Fundraising Rules to Follow
- Get fundraising over as soon as possible, and get back to building your product and company, but also…
- Don’t stop raising money too soon. If fundraising is difficult, keep fighting and stay alive.
- When raising, be “greedy”: breadth-first search weighted by expected value. This means talk to as many people as you can, prioritizing the ones that are likely to close.
- Once someone says yes, don’t delay. Get docs signed and the money in the bank as soon as possible.
- Always hustle for leads. If you are the hottest deal of the hour, that’s great, but everyone else needs to work like crazy to get angels and other venture investors interested.
- Never screw anyone over. Hold yourself and others on your team to the highest ethical standards. The Valley is a very small place, and a bad reputation is difficult to repair. Play it straight and you will never regret it. You’ll feel better for it, too.
- Investors have a lot of different ways to say no. The hardest thing for an entrepreneur is understanding when they are being turned down and being okay with it. PG likes to say, “If the soda is empty, stop making that awful sucking sound with the straw.” But remember that they might be a “yes” another time, so part on the best possible terms.
- Develop a style that fits you and your company.
- Stay organized. Co-founders should split tasks where possible. If necessary, use software like Asana to keep track of deals.
- Have a thick skin but strike the right balance between confidence and humility. And never be arrogant.
What Not to Do While Communicating with Investors
- Be dishonest in any way
- Be arrogant or unfriendly
- Be overly aggressive
- Seem indecisive – although it is okay to say you don’t know yet.
- Talk so much they cannot get a word in edgewise
- Be slow to follow-up or close a deal
- Break an agreement, verbal or written
- Create detailed financials
- Use ridiculous / silly market size numbers without clear justification
- Claim you know something that you don’t or be afraid to say you don’t know
- Spend time on the obvious
- Get caught up in unimportant minutiae – don’t let the meeting get away from you
- Ask for an NDA
- Try to play investors off each other when you are not a fundraising ninja
- Try to negotiate in real-time
- Over-optimize your valuation or worry too much about dilution
- Take a “No” personally