It Depends: Why the right fundraising strategy for your startup is never a straight answer.

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Talk to ten founders and ten different VCs and you’ll get roughly about 600 different suggestions as to how you should go about your fundraising strategy. I don’t know what the formula is here, but the numbers and the resulting amount of confusion gets big very very quickly.

Why does it seem like there’s an exception to every rule? You’re told that you can’t raise until you have a product, yet pre-product companies get funded all the time. You’re told that you need more revenue, but someone who has half the revenue that you do got funded last week. What gives?

The problem is that your pitch is a combination of a bunch of individual components, each of whom an investor is going to have particular reactions to and sometimes a great reaction to one is enough to push you over the top—or sink your pitch.

For example, I’m more than happy to fund something that is pre-product except if you’re in a notoriously difficult to sell into industry, like small businesses, government, or education. In those industries, there are lots of seemingly great products that die because the team lacks the expertise to break into the market.

Even a particular attribute like revenue has several factors to it, like growth, concentration and whether or not that revenue is a subscription for SaaS, one time purchases, or consulting. A million-dollar run rate achieved in four months will garner very different reactions in the market than one reached after four years. Investors also care about how much you spent to get there and also whether you’ve built a team to do it, which is really to say whether anyone else besides the founder seems to be able to sell this product.

Too often, founders look at what they’ve done so far as proof they should get funded, whereas they should really be looking at it as proof of a funding-worthy plan. Fundraising is an exercise in selling tickets to the future, not a reward for the past—so even if you’ve got all the same attributes as some other company, your ability to describe the future may have been the difference between being funded and not.

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The market also affects your raise. This year, while a lot of companies have raised big rounds, there haven’t been as many super early, crazy ideas backed during the quarantine. From what I’ve seen in the market, despite the fact that the two term sheets I’ve offered this summer were to first time founders, a repeat founder in a well-understood space is more likely to get backing when everyone is feeling uncertain and risk-averse.

One of the things we learned when we built the anonymous fundraising feedback tool Feedback.vc is how much sector affects a VC’s willingness to look at a deal. When founders anonymously described their companies to a blind pool of investors, the biggest factor wasn’t traction—it was what problem you were solving. Solving the right problems made investors willing to overlook a lot of other things about the company.

Understanding which aspects of a company an investor is going to focus on in the fundraising process is incredibly difficult, and is worth asking about right off the bat. Too many founders just jump right into a pitch without even stopping to understand where a VCs questions are.

Often times, when I take a meeting with a founder, I tell them right off the bat that I’m happy to have them run through their pitch, but my initial concerns/questions are X, Y, and Z. Not enough founders gather data from their pitch meetings in this way to understand what VCs were focused on before they even heard the details.

In many ways, it’s a lot like buying a house. Two houses of different locations, sizes, and attributes are very difficult to compare. When you read fundraising advice to founders, think about how much blanket statements would make sense for real estate. Imagine telling everyone from bike commuters to people who work from home to “Move next to public transportation”.

It wouldn’t make any sense—and figuring out what kind of advice makes sense for your startup requires a lot of listening to what VCs are saying about your company, not necessarily all startups in general.