This post was originally published on https://inflection.fund/writings/on-fundraising.
For an untrained mind fundraising is torture. As a founder you’re exposing your life’s work to the judgement of a stranger you’re depending on. Naturally, you are experiencing a power asymmetry to your disadvantage. For the VC its one out of 12x founder meetings that week and one position out of many. For you its your life’s work tied to your identity. You might get a straight “no”, some hard truths or you might get ghosted without much empathy. It can be a traumatizing experience. But it is also a necessity and an opportunity for you to grow into your best self. In this post I’m sharing some tools, interventions and anecdotes that helped me stay sane for more than a decade in venture (on both sides of the fundraising table). The ideas laid out here shall serve as mere inspiration to develop your own tools and routines; it will require hard work and discipline beyond reading a short blog post.
TL;DR
Fundraising breaks founders for reasons that have nothing to do with the quality of their company. You’re dealing with power asymmetry that is amplified by how your brain works. After more than a decade on both sides of the table, here’s what actually helped:
growth mindset: treat it as a skill, not a trait. Record your pitches. Benchmark against your own last raise, not against the founder who makes it look easy.
negativity bias: become aware, intervene through batching the nos, cognitive offsetting or reframing.
fear release: write the fear down in detail. Shift your brain from emotion to reasoning and take control.
Community: you’re not alone. Talk to founders raising right now. “Geteiltes Leid ist halbes Leid” — a sorrow shared is a sorrow halved.
Frame control: Capital is not scarce. Your talent, character and network are. Inverse the power dynamics through simple behaviors.
Process design: Internal deadline, a funnel with critical mass, visible velocity at every touchpoint, back-channel through your network, honest facts.
Have some fun: Some of my most productive meetings were a walk in the park and an ice cream + a fun story about bananas.
None of this is a shortcut. It’s practice, and it takes discipline beyond reading a blog post. But it can be a starting point.
growth mindset
Fundraising is something every founder has to go through in some form or another. Some seem to have a natural talent or a very high pain tolerance for it, others don’t - yet! You can and will improve if you try. Fundraising is a skill that can be learned, not a condition you’re born with. Further, that skill might be acquired more easily and faster than say becoming an engineer.
Benchmarking your progress not against those who are better at it but against yourself is critical, especially over your first few raises. You could record pitch calls with granola and ask your favorite AI models for critical feedback on how you did and what you could improve. Writing down some quick notes on how you felt during and after the pitch can help you figure out your trajectory.
negativity bias
What makes fundraising hard emotionally and mentally is that your brain prioritizes bad news over good. The no to yes ratio will be 10:1 or worse. However, research shows that it takes five positive events to psychologically outweigh one negative event. Your brain is working in the wrong direction for good reason though. For our ancestors, failing to notice a threat (like a predator) meant death, while missing out on an opportunity (like a piece of fruit) just meant being hungry for a bit longer. The brains that overemphasized danger survived to pass on their genes. Brain imaging shows that the brain’s electrical activity spikes much higher in response to negative stimuli than positive stimuli. We literally process bad events with more cognitive bandwidth.
Awareness is helpful but we need interventions whenever we deal with emotions. (1) Batching negative inflow compresses the no : yes ratio. Label investor email threads and designate one time window a day to read them. Your brain will count 3x fast nos as one. (2) You can separate “data” from “danger” by documenting the nos in a spreadsheet with a single useful piece of feedback. (3) Cognitive offsetting: when you get a “no”, consciously force yourself to list 5x things that went right that day (e.g. a great engineering push; a new customer; a happy customer quote; a strong team meeting etc.). That way you can artificially balance your brain’s scales. (4) Reframing a “no” as something positive. Getting a no from a stranger can free up equity and a board seat for the “right investor” who “gets you” and who cares deeply about your vision and success. (5) Gamifying rejection is powerful and fun. Shift the reward mechanism of your brain. Instead of tracking the “yes” matches, set a goal for collecting 10x fast rejections. When a “no” comes it, check a box and reward yourself for achieving it. Finally, (6) a biological intervention: box breathing (inhale 4sec, hold 4sec, exhale 4sec, hold 4sec - repeat). This signals to your nervous system that there is no physical predator in the room and that you’re safe.
community
Thousands of founders are going through the same experience as you are, right now. Many more have been through it over the last few centuries and many more will go through in the future. You are not alone. Some of them are very open to share their experiences.
Invite them over a coffee, lunch or walk to exchange experience. Start by sharing your own experiences, thoughts and feelings. The more you share, the more you will get back from the other side - good old reciprocity at play. No surprise we germans have a saying for that: “Geteiltes Leid ist halbes Leid“ - freely translated into “a sorrow shared is a sorrow halved”. Do this a few times to get more perspectives. It will make you feel in good company. You’re not alone.
fear release
Fear is an emotion that draws its overwhelming power from the unknown; from the blurry idea of what might be if we don’t succeed. Intuitively, when faced with fear we look the other way and force our mind to think of something else. If we do this for too long the emotion of fear rises within us until a point where it starts to paralyze us.
I suggest the opposite. Take a piece of paper or a journal and write down your fears as concretely as possible. What is a concrete situation you’re afraid of? What clothes do you wear? How does the room / environment look like? Who is present? What are their facial expressions? What is their body language? What exactly do they say to you? Which words of judgement are you afraid of?
“*You are not good enough. We won’t back you and nobody else will either. Your company will fail. You will fail.”
Then observe your body. How does that feel? Write down your feelings as concrete body sensations, e.g. a burning heat in your chest; a pressure building up from within; dizziness in your head; emptiness or the “hole in your stomach”; tears in your eyes. What does this sensation remind you of? Have you been there before? How do you know this sensation? What is your earliest memory of it? Writing all of this down will help you manage and release your fear.
Why does it work? Writing requires structure and language which is processed in a different part of your brain than fear, hence your brain activity shifts emotion to logic. Your brain treats an unwritten fear like an open browser tab, constantly burning background energy. Externalising fear to a piece of paper creates “cognitive distance”. Further reading: Fear-setting: A brief writing intervention increases motivation to reach personal goals and positive affect.
equanimity
The more attached you are to the success of your fundraise (aka the judgement of others), the bigger will be the pressure you put on yourself. There is a fine line between a strong motivation and a depression derived from that pressure. Equanimity describes a calm, balanced, neutral state of mind at any circumstance. Developing it can occupy you for a life time. Some of the tools that can support you on that journey are meditation, breathing techniques or psycho-active substances. A state of mind is nothing static. It shifts from time to time but you can develop interventions and tools to steer into a certain direction.
This is obviously a huge topic that cannot be addressed properly in a short blog post. If you’re curious about the topic I recommend reading The Art of Living: Vipassana Meditation as Taught by S.N. Goenka or Meditations by Marcus Aurelius.
manifestation
Once you released the dark version of your future it is time to build up the positive one. Manifestation is the practice of turning a goal or desire into reality by aligning your thoughts, mindset and actions with it. When you focus intensely on a specific goal, you program your Reticular Activating System (RAS - basically a brain filter) to spot opportunities, resources and connections related to that goal. Believing that a positive outcome is possible naturally shifts your mood and confidence. This shift makes you more likely to take positive risks, speak up, and put yourself in a position to succeed.
There are some easy interventions you can leverage. (1) Prime and sleep. Your brain is highly suggestible right before you fall asleep. Spend 2 minutes before closing your eyes on visualizing a specific, successful moment in the near future - like shaking hands on a deal or seeing a green checkbox on a dashboard. Focus on the feeling of relief, excitement and joy. (2) Journaling. Write down 1x specific opportunity you’d like to go for on a given day and visualize the outcome. At the end of your entry write down a positive affirmation like “I learn from every rejection and get sharper at every pitch.”
Further reading: The neuroscience of manifestation: what the brain really does.
frame control
Being the (early stage) founder pitching venture investors who manage millions or billions of dollars makes you put yourself into a position of relative weakness. This perceived power asymmetry is expressed in social protocols and our environments as a “frame”. You take the elevator to a fancy office where you’re greeted by a receptionist. They might let you wait for a couple of minutes. There is fancy art at the walls. You are a guest in foreign territory etc. There are ways to “break the frame” and invert the the power asymmetry to your advantage.
You can reframe your situation: Capital is not scarce, there are 100s if not 1,000s of VCs who could finance my company. My genuine talent, character and network are much more scarce than capital. *If you don’t fund me, somebody else will. You will regret not funding us.
There are endless ways to “break the frame” socially. E.g. you can cut the meeting short by a few minutes saying that you have another meeting close by. This signals time scarcity on your end and demand from others. You can control the conversation by leaving some intentional, longer pauses before answering questions. You get the idea. If you’re curious about frame control I recommend reading the book Pitch Anything . It’s somewhat controversial and sometimes painfully awkward to read but I found it entertaining and quite informative about the hidden social rules governing our interactions.
process engineering
To get into the mind of your future investor it is helpful to design a process around your fundraise. You put together some documents (pitch deck, data room). You prepare your narrative and the points you’d like to get across - a lot has been written about that, so I won’t repeat it. The hard part is to align investors on a reasonable, shared time line to optimize your optionality. Here are some things that worked for our portfolio companies in the past:
set an internal deadline for when you’d like to close and communicate it to investors clear enough to create urgency (next couple of weeks, we kicked off the process); once you hit concrete milestones you can increase the pressure (we have a term sheets but didn’t counter sign. We stick to a disciplined process to find the best possible partner.)
build a funnel of critical mass. fundraising is a numbers game - you only need one yes out of 100 (or more) nos. Brainstorm with your business angels and early investors who might be the best possible partners for you - which firm, which partner and why. Cluster your funnel by priority. Start reaching out to your inner circle, to people where you feel comfortable with a bad pitch, ask for feedback, iterate. Go for prio 1 once you feel ready.
display velocity by sharing bits of information that indicate progress at every touchpoint you have with an investor. E.g. yesterday we signed 2x new customers for $X revenue; this week we will hear back from gov program X for a contract / grant (even if you already have certainty that it will come through); we hired elite talent Y for our critical open role of A etc. Make the investors feel your velocity.
amplify and back channel through your network. Your existing investors, angels and close business partners might have touch points with some of your respective VCs. Ask them to pro-actively to sing your praises in the right context and with the right timing. Close the loop by asking for any resonance your network might have gotten.
stay honest and real. Some VCs are pattern matching founder archetypes like “the traumatized misfit” or the “20yo renegade who dropped out of an ivy league engineering school”. Don’t try to fit in, be your authentic self. If the investor doesn’t vibe with you she is not the right fit. Present facts in a positive light but don’t lie. Investors are allergic to founders making things up or lying about issued term sheets. If you make bold claims, expect the investor to ask for proof. Being called out will erode trust and kill the relationship.
learn systematically. Actively request feedback from every investor you talk to. Summarise learnings, missed opportunities, misunderstandings in an “objection handling doc”. Go through it before every important meeting.
fun
Most of us are much better at what they do if they have some fun on the way. Make sure that fundraising meetings are somewhat entertaining for yourself and the investor (who happens to be a human, after all). Personally, some of the my most productive fundraising meetings were “walk in the park” and “having ice cream” meetings. A friend of mine can’t take people seriously who eat a banana, so he brings one to important meetings and offers it to his meeting partner, genius.
If you think through your fundraise and are struggling to get into the right mindset, reach out. Feel free to share what worked for you in the comments.
really well written. but this is something i'd challenge: setting deadline can be suicide. you miss your own deadline = signal that you didn't make it.