The 7 Deadly Sins of Fundraising

Since the ancient days of Palo Alto, scholars have written treatises of the seven deadly sins of fundraising. The vices that many a founder has fallen prey to on their lonely journeys. Let me share them with you, my dear founder, in the hopes that you may avoid their tempting fate.

Envy

The most common sin for first-time founders is envy. Worrying about what others have raised.

“Acme co raised $5M and our product is way better than theirs!”

“My friend’s startup raised a Pre-Seed without even having a working prototype!”

“Our competitor raised at a $30M valuation and we’re lightyears further ahead than they were!”

Whatever some other company might have done is not only irrelevant to you, but it’s likely to be a massive distraction. And talking about them makes you seem insecure.

You aren’t them. They aren’t you. So stop worrying about what others may or may not have done (and stop believing everything you read in TechCrunch!).

Greed

Many a company fell victim to this sin in 2021/22.

Fundraising is a negotiation and it’s easy to want to push the envelope further and further. But if both parties don’t feel good about the end result, then a deal won’t get done. I know far too many founders who wish today that they had taken an offer that was on the table last year.

That doesn’t mean you should sell yourself short, but resist the urge to push for “one more thing” if you feel that a deal is fair for both parties.

Sloth

Successful fundraising requires focus, hustle and a lot of meetings. It’s not uncommon for a Pre-Seed or Seed round to involve 150 or more meetings. High-velocity fundraising is the only way to make the numbers work. If you’re only taking a couple of meetings each week and limping along, you’re shooting yourself in the foot.

Fundraising is a full-time job and you can’t half-ass it. Especially in 2023.

Gluttony

Gluttony is an overconsumption / overindulgence to the point of waste. In 2021, many founders raised more money than they needed, at valuations that deep down they knew were too high. Investors eagerly pushed early founders to take more and more money, and many agreed.

Fast forward to today, and many of those founders are paying for their sin as those same investors are revealing the dark side of VC recycling.

This is unlikely to be as much of an issue in 2023, but you should always be wary of raising too much more capital than you actually need, particularly if it’s done at a valuation that you won’t be able to grow into.

Wrath

When fundraising, it’s inevitable that you’re going to hear ‘no’. In fact, you’re going to hear it a lot. The vast majority of interactions with investors will end without an investment. Many will end with frustration for you as a founder.

Some investors will ghost you. Others will string you along. Unfortunately, it’s also likely you’ll encounter a handful that disrespect you or otherwise treat you poorly. No matter the result — whether you feel that you were treated fairly or not — resist the urge to lash out in anger.

Pride

When meetings start to go well and you’re into third and fourth meetings with multiple firms, it’s easy to get cocky. Resist the urge to drink your own kool-aid and remember that nothing’s done until the money’s in the bank.

The foolish founder gets too far ahead of themself and starts referencing term sheets that haven’t been issued, investors that haven’t committed and promises that aren’t in writing. Get too far ahead of yourself and the entire process can unravel.

Lust

Lust is an intense longing that can lead you astray. For founders, it’s the trap of focusing on one or a handful of investors based on their fame, brand or other appealing features.

In Silicon Valley alone, there are nearly 2,000 early-stage VC firms. By all means go after your dream investor, but don’t ignore the dozens of other investors that could be a good (or better) fit.

Be sure to cast a wide net and look beyond the top names.