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What comes first in fundraising?

Jason Yeh
July 2, 2021

What comes first in fundraising?

No matter who they are or what experience they have, founders always deal with anxiety when entering a fundraise. Some think, “What if I can’t get this done?!” while others stress about taking time away from the business or driving optimal terms. Either way, everyone deals with being nervous about the outcome of a fundraise.

It turns out, how and when you break free of that anxiety greatly affects the perception of you as a fundraiser. Since perception is everything in fundraising, this can be the difference between success and failure when raising capital. The moment a founder begins projecting a calm confidence while pitching their startup, investors begin listening more intently.

For most first-time founders, this is a chicken and egg dilemma. Entrepreneurs who project an aura of confidence around their ability to raise capital drive irrational interest from investors. However, the only way those first-time founders acquire any sort of confidence is when investors start leaning in. So what comes first? How do you break the cycle as a founder?

Here are three tips to help you show up with a level of calm confidence that will stimulate investor interest from the beginning:

Plan for zero funding.

Existential risk and fear of the unknown drive so much of the anxiety for founders when fundraising. In other words - “if this investor doesn’t fund me, what will I do??” 
I encourage founders to understand how they’ll continue making progress without funding. Even founders who require investment in engineers to build product can make progress in functions like customer development, recruiting, and thought leadership without funding. There’s always a way to keep marching forward and if founders can understand that path, they will relieve some of the self-sabotaging stress and anxiety of fundraising.

Expect no’s. Get energized by no’s. Move on from no’s.

Rejection is a natural part of fundraising. Most of the best venture-backed startups in the world received dozens of no’s before landing their investors. The main challenge with first-time founders and rejection is how painful it feels and how easy it is to take those no’s personally. Hearing “no” can feel like a punch to the stomach and an insult to the undertaking you’ve poured your heart and soul into. Founders should of course want their pitch to be convincing and get to yes’s, but be comfortable with no’s. They should move on to the next pitch with just as much excitement. Fundraising is a numbers game of getting to investors who think like you. Realizing that no’s are just a step towards finding the yes and an opportunity to learn can help rewire the brain to remove some of the stress around pitching.

Prepare extensively.

Finally, prepare prepare prepare. I often share the following quote from Abraham Lincoln with founders who want to fundraise:

good 'ol honest abe...

Preparing in a deliberate way that packs the top of your fundraising funnel and creates a process that removes as many question marks as possible will help instill confidence in a founder from the very first pitch. That means creating a large target list, organizing introductions to those investors ahead of time, and planning a launch that helps generate calendar density.

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