How to Raise Money for a Startup

The Short Version

Fundraising is a momentum game, not a talent show. Your round is either hot or cold, and the difference between the two can flip in a single week. Most first-time founders spend too much time perfecting their deck and not enough time building the conditions that make a round come together.

Here is what actually matters, in order:

1. Have a business worth funding (a strong team with a clear right to win, traction, a real market).
2. Prepare your materials before you start talking to anyone.
3. Build relationships with the right people months before you need money.
4. Run a tight, time-boxed process that creates urgency.
5. Keep building the business while you raise. The rest of the team should not stop.

Everything below is the detail behind those five points. If you remember nothing else, remember this: the founders who raise successfully are not the ones with the best slides. They are the ones who create momentum and know how to manage a process by preparing ahead of time and being strategic in their efforts.

The Reality: Your Round Is Hot or Cold

Andreas Klinger, an angel investor and former CTO of Product Hunt, describes the typical first-time fundraising experience this way: you struggle for weeks or months to convince anyone to invest. Then, all of a sudden, everyone wants in and you are turning people away. This state can flip from one week to the next.

Why? Because most investors are followers, not leaders. They want to see that other smart people are committing before they commit. Nobody gets fired for investing in last summer’s hottest startup. The naked truth is that investors are not trying to find the best company. They are trying to invest in the company that the next round of investors will consider the best. It is a Keynesian beauty contest, and understanding this dynamic is the single most important thing you can learn about fundraising.

This means your job as a founder is not to convince investors one by one. It is to create the conditions where your round flips from cold to hot. Everything in this checklist is designed to help you do that.

Phase 1: Prepare Your Mise en Place

The Techstars Entrepreneur’s Toolkit uses a cooking analogy that is worth keeping. In French kitchens, “mise en place” means having all your ingredients prepped before you start cooking. You do not chop onions while the pan is smoking. The same principle applies to fundraising: have everything ready before your first investor conversation.

Here is what you need, in priority order.

Must have before your first meeting:

Your narrative. Not your deck. Your narrative. This is the one-paragraph version of why your company exists, why now, and why you. If you cannot say it clearly in conversation, no slide deck is going to save you. NFX calls this treating your pitch as a product launch. You would not ship a product without testing it. Do not pitch investors without rehearsing your story with mentors and peers first, and change at least one thing after every practice session.

A financial model. Investors at the seed stage are not expecting a perfect model. They are expecting you to know your own assumptions. What drives your revenue? What does your cost structure look like at 10x your current scale? If a VC asks about your commission structure or your CAC and you say “let me get back to you,” you have lost credibility. Kevin Ryan, who has raised $750M across companies like MongoDB and Gilt, puts it bluntly: investors have a strong bias toward founders who know their numbers backwards and forwards. It is a very simple way to be impressive. You do not need to be right about every projection. You need to demonstrate that you have thought rigorously about what drives your business.

A clean cap table. The last thing you want is to get to the finish line and have a round held up because your cap table has issues. Get this sorted before you start.

An investor pipeline. A spreadsheet or lightweight CRM with your target investors, who can introduce you, and why each one is a fit. Techstars recommends tracking: fund name, location, fund size, ticket size, the specific partner you want to meet, who can make the introduction, and the status of that intro. You will share a simplified version of this list with your mentors and allies when you activate your network. This can be a spreadsheet or a written doc, but either way you need to write out your networking plan.

Important but can come second:

A forwardable email. This is the email your contacts will forward to investors on your behalf. It needs to be brief, scannable, and require zero editing from the person forwarding it. If your contact has to rewrite your email before sending it, they probably will not send it. Include: who you are (one line), what you do (one line), traction (one number), why this investor specifically, and a clear ask.

An emailable deck. A high-level version of your pitch, 10-15 slides, that you are comfortable sending to someone you have not met yet. Use a PDF or DocSend so you can track who opens it. This is not your full meeting deck. The point is to get someone’s attention and get them into a meeting. You are trading information for time, and then escalating the commitment at each stage of the relationship.

A meeting deck. This is the detailed version with financials, competitive landscape, and product depth. Do not send this to anyone who is not deep in diligence with you.

Can wait or might be unnecessary:

A one-pager. Some founders love these. They are fine as a supplement but rarely make or break anything.

A data room. You will need this eventually, but it is a Phase 3 concern. Do not spend weeks building a data room before you have had a single investor conversation.

Phase 2: Build Your Pipeline (Before You Need It)

The biggest mistake founders make is starting investor relationships when they need money. Kevin Ryan is clear on this: if you start reaching out to VCs when it is time to raise, it is already too late. Start building relationships six months before you plan to fundraise.

Who to target.

Start with how much money you need to raise to reach the next phase of exponential growth or another relevant milestone. Then work backwards into a round composition and average check size. If you need $500K to get to profitability with a clear growth path, that is a very different investor profile than if you need $5M to go from zero to $20M in revenue. The amount of capital determines the check size, and the check size determines who is even in the pool.

Then reconcile your growth expectations with those of the investor. If you are going maximal risk on a hypergrowth trajectory, you need investors who tolerate maximal risk and expect to deploy more capital in future rounds. If you have a measured path with the potential to return capital through earnings, you can structure differently and look for investors who are comfortable with longer holding periods and more patient returns. Those three processes, working backwards from capital needs, determining round composition and check size, and matching growth expectations, are how you choose your investor type. From there, it is a matter of screening for assumptions.

A founder I know learned a useful frame from an accelerator at Stanford: the best investor matches are people who share your assumptions about the way the world is unfolding and where it will be in three to five years. They are probably already familiar with or experts in your field. You are screening to see if they believe that the future you see is as inevitable or possible as you do. If they do not share your worldview, you are going to struggle to reshape it. But if they do, the conversation shifts from “let me convince you this market exists” to “let me convince you that we are the team that will win given the future that is already unfolding.” That shared conviction creates a common bond and is a much easier sell. Do not pitch without first qualifying how they see the world.

Andy Rachleff, co-founder of Benchmark Capital and a lecturer at Stanford GSB, captures this perfectly:

“The best startup scenarios I’ve seen are when the entrepreneur, the early investors and the early customers are all in on a secret together. They’re starting a movement that the rest of the world will one day accept, but they’re starting it as rebels.”

This connects to the concept of product/market/founder fit. It is not enough for your product to fit the market. You, as the founder, need to be the right person to build this specific business in this specific market. And your investors need to see that alignment. The best investor matches happen when the founder’s experience, the market opportunity, and the investor’s thesis all point in the same direction. You are not just looking for capital. You are looking for co-conspirators who already believe what you believe.

Mark Suster’s “Invest in Lines, Not Dots” framing reinforces this. Every interaction with an investor is a data point. A single meeting is a dot. A series of conversations over six months where they can see your progress is a line. Investors back founders whose trajectory they can observe. That means your pipeline work is not just about collecting names. It is about giving each person enough touchpoints to form a conviction.

Klinger adds a less obvious angle that many first-time founders miss. Instead of chasing the famous VCs who are getting hundreds of cold emails a week, target domain experts as your first angel investors. Think about the core bets an investor would need to believe to back your company, then ask: who are the top people in the world for each of those bets? These are often founders who solved a related problem in a different market. They are more accessible than brand-name VCs, they bring real expertise, and their involvement becomes social proof that helps you with the next tier of investors.

The “not fundraising but…” approach.

This is fairly standard advice in the fundraising world, and everyone says it with a wink and a nod: do not officially fundraise until you have a clear feeling you can close your round. Instead, tell investors “we are not fundraising yet, but I would love to get your feedback on what we are building.” Investors understand exactly what you are doing, and they are happy to take the meeting. It lets you build relationships, test your narrative, and gauge interest without the pressure of a live process. If someone wants to invest on the spot, you can close them with a SAFE. If not, you have started a relationship you can activate later.

Phase 3: Run the Process

When your materials are ready, your pipeline is built, and you have enough warm relationships to generate real interest, it is time to officially fundraise. This is where process discipline matters most.

Sequence your meetings carefully.

Save the firms you want most for last. Use your first two or three meetings as rehearsals with investors who are not your top choices. Every meeting will surface questions you had not anticipated and will make you sharper. By meeting three or four, you will have tight answers to every recurring question. Kevin Ryan notes that he always schedules his best prospects at the end, not the beginning, of a fundraising sprint.

Create urgency and scarcity.

Be transparent about your timeline. Set a specific window for term sheets (typically three to four weeks after final meetings) and stick to it. Signal that other people are at the table without naming them. If you are flying to the other coast for a meeting, mention it. Everyone will understand what that means. Sahil Lavingia documented his process raising from 100+ angels for Gumroad and showed how even a simple, systematic approach to investor outreach can create its own momentum. When every investor on your list can see that other credible people are committing, you do not need to manufacture urgency. It manufactures itself.

Start with a slightly lower raise target than what you actually want. If you want to raise $5M, go out saying $3-5M. When you come back two weeks later and say the round is shaping up at $5-6M because of strong interest, that creates momentum. As Kevin Ryan puts it: nobody wants to feel like they are getting a deal in venture capital. They want companies that everyone else wants. If you adjust your target, always go up, never down.

Manage your CRM like a sales pipeline.

Techstars recommends tracking investors through clear stages: New (targeted, not yet engaged), Advancing (a few meetings, back and forth), Soft Circled (committed but with conditions), Committed (fully confirmed), Legal (working through docs), Wired (check in the bank), and Passed. Importantly, a pass is not permanent. You may be able to circle back as the round gains momentum and flip an early pass into a yes.

Keep the rest of the team building.

NFX is clear on this: one founder (usually the CEO) should own fundraising full time. Everyone else should stay heads down on the business. This is hard because early-stage teams are used to collaborating on everything. But fundraising is a time to divide and conquer. The progress of the business is going to be critical to your fundraising success, and if everyone stops building to focus on investors, you lose the traction that makes the round possible.

Klinger learned this the painful way. At his first startup, most of the founding team focused on fundraising. They built a business plan in two languages, dozens of deck versions, and a finance model that could do year-end balancing. None of it helped close the round. At Product Hunt, which had real traction, everything was different. People saw the train moving and wanted to get on board. The lesson: the best fundraising strategy is a business that is visibly accelerating.

Phase 4: Close

When term sheets come in, you have about a week to process offers and go back to interested firms. Do not rush this, even if a VC pressures you to decide immediately.

Evaluate the whole package, not just the valuation.

A term sheet at a $20M valuation from a partner you do not trust is worth less than one at $16M from someone who will be genuinely helpful for the next 7-10 years. Kevin Ryan’s advice: for most firms, you will seldom see anyone other than your point partner after the deal closes. You are not getting a firm. You are getting a person. Make sure you like that person.

Keep everyone on the same timeline.

Do everything you can to make sure all interested investors are on the same schedule. Nothing is worse than having a great term sheet in hand but knowing you are two weeks away from potentially getting another one because you staggered your conversations.

Set a specific deadline and hold it.

Give investors the exact date when term sheets are due. Three to four weeks from the final meeting is typically right. This gives them enough time to do their work but not so much that the process loses energy.

What Most Founders Get Wrong

Obsessing over the deck. The deck matters, but it is not where most founders fail. They fail because they have not built relationships early enough, or their narrative is muddled, or they do not have a clear answer to “why now?” The deck is the vehicle. The story and the traction are the engine. Jason Yeh, who runs Adamant Ventures and coaches founders through raises, puts it well: the best fundraisers he works with spend 80% of their prep time on the story and 20% on the slides. Most founders do it backwards.

Looking for “startup investors” instead of domain experts. Klinger nails this one. Every first-time founder makes the same mistake: they look for the famous names, who are getting hundreds of inbound pitches. Instead, find people who are domain experts in the specific bets your company is making. These people are more accessible, more useful, and their endorsement carries weight with the institutional investors who come next.

Treating fundraising as a merit-based process. It is not. It is a market. Your company might be excellent and still have a cold round. It might be unproven and still have a hot one. The difference is often momentum and social proof, not quality. Understanding this is not cynical. It is practical, and it changes how you approach the entire process.

Saying “let me get back to you.” Every time you defer a question in an investor meeting, you lose a small piece of credibility. You do not need to know every number to the decimal. But you should be able to give a confident, directionally accurate answer to any question about your business. If the commission structure is around 17-18%, say “between 15 and 20%, and it is improving.” That projects mastery. “I will get back to you” projects uncertainty.

Raising in isolation. Fundraising is not a private activity. Your mentors, existing investors, advisors, and founder friends should all know you are raising and should be actively helping with introductions. Techstars recommends sending a “process starter” email to your inner circle with your target list and asking for feedback, introductions, and support. The founders who raise fastest are the ones who mobilize their entire network, not the ones who quietly email VCs from their laptop.

The Bottom Line

Fundraising is not about having the perfect pitch or the biggest TAM slide. It is about creating momentum, running a disciplined process, and making it easy for investors to say yes. Prepare before you start, build relationships early, run a tight timeline, and keep your business growing while you raise.

The round will be cold until it is hot. Your job is to do everything in your power to make it flip.

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For more on fundraising strategy, see The Best Startup Fundraising Guides and Resources.