Old vs. New

Understanding the evolution of fundraising is crucial for founders and venture capitalists alike.

Knowing the difference can impact a startup's success!

The Old Approach to Fundraising:

→ Founders traditionally treated the fundraising process as a series of isolated tasks. This included preparing a pitch deck based on standard templates and setting up a data room with all the required documents.

→ The process, story, and signals were often treated separately, leading to a disjointed fundraising strategy.

→ Founders typically approached a wide range of investors, aiming for quantity over quality, which often resulted in standard rejections and a prolonged search for a lead investor.

The New Way of Fundraising:

→ Modern fundraising intertwines the process, story, and signals, acknowledging their interdependence.

→ Use negotiating power effectively, especially for early-stage companies, by generating multiple term sheets and leveraging market conditions.

→ It involves targeting a specific list of qualified investors and aiming for validated leads rather than a broad, unfiltered investor base.

→ Understand the time required for fundraising, typically between 6 to 9 months or faster for pre-seed startups, and optimize the process to fit within this timeframe.

Common Mistakes and Solutions:

→ Founders often fail by not aligning their fundraising strategy with their company's stage and market conditions.

→ Aiming for a high number of investor meetings without proper qualification leads to inefficiencies.

→ The focus should be on creating a compelling narrative, understanding the investor thesis, and aligning the company's signals with the presented story.

The one thing that remains intact in the old and new approach is the STORY!

This is what we do weekly for startups globally.

→ Craft a compelling narrative that creates a human connection, making the business more relatable, memorable, and investible.

→ Provide insight into why the business exists, its goals, and the problem it solves, which is fundamental to both old and new fundraising methods.

→ Differentiate your startup from the competition and how your product and/or services cater to a niche audience within a broader market.

→ Weave in authenticity, challenges faced, and milestones achieved to build credibility and respect from investors. 

→ Evoke emotion, leading to a deeper interest and potential investment from investors. They're more likely to support a venture that resonates with them on a personal level.

A special thanks to @Michael Ho for his insightful teachings on fundraising. 

His experience as both a founder and a venture capitalist provides a unique perspective on the intricacies of the fundraising process.