Be Ready Before Fundraising: Money Is the Tailwind, but Everything Else Must Be in Place

Robin: “Make sure you have thought things through and are ready before you begin fundraising. From Series A onward, VC money is very likely to demand scaling and exponential growth over a short period, rather than gradual product refinement and product-market-fit (PMF) validation. “VC money has a sense of urgency: once it arrives, it expects accelerated growth. Ideally, everything is ready and only the east wind is missing; money is that wind. But if you lack everything, do not rush to find the wind. Even if you manage to summon it, it could blow you over.” ---- If you are sure you are ready to raise money, what will you use it for? Do you need to build a prototype? Recruit a team? Research an idea? Have you obtained a patent? Launch a partnership? Plan a marketing campaign? What is the minimum funding needed for your current requirements, and how much will you need when those requirements change? Once you have thought all this through, consider whether your company's business will interest investors. Your company may not actually be a good fit for venture capital. Most large VC firms are surprisingly risk-averse (yes, this is about the United States, not Taiwan). They will not invest in startups that cannot demonstrate a clear growth trajectory. The internet era has educated VCs. Before investing, they now need expectations about the numbers: growth rates, signup rates, click-through rates, cancellation rates, execution rates—every kind of rate. VC managers also report to their own bosses: limited partners, the people and organizations that supply their money. They need to show that they have made smart, profitable investments with the right management teams. If they do invest, many large VCs believe you immediately need a large infusion of money to generate enormous returns quickly. For many startups, those expectations and timelines are unreasonable. So do not assume you must pursue big-name VCs. You have many options. Giant VCs that have invested in hundreds or thousands of companies and can write checks for tens or even hundreds of millions of dollars are certainly one option. But there are also smaller niche or regional VCs investing in a handful of businesses. Angel investors can supply small amounts at the start and help prepare you to approach larger VCs. Corporations with investment arms may want to use your product or do business with you. These options exist not only in Silicon Valley, but across the United States and around the world. Money is everywhere now. Whatever source of funding you choose, everything ultimately comes down to the people you will work with. When you negotiate an investment agreement with a VC, you are not dealing with everyone at the firm. You need to impress and build a relationship with the person in the room. That person is your partner, the one who will determine the deal terms, become your board member, and enter a kind of marriage with you. Founders sometimes face difficult decisions: keep waiting for the biggest VC to favor you, or choose a less famous but far more enthusiastic investor? Who will be the better partner? Who will help more over the long term? Remember: once you take investors' money, you are stuck with them. The balance of power shifts. VCs can join forces to fire founders, but founders cannot fire their investors. Even irreconcilable differences do not let you divorce them. As you pitch, make sure you are choosing the right people. Speak with founders who have worked with the firm and weathered hardship together. Find out which partners are capable, helpful, and smart, and which care only about money. #創造用非傳統方式做有價值的事 (Build: An Unorthodox Guide to Making Things Worth Making)