This week I talked to an early-stage founder I’ve known for a few years. So far, he has bootstrapped his company. It started as an agency, and he’s now built software that he sells. His target market is micro SMBs that drive revenue by engaging in outbound sales. The founder has some traction, and he’s looking to raise funding from venture capitalists to scale the software.

He shared with me that he’s considering targeting enterprise customers because that’s a clear path to raising from VCs. The micro SMB market doesn’t have a clear path to acquiring customers. He’s found that it’s tough for VCs to understand the potential in that market and to see how capital raised would lead to new customers. With enterprise, the path is clear, and they get it.

This founder is in a tough spot. As I shared earlier this year (see here), micro SMBs isn’t a market that VCs easily understand. The process for acquiring customers lacks a defined playbook, which makes investors hesitant to back software founders targeting this market.

I’ve watched this founder work for some time now, and I think he’s on to something. I’m not sure that enterprise is the right market for him to go after at this time; that’s something he’ll have to decide. If he decides to stick to the micro SMB market, I suspect he’ll raise from VCs only after he has derisked the customer-acquisition process. Once he can show that he has figured out how to find and acquire micro SMBs repeatably and that the product is valuable to them, I think VCs will get on board and cut checks. Heavy product usage by paying customers is a strong signal that a savvy investor never ignores. They may not agree with going after micro SMBs, but they’ll never argue with data like that.

This week, I met an early-stage entrepreneur. We discussed his fundraising strategy and pitch deck. He began by telling me about his background. As I listened, I could tell he’s bright and has a deep understanding of the problem he’s looking to solve and the market—but that wasn’t being conveyed in his deck.

His pitch deck jumped straight to the problem slide.

During our conversation, he established credibility before telling me about the problem. His work experience and a failed start-up gave me a glimpse of his drive and intelligence. He then told me how he discovered this problem and described all his research around it. At that point, I was hooked and engaged in his pitch.

His deck didn’t establish credibility and didn’t have a humanizing aspect (except a team slide at the end). So, the pitch didn’t resonate with me and likely wouldn’t with anyone else.

Early-stage entrepreneurs are selling themselves and their vision. Their decks should reflect this. It’s easier for someone to engage with a pitch when they sense that the person who created the pitch is worth listening to.

Think of an early-stage pitch as a conversation on paper. When you meet someone for the first time, you don’t jump straight to what you want from them. You introduce yourself and give some background info so they can get comfortable with you and become receptive to what you’re about to ask or tell them. The beginning of an early-stage pitch deck should resemble the beginning of an introductory conversation—it should establish credibility to help the reader be receptive to your pitch.

I caught up with a founder who shared an update on his fundraising. The story stuck with me because of how the tariff turmoil is impacting him. That’s not something I anticipated for technology companies raising from venture capital firms.

He’s raising a $1 million round and had a lead investor committed for $500k. He was deep in diligence with a few other firms to fill out the rest of the round. Then, the tariff turmoil hit. All the investors in deep diligence simultaneously pulled out. His lead investor has notified him that it will pull out too if the remaining $500k isn’t raised within a tight window.

This founder went from seeing his fundraising go from a clear path to completion to complete uncertainty because tariff and stock market turmoil rattled the investors he was talking to.

This story was surprising to me since this founder is early stage, but it was a reminder. The tariffs and stock market turmoil they caused are prompting uncertainty, which will show up to entrepreneurs in all sorts of unexpected ways.

This week I caught up with a founder and chatted about his fundraise. He recently kicked it off (again), and it’s going well this time. A few bank wires have cleared and he has significant interest from various funds for the remainder of the round.

This is starkly different from his efforts to fundraise last fall, so I wondered why he’s having more success this time around. Is something materially different about his company (or pitch)? When I asked, he said the company is still progressing at the same rate as a few months ago. He sees a difference in venture capital investors. More investors are receptive to his pitch, which is essentially the same as a few months ago.

In March, we’ll see start-up fundraising kick into high gear: more pitch competitions, demo days, etc. Lots of founders will “officially” kick off their raise and begin pitching investors. Fundraising wasn’t great last year. How will it go this year? I’m curious about whether this founder’s fundraising experience will be the exception, the norm, or somewhere between the two.

I’ve been helping a founder with a fundraising round. It’s been a few months, and the round was moving toward the finish line. With investors lined up and lawyers finalizing documents, everything looked good for the transaction to close on time. Then one of the investors pulled out unexpectedly, putting the entire transaction in jeopardy. Luckily this founder had never stopped pitching other potential investors and had built a good working relationship with the lead investor. He has a solid list of potential investors to replace the one who dropped out. He was able to have a constructive conversation with the lead investor and agree on a strategy to close the transaction. It took an extra day—not bad given the eleventh-hour dynamics—but the transaction closed and the funds cleared the company bank account.

Fundraising is tough, full of all kinds of twists and turns. A transaction isn’t done until the money’s in the bank. Before then, anything could happen—and something often does happen at the last minute. Don’t get comfortable. Continue working on open items until the transaction is officially closed and the wire clears your bank account. When the wire clears, then you can relax a little and celebrate.

An early-stage founder asked me for feedback on his fundraising deck, and I went over it with him. Then he asked me to also look at his data room and provide feedback.

The data room was well organized and included more detailed information than I’d expect for an early-stage company. I asked the founder about that, and he said it’s the expectation these days—without this level of detail, his chances of getting funded would be significantly lower.

My takeaway is that investors are focusing more on substance, and founders are starting to get the message. Investors are taking longer to evaluate investment opportunities and diving deeper into whatever data exists to help them make an investment decision. They want to understand the problem, the market potential, and whether the solution is adding (or could add) real value to customers. Founders looking to raise should be aware of this and prepare accordingly.

I’ve been keeping tabs on several early-stage founders who are aiming to raise capital before the end of the year. Their funding experiences so far are on the extreme ends of the spectrum (for various reasons). From what I’m hearing so far, it sounds like funding rounds will end up in one of two camps.

• Fundraises will be extremely successful and engender a high degree of interest from several firms. These founders will likely be given offers to raise materially more capital than they set out to raise (which isn’t necessarily a good thing).
• Fundraises will be completely unsuccessful, with zero interest from firms. If these founders are running out of runway, they’ll likely struggle to raise a bridge round.

These initial thoughts are subject to change as the market changes. But if they hold, it sounds like an extreme case of haves and have nots this fundraising season.

I recently talked to founders building an AI start-up. They shared with me that they’re raising capital, and I asked the normal questions about metrics, runway, etc. I learned they have a significant amount of capital in the bank from their raise less than 12 months ago. This made me ask, why are you raising again if you have ample runway for executing your strategy?

Their response was simple. They’re getting interest from VC firms looking to invest in AI start-ups, and they figured they should strike while the iron is hot.

It’s so interesting to hear how different the stories of founders raising in the market right now are. Some are grinding it out to get an opportunity to pitch an investor, while others are being sought out by investors. I’m really curious to see which companies successfully complete their fundraising rounds (i.e., have money in the bank) before the end of the year.

One of the founders I work with recently kicked off his fundraise. He decided he wanted a well-run, tight process to boost his chances of completing his fundraise before the holidays. One of the things he’s doing is sending a weekly recap of the week’s activities to all his existing investors.

I really like this. My favorite part of the recap is that his fundraise process is displayed as a funnel, and he quantifies how many venture capital firms are in each stage. As an investor, I can quickly understand, looking at the funnel, where he is in his process and gauge the likelihood of it being successful as it progresses.

In addition to the funnel, he includes in his recap a few bulleted highlights and planned activities for the upcoming week. 

In a minute or two every week, I get a good idea of where he is, what he’s planning to do, and how I can help (if I know some of the investors he’s about to pitch or already has pitched).

I’m a fan of this fundraise update email. It’s a great tool to help founders focus, run a tight process, and keep stakeholders informed throughout the fundraise process.

Fundraising season is in full swing, and founders are having lots of meetings with VC firms. Many are trying to complete their fundraising before the holiday season begins in November. And many think, because of the rapid decision processes in the 2020 to early 2022 period, that that’s plenty of time.

Getting a quick decision isn’t a given these days. Some firms may still say yea or nay quickly, but many have adjusted their internal processes to spend more time evaluating a company before deciding whether to invest. Said differently, some firms are taking longer to decide.

The best thing founders can do is not assume. During initial meetings, they should ask, “Assuming an investment will be made, what steps are left in the firm’s decision-making process?” “What’s the average time frame to complete those steps?” Who else will I need to meet with before a final decision is made?”

These simple questions help founders set loose expectations and give them a better idea of where they are in the firm’s process. This helps the founder run a better fundraise process and, hopefully, increases the chances of success.