Fundraising Sucks. Get Over It.
At least once a week, I get an email from a founder expressing frustration about one or more aspects of fundraising. The process. The way they were treated by an investor. The lack of feedback. The simple fact that they have to do it in the first place.
“Founders are tired of having to validate themselves and their ideas to VCs, so the VCs can make money on the backs of those who are doing the work.”
Having been in Startupland™ for 20+ years, I can confidently say that almost no one enjoys the process of fundraising (shout out to Andrea Barrica and Kim Kaplan, two of the only humans I’ve ever met who genuinely love it). Fundraising is time-consuming. It’s inefficient. It’s filled with gatekeepers. It pulls the CEO away from running the business.
“We're the ones that need the runway, and the money is a tool to help us get there to make *everyone* money and create jobs, etc. etc. so what sense does it make for the key person to take so much time (and money!) away from the business to secure this?”
The thing is: none of this is a secret.
Every founder you know who has ever raised money (or tried to) will warn you about how difficult, time-consuming and frustrating it is. Mentors and advisors will caution you to temper your expectations. And the internet is awash in posts with tips and tricks to try to make it easier for you to fundraise (including plenty from yours truly). So this really shouldn’t come as a surprise.
Despite that, many founders start off with the naive presumption that their fundraising experience will be different/easier/better.
But once things get going, 99.9% of founders are splashed with a cold, hard dose of reality. And it sucks.
It really does. (I know because it happened to me.)
How founders react to this reality is a big indicator of what comes next.
I’ve spoken to thousands of founders over the years about their fundraising experiences and the best all had one thing in common: when the going got tough, they focused on finding solutions, not making excuses.
So if you’re finding that your fundraising process isn’t going as planned, I have one simple piece of advice: get over it.
Sounds harsh? Maybe. But it’s also the path to success.
I have deep respect and empathy for all founders, especially when it comes to how hard it can be to fundraise. That’s a big reason why I put so much time and effort into trying to make it just a little bit easier with this website. Unfortunately, a lot of founders get caught in a spiral of despair around how difficult fundraising is, which distracts them from figuring out why it’s not working and identifying the factors that are within their control.
Let’s start with the fact that VC (probably) isn’t right for you. The reality is that venture capital isn’t a fit for 99% of tech startups — something that has more to do with the VC asset class than it does the startups themselves. That simple fact accounts for the lion’s share of frustration around fundraising — many founders spend months trying to raise funding from VCs when their business was never going to be a fit.
If you’re running a high-velocity fundraising process (which I hope you are!), then you should be able to get enough datapoints to recognize if there is something fundamental getting in the way of investors leaning in within weeks. After 2-3 weeks of back-to-back meetings, you should have feedback from dozens of potential investors about your business. At that point, it’s up to you what to do with it.
(If you aren’t running a high-velocity fundraising process and find yourself limping from one investor to the next — with only a meeting or two each week — I can’t urge you enough to stop and regroup. There are so many reasons why a drawn-out fundraising process is bad — one of the most important being that it’s difficult to see patterns in the investor feedback.)
Assuming that you’ve lined up a sufficient number of investor meetings, make sure to dedicate time at the end of each week to really look at the feedback you received. What patterns do you see?
For example, if investors are repeatedly telling you that the market is too small or the opportunity isn’t big enough, what they might be saying is, “the market is too small for VCs,” not that it’s a bad idea. (See this post on why market matters most to VCs for more.) Now be honest with yourself. Are they accurate in their assessment of the market you’re going after? If the answer is yes, then you shouldn’t waste time seeking out more VCs, hoping that you’ll get a different answer.
Similarly, if the investors you’ve met with are overwhelmingly asking for more traction, then one of two factors is likely at play:
The investors you’re speaking to aren’t comfortable investing in companies at your stage
The investors you’re speaking to aren’t convinced that there’s a market for what you’re building
Plenty of founders (and ecosystem supporters) get caught in the trap of complaining about (1), particularly when their home base is an emerging ecosystem with relatively few real Pre-Seed investors. That might be frustrating, but complaining won’t change anything. It’s time to change tactics.
“There are not enough people doing sub-100k investing in Canada... the VC models don't support it. Only VCs seem to disagree with me.”
I could write an entire series of blog posts translating the feedback founders get from investors (and maybe I will down the road), but my point here is simple: after 30 or 40 investor meetings, you should start to see patterns emerge in the feedback you’re receiving. Taking the time to identify and reflect on those patterns is critical to making progress on your fundraising journey and avoiding the frustration trap.
The question is, will you pay attention to those patterns?
Chances are, they’re telling you that there is something fundamental in your current approach to fundraising that’s preventing you from succeeding. It could be something about your business. It could be something about the way you’re pitching the business. It could be something about the investors that you’re pitching the business to. Either way, the sooner you recognize the patterns, the sooner you can change tactics. But complaining about how unfair fundraising is won’t change anything. (Note: you certainly have every right to complain — and you should absolutely leverage your mentors, advisors, friends and friendly-neighborhood bloggers to let off steam — but know that complaining won’t change the outcome.)
So pay attention to the patterns. They’re pointing the way forward.
But at the end of the day, if you really don’t like fundraising. If you think it’s completely unfair and it’s all the investors’ fault that you can’t raise capital. If you find yourself getting angrier and angrier at what you’re having to go through in order to get the company off the ground,
…maybe, don’t do it?
