5 vital fundraising tips that most founders ignore

By Oleksii Yermolenko, co-founder & partner at F1V

Fundraising is a full-time job. It’s complex, time-consuming, and requires constant effort. I’ve always admired startup founders who can simultaneously do both — build the product and raise a new round. I believe it’s more innate than learned.

Still, there’s a way to make fundraising easier.

Treat fundraising like a sales funnel

Fundraising is often an emotional time for founders. I know what it’s like, as VC funds also raise money from their investors (limited partners).

It’s normal to feel that way, but focus on the pragmatic side of fundraising — it’s a B2B sales deal. To get venture capital, a startup sells a portion of its shares to an investor, so view this as a standard sales process.

Like sales, fundraising involves managing a pipeline of investors and moving them through various stages in the funnel. This includes reaching out to dozens of VCs through cold and warm introductions, meeting with leads, and wrapping up the deal with a few funds.

The average lead-to-customer conversion rate in B2B is around 2%. So, having 20-30 investors in your pipeline is not enough, especially in 2024, when it’s harder to fundraise. You should talk to over a hundred VCs to close a round.

Also, remind investors about yourself by following up. It’s okay to do it a few times if you don’t get a reply: 80% of sales occur on the fifth attempt. The fund’s team may be busy working on another deal when you first contact them.

I like how startup V7 raised money for its Series A round. It took care of every detail — from building a deal team and ranking its leads to arranging inbound and outbound strategies and tracking who read its deck. I recommend looking through its story.

Test, refine your pitch

Many young companies try to reach their top-target funds as soon as they start to fundraise. It’s not the best strategy.

Start with less relevant funds. Along the way, you’ll get feedback from investors and improve your deck and, possibly, the product too.

Record the first call with an investor and later reflect on the questions they ask and your answers. For example, you can use transcription services.

I’d also say that sticking too much to the same ideas and key messages is a mistake. Be open to investor feedback and iterate your pitch deck when needed.

While pitching, tell VCs a compelling and clear story: why they should support your company, why you’re raising now, what you’ve achieved (and what you haven’t), and what you will do with the funding. Prove your points with metrics — not adjectives.

Prepare in advance

Mark Suster, partner at Upfront Ventures, once wrote on Medium: “Invest in lines, not in dots.” He implied that investors preferred meeting founders before they started raising funds. And I like that approach.

To get funding when needed, founders should start talking to VCs at least 6-9 months before their runway ends. Also, early negotiations are much more favorable for startups.

The most successful entrepreneurs also don’t stop networking after they’ve raised money; they keep devoting 5% of their time to meeting VCs.

Share updates with investors, even if they’ve decided not to back you. We had cases when our fund invested in a company after saying no at first. We changed our decision after observing its traction through regular email updates.

Consider seasonality, create FOMO wisely

The perfect times to seek funding are September-December and January-May. In summer, focus on preparing. Many VCs take vacations from June to August, so investment committees at most firms won’t be able to decide on deals when some members are absent.

Dedicating specific months to fundraising lets you talk to many VCs at once, which can speed up the process and create competition. It helps to mention you’re finalizing commitments with another fund, but never lie — that’s the worst thing you can do.

Simplify every interaction with investors and reply fast: VCs usually have multiple deals on the table at once.

Raise enough for 1.5-2 years

I’ve recently seen many startups looking for extra funding to cover expenses until their next big round. In Q1 2024, 42% of seed-stage deals on Carta’s platform were bridge rounds, which is historically high.

Still, due to the high risks, many VCs freak out to participate in bridge rounds in the current market conditions. So, it’s now safer for startups to raise sufficient funds for 18-24 months.

For more advice on fundraising, I highly recommend reading the book “The Great CEO Within: The Tactical Guide to Company Building” and listening to 20VC’s podcast “How to Fundraise Like a Pro.”

The article is based on Oleksii Yermolenko’s lecture for Genesis StartUp Academy together with Meta.

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