disgruntled investors try to ask for their money back.

Don’t use a convertible note with a due date. Use a SAFE if you can get away with it. If the investor doesn’t want to use a safe, get a very specific and detailed explanation why.

Do treat all the investors with respect. But don’t let them get away with power tripping. This is one thing infuriatingly common especially among big names. If you take their shit, they won’t respect you. But you also can’t blow your cool. Call them on it, explain that you’re serious and don’t want to play games, and be prepared to walk out of the meeting if necessary. Don’t walk out unnecessarily or be a dick yourself. But be prepared to show you mean business, and if they don’t, then you have better things to do.

Do listen to investor feedback, especially if they are ex founders or have domain expertise. But don’t lose sight of your vision or try to shift your entire strategy bass on one person’s feedback.

Make sure you take time for self care and have strong support networks during fundraising. It is very emotionally intense to pitch your heart out, the stakes are high, and not everyone is nice. Take time and space to recover and recharge emotionally. Remember that you’re selling investors first and foremost on you and your team. And mostly you. If you seem tired or stressed, or anything other than happy, alert, comfortable, and crushing it, that is a bad signal.

Don’t be afraid. Remember why you’re doing what you do. Realize that even if you get destroyed in the next pitch meeting, nobody is going to die. You’ll sleep it off. Tomorrow is another day and another chance to try again. Every pitch is an opportunity to practice and to improve your craft. Celebrate every success, even if it’s just learning one tidbit from a VC who decided to pass. And embrace the failures, because you will have them. It hurts to get rejected when you have so much on the line. But if it was easy to close seed rounds then everybody would be doing it.

Don’t worry too too much about valuation, at least compared with investor quality. Better to have a committed lead investor who backs you 100% at a $3M valuation than some rando coming in $5M.

Finally, after you close the big bucks, shred your pitch deck and don’t use it to inform your next product plan. The exciting part of the pitch deck is typically big picture vision stuff. Don’t lose sight of that, but focus on the next step of product. Go back to being scrappy even with $1M in the bank.

Good luck!