Venture Deals, 3rd Edition

CHAPTER 2 How to Raise Money

Your goal when you are raising financing should be to get several term sheets. While we have plenty of suggestions, there is no single way to do this, as financings come together in lots of different ways and can be attributed to an outstanding strategy or just plain old good luck. Venture capitalists (VCs) are not a homogeneous group; what might impress one VC might turn off another. Although we know what works for us and for our firm, each firm is different, so make sure you know who you are dealing with, what their approach is, and what kind of material they need during the fundraising process. Following are some basic but by no means complete rules of the road, along with some things that you shouldn’t do.

Do or Do Not—There Is No Try

In addition to being a small, green, hairy puppet, Yoda was a wise man. His seminal statement to young Luke Skywalker is one we believe every entrepreneur should internalize before hitting the fundraising trail. You must have the mind-set that you will succeed on your quest.

When we meet people who say they are “trying to raise money,” “testing the waters,” or “exploring different options,” this not only is a turnoff but also often shows they’ve not had much success. Start with an attitude of presuming success. If you don’t, investors will smell this uncertainty on you; it’ll permeate your words and actions.

Not all entrepreneurs will succeed when they go out to raise a financing. Failure is a key part of entrepreneurship, ...