Fundraising

Fundraising is a process, not an event

Founders talk about a round as a single moment — "we are raising". In practice it is a three-to-nine-month process with distinct stages, and most of the mistakes that stretch it out are made before the first email goes out.

Funds do not read a deck and decide. They form a view, test it against someone else's opinion, defend it to an investment committee, and only then issue a term sheet. Every one of those steps takes time, and every one of them can be slowed down by something you failed to have ready.

Four things that must be true before you approach anyone

1. The round size is decided and defensible. One number and the milestone it buys — not "€500k to €2M depending on what we can get". How much should a startup raise covers how to set it.
2. The deck survives being read without you. Most decks are read with no founder in the room, forwarded to a colleague, and decided over lunch.
3. The data room exists. Not "we can put one together if they ask". Being ready when a fund asks is itself a signal about how the company is run.
4. The investor list is qualified. Forty to sixty names filtered on stage, cheque size, geography, sector and conflicts — see investors.

The full sequence is in the startup fundraising checklist.

When to start

Earlier than your runway forces you to, and with more margin than you think. Signed term sheet to money in the bank is typically four to eight weeks, and that is only the end of the process. If you start approaching investors with three months of runway, it shows in your numbers and it will be used in the negotiation. You are bargaining from a position where you cannot say no.

Six to nine months of runway when you send the first email is a sensible target. Not because the process takes nine months, but because you want the option of walking away from a bad offer.

What the process actually looks like

• First meeting — thirty minutes, usually with a more junior member of the team. The goal is a second meeting, not a term sheet.
• Second meeting — a partner, deeper questions, usually about the market and why you specifically.
• Diligence — numbers, customer references, technical review, legals. This is where processes stall, almost always on things that could have been prepared in advance.
• Investment committee — you are not in the room. You are represented by whoever inside the fund is championing you, which is why it pays to give them material they can actually work with.
• Term sheet and close — read it for terms, not price. Liquidation preference and the option pool will affect your outcome more than the valuation headline.

What goes wrong most often

Eight years on the fund side, the same four things came up again and again:

• Serial instead of parallel outreach. Talking to funds one at a time removes your only real leverage, which is competition between them.
• A round with no lead. Eight enthusiastic angels do not add up to one term sheet.
• A valuation set by ego. Too high at pre-seed creates a problem at the next round — see startup valuation.
• Slow replies. Responsiveness is the cheapest signal of competence available to you, and most founders throw it away.