Fundraising in a new environment, then and now

This week, I gave a presentation to a group of early-stage founders going through First Round’s Dorm Room Fund Female Founder Track. The goal of the session was to provide tactical guidance around what to expect when fundraising, particular as first time founders.

This post is about raising your early round of funding based on my experience as an investor at On Deck, Bloomberg Beta, Ridge Ventures. There are many helpful fundraising guides already out there, so this post is focused on insights and observations based on recent market shifts.


Fundraising is one of the few one-way doors in a company’s life, so it’s important to prepare well, be ready to eliminate the easy “no” reasons, and commit to making this a core focus for 1-3 months (sometimes longer) when you are ready. I’ve laid out the three critical phases of fundraising, the key questions to address in each, and some pointers on how fundraising in a bear market is different from the bull market of the last few years.

I. Prepare, prepare, prepare

• Why are you The One? An investor needs to believe that your company can return the fund. Many founders need to practice their pitch a hundred+ times. Find a small group of friends, existing investors, advisors to practice and get feedback. You should practically get bored of your pitch but be ready to talk about the company each time as if it’s the first time telling it.

• What are you raising on — progress, story, team — and what are investors anticipating will happen with this raise? Put differently, what risks have already been de-risked and what risks will you de-risk in the near-term? The very best founders can fundraise in 2 weeks, but this is outlier and often attributable to a track record of success, credibility, network.

• How much do you need to raise and at what price? Cash efficiency is critical today. Your fundraise should afford you at minimum 24 months of runway. You can have a target price in mind, but the market will set the price.

• Who are the natural investors for you? Invest real time to curate your investor CRM — tier your leads, intro paths, backchannels. Qualify EVERYONE. Knowing who you’re targeting, preparing the custom forward intro emails with why you believe they’re a good fit, and ensuring you have as many warm intros are surprisingly important parts of the process. Target 40-50 names on your list and in today’s markets, you may need to talk to 80-100 investors.

What’s changed from then vs now?
• Commitments aren’t dollars in the bank. They won’t create as much fomo and may even have the opposite effect with VCs who are investing with more caution right now.
•  Prices are lower (and likely will be for the next 6-12 months) and ownership expectations are stricter/higher. Be wary of stacking SAFEs at multiple caps for this reason. Treat your round like a priced round and close everyone on the same deal. Anticipate 20% dilution at the seed (up to ~30% for hard tech).

II. Run a tight process

• Who will be your strongest intro paths? Ideally you work with an angel or founder advisor who can champion you. Of course, successful portfolio founders are the strongest intro paths to an investor.

• What are the easy pass reasons? Pre-empt these. You can learn about common hesitations by practicing your pitches with smaller check investors and your “nice to have” investors to get feedback.

• Why is this investor a good fit? While tools like NFX Signal, Crunchbase/Pitchbook, Twitter can help, curating a high quality lead list will take time. Prioritize conversations accordingly, and maintain ball control of your information by keeping investors in each part of the process in similar time frames.

What’s changed from then vs now?
• While tier 1 funds may be moving slower, there are angels and micro-funds that are still investing smaller checks. Have clear next steps at the end of each conversation and follow up appropriately, but responsiveness is your best leading indicator with investors. If it’s not a hell yes, it’s probably a no.
• The bar is higher for diligence. Anticipate deeper founder references for pre-product and more questions around customers and pipeline if you’re post-product.

III. Win and close

• How do I command a higher price? Congratulations on an offer! Momentum is your best leverage. Multiple term sheets from comparable investors are your best bet to increase the price. That said, if your offer is with an investor you trust and respect at reasonable terms, don’t over-optimize. Take the money.

• What allocations make sense for the round relative to what each investor wants? Go back to your smaller check commitments and confirm their desired check size so you can revert with as best as you can accommodate.

• Which angels or small checks do you definitely want on the cap table and why? Founder or operator angels are often the most helpful small checks for their tactical, hands-on support.

What’s changed from then vs now?
• Don’t assume a verbal yes is a done deal until the investment is signed and wired. Ordinarily, an investor would almost never risk the reputation damage of changing terms last minute or reneging on a handshake, but these are uncertain times. Again, if you receive an offer with an investor you trust and respect at reasonable terms, take the money.

The truth is that fundraising for almost everyone is a slog, so prepare well, gather your support network, and don’t cut corners.


Thanks to the Dorm Room Fund team and founders for having me. If you’re an early-stage founder working on frontier tech to transform traditional industries, reach out.