Founder's Guide to Early-Stage Fundraising

Once you’ve identified your "why now" and considered trade-offs, it’s time to choose the fundraising strategy that best suits your needs. Think of these as two types of marathons: the Marathon and the Half Marathon. Each demands focus and preparation but caters to different timelines and goals.

1. The Marathon: "Always Be Raising"

This is the long, steady approach to fundraising, emphasizing relationship-building and gradual momentum over time.

Best For

• Companies with below-market traction benchmarks, in nascent industries, with large capital requirements, etc. 
• Deep tech or complex products that need time to educate investors.
• Founders with strong networks who can nurture long-term relationships.
• Markets that demand significant investor education.

How It Works

• Provide regular investor updates to keep them engaged with your progress.
• Highlight achievements through milestone-based check-ins.
• Focus on relationship building rather than immediate asks.
• Position for preemptive rounds, creating opportunities for investors to approach you.

Key Advantage‍

This approach builds long-term investor conviction, increasing optionality for future funding.

• Founder Bandwidth: Fundraising demands significant time and focus, potentially pulling founders away from product development, customer engagement, and team building.
• Market Perception: Staying in market too long can signal difficulties in securing funding, creating doubts among investors and reducing competitive leverage.

2. The Half Marathon: "Concentrated Process"

This is a shorter, focused fundraising effort designed to close your round quickly.

Best For

• Companies with strong metrics and traction.
• Hot markets where urgency and competitive tension drive decisions.
• Founders ready to dedicate time and energy to an intensive process.
• Situations where momentum is critical to attract multiple term sheets.

How It Works

• Run a 6-12 week focused process dedicated to fundraising.
• Engage in parallel investor conversations to create competition.
• Set clear timelines and deadlines to drive urgency.
• Leverage momentum-driven decision-making to encourage investor commitment.

Key Advantage‍

This approach helps you close quickly while leveraging urgency and competition to secure better terms.

Key Challenges

• Timing & Optionality: Aligning multiple investors’ processes and timelines can be complex but is critical for maintaining leverage and optionality.
• Market Perception Risk: A failed sprint can signal fundraising struggles, making future rounds more challenging to raise.
• Preparation Burden: Success requires significant upfront effort to ensure the pitch deck, data room, customer references, and financials are investor-ready.

Choosing the Right Path

Choosing the right fundraising path ultimately depends on your goals and circumstances. The Marathon is best for founders with the time to cultivate relationships and build deep investor conviction, while the Half Marathon suits those who need to close quickly or capitalize on market momentum. Regardless of the path, you should expect to have multiple meetings per week, a strong pitch deck showcasing detailed metrics, and be fully prepared with both team and customer references.

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The fundraising landscape has evolved, and today’s market demands more focus, discipline, and insight into investor psychology. Here’s what you need to know to navigate it effectively and avoid getting stuck in the "we’re excited to keep in touch" loop.

The New Normal: What "Good" Looks Like Now

Market shifts have set a higher bar for startups, especially at the Series A stage:

• $1M+ ARR is now the baseline many investors look for in B2B companies.
• 3x year-over-year growth is solid, while 4x+ growth stands out.
• Efficient growth matters more than ever—investors are scrutinizing burn rates closely.
• A clear path to strong unit economics is prioritized over "growth at all costs" models.

Investor Psychology: The Inside Track

Investors are not only evaluating your company; they’re managing their own pressures. Understanding their motivations will help you better pitch to them:

Portfolio Construction

• Most funds aim to deploy specific check sizes, often targeting 15-20% ownership in early rounds.
• They consider how your company fits into their existing portfolio and future fundraising plans.

Decision Drivers

• Pattern Matching: Many investors rely on comparisons to past successes to gauge your potential.
• Competitive Positioning: They assess how your company aligns with or competes with their other investments.
• Fundraising Needs: Their interest may be influenced by their own timelines and capital availability.
• Personal Passion: Alignment with an investor’s expertise or interests can accelerate conviction.

Fear Vs Greed: Investor Psychology

Every investment decision is driven by a balance of fear and greed—your job as a founder is to tip the scale in your favor.

• Fear makes investors hesitate. Concerns about backing an unproven team, investing in an unfamiliar space, looking bad in front of their partnership, or missing a better opportunity can stall a potential deal. Junior investors may be reluctant to push a deal forward without strong internal consensus. Getting group consensus can often take time and cause a deal to stagnate in perpetuity.
• Greed compels action. Investors are far more likely to move quickly when they believe they are investing in a generational company, see clear indications about market momentum, have personal passion for the space, or the desire to be associated with a breakout success.

Your goal is to minimize fear and amplify greed—giving investors confidence that investing in your company is an opportunity they can’t afford to miss.

Reading Investor Signals: Real Interest vs. “Let’s Keep In Touch” Loop

Not all investor interest is genuine—know how to tell if you're moving toward a check or stuck in a loop:

Strong Interest Signals

• Rapid and detailed follow-up after your meeting.
• Engagement from partner-level investors, not just associates.
• Specific and actionable feedback on your pitch or metrics.
• Proactive introductions to other investors or potential customers.
• Willingness to share portfolio founder references for validation.

Polite Pass Signals

• Vague phrases like "keep us updated" without clear next steps.
• Meetings that never progress beyond associates.
• Delayed responses or lack of urgency.
• Vague timing discussions like "we’re taking a closer look this quarter."
• Absence of meaningful feedback or interest in your metrics.
• Unwillingness to give their portfolio founder references.

Founder Homework:

• Know Your Numbers: Ensure you are either meeting or on track toward the baseline metrics investors expect, such as $1M+ ARR, 3x+ growth, and strong unit economics. Be prepared to discuss burn rates and growth efficiency in detail.
• Research Investor Fit: Identify funds that align with your stage, sector, and check size. Understand their portfolio and how your company complements or strengthens it.
• Tailor Your Pitch: Highlight metrics or milestones that resonate with their decision drivers (e.g., pattern matching, competitive positioning).
• Understand Their Timeline: Learn about the fund’s deployment schedule to gauge their urgency and capital availability.
• Evaluate Investor Signals: Look for strong interest through partner-level engagement, rapid follow-ups, actionable feedback, and proactive introductions are green lights. Beware of vague phrases like "keep us updated," delayed responses, or meetings that stall at the associate level.
• Build Relationships Strategically: Target decision-makers whose expertise and passions align with your company, focusing on fostering genuine interest and alignment.
• Prepare to Differentiate: Clearly articulate how your company stands out or fills a gap in their portfolio to proactively address potential overlap or conflicts.

Today’s fundraising market requires founders to deeply understand both the metrics that matter and the psychology driving investor decisions. Avoid wasting time with "excited" investors by focusing on genuine signals of interest. Build relationships strategically, maintain disciplined growth, and align your pitch with the priorities of investors who can actually help you close the round.

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Creating a targeted investor list is essential to running an efficient fundraising process. Instead of reaching out to every investor who shows interest, take a targeted approach by prioritizing firms that align with your stage, sector, and fundraising goals. Here’s how to build, prioritize, and leverage your investor pipeline.

Track & Organize Inbound Interest

Before you begin outreach, keep track of all inbound investor interest—even casual introductions or VC outreach on LinkedIn. Some of these investors may not be the right fit now, but could be valuable in future rounds. Maintaining an investor tracker (Google Sheets, Notion, or a CRM tool like Affinity) will help you stay organized. Here is an example template you can use to help you get started.

Categorize Investors Into Tiers

Not all investors are going to be equally suited to your needs—structure your list based on fit and priority:

• Tier 1 (Dream Investors): The firms and individuals that are the best strategic fit, offer the most value, and have a strong track record of supporting companies like yours.
• Tier 2 (Strong Contenders): Investors who may be a good fit but aren’t necessarily your top choices—either because of their check size, industry focus, or portfolio structure.
• Tier 3 (Long Shots & Strategic Options): Large funds that occasionally invest at your stage, strategic investors, or firms that might be opportunistic but are not actively investing in your space.

Start with Tier 2 Investors to Gather Market Feedback

Many founders make the mistake of pitching their Tier 1 dream investors first—this is a risky approach. Instead:

• Begin with Tier 2 investors to refine your pitch, get market feedback, and understand common objections.
• Use these early meetings to sharpen your narrative and metrics before approaching top-tier firms.
• Ensure that by the time you pitch Tier 1 investors, you are polished and prepared to answer tough questions.

Map Warm Intros & Build a Connection Strategy

Investor introductions can make a meaningful difference—while cold outreach can work, warm intros are significantly more effective.

• Identify who in your network (other founders, existing investors, advisors) can make warm introductions.
• Prioritize intros that get you to the most senior and relevant decision-makers within a firm.
• Leverage your angel investors, existing VCs, and advisors to create internal champions before formal meetings.

Watch for Conflicts & Competitive Investments

Not every “interested” investor may be actually interested in investing—some firms may take meetings simply to gather competitive intelligence for their portfolio companies.

• Research competing investments within a firm's portfolio before engaging.
• If an investor has a company in your space, ask direct questions about how they manage conflicts of interest.
• Be cautious about sharing sensitive details too early in the process—especially with firms that seem overly eager for diligence before showing serious intent.

Stay Organized & Keep Momentum

Fundraising is a fast-moving process, and tracking interactions is critical. Use a spreadsheet or CRM tool to monitor:

• Outreach status (Intro requested, Meeting scheduled, Follow-up needed, etc.).
• Investor engagement level (Are they leaning in or just staying warm?).
• Feedback themes from each conversation.

A strategic and disciplined investor pipeline increases your chances of landing the right partners—those who bring more than just capital but also strategic support and long-term alignment with your vision.

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Success in fundraising involves mastering the details and staying disciplined throughout the process. From preparing the right materials to managing the timeline and avoiding common pitfalls, here are our recommendations for building a winning process.

Your Fundraising Kit: Essential Materials

Preparation is everything. Founders should have their fundraising materials prepped early, updated frequently, and be ready to speak to them at a moment’s notice. Investors expect clarity, detail, and confidence in your story, and having these materials at your fingertips ensures you can engage effectively and make the most of every opportunity. Here’s what your fundraising kit should include:

• Teaser Deck: A concise 5-7 slide overview to spark initial interest.
• Full Pitch Deck: A comprehensive 15-20 slide presentation to tell your story.
• Financial Model: Detailed with clear assumptions to back up your projections.
• Product Roadmap: A clear vision of where your company is heading.
• Customer References: Contacts who can vouch for your value.
• Team Backgrounds: Highlights on expertise and alignment with the company vision.
• Data Room Index: A well-organized repository of key documents for due diligence.

Process Management: Stay Organized and On Track

Start early, plan for the unexpected, and structure your meetings to maximize impact. Staying responsive and adaptable throughout the process ensures you keep investor interest high and capitalize on every opportunity. Here’s how to stay organized and on track:

Timeline Management

• Ideally, begin fundraising with 6+ months of runway to avoid desperation.
• Allocate 2-3 months for active fundraising, plus a buffer for unexpected delays.
• Factor in holiday slowdowns or other periods when investor availability drops.

Meeting Orchestration

• Group meetings throughout the week with investors at similar stages to create momentum.
• Leave room at the end of every meeting to ask about next steps and follow-ups to capitalize on interest.
• Account for time zone differences to maximize scheduling flexibility.
• Respond to questions and follow ups quickly to maintain investor engagement.

Common Pitfalls to Avoid

Strategic missteps, like staying in the market too long or misreading polite passes as genuine interest, can waste valuable time and create negative signals. Similarly, sharing sensitive data prematurely or neglecting existing investors can weaken your internal support and position. Here are a few common pitfalls to avoid:

Strategy Missteps

• Running too long in market can create negative signals.
• Misinterpreting polite passes as genuine interest wastes valuable time.
• Sharing sensitive data too early can expose you to unnecessary risk.
• Neglecting existing investors can lead to a lack of internal support.

Tactical Errors

• Poorly prepared references weaken your credibility.
• Inconsistent metrics across documents can erode trust.
• A disorganized data room delays due diligence.
• Missing follow-up windows signals disinterest or lack of urgency.

Keys to Success

Founders need to approach every interaction with clarity, align their team around a consistent narrative, and maintain momentum both within the business and the fundraising process. Balancing strategic decision-making with tactical execution is key to securing the right investors and the best terms. Here’s how to stay focused on what matters most:

Know Your Story Cold

• Ensure team alignment with consistent messaging.
• Be prepared to answer questions from every angle.
• Project confidence and clarity at all times.

Manage Your Energy

• Fundraising tends to be a marathon, not a sprint—pace yourself accordingly.
• Continue building the business while fundraising to maintain momentum.
• Keep the team motivated through transparent updates and shared wins.

Stay Strategic

• Focus on best-fit investors who align with your vision and stage.
• Build competitive tension to drive urgency and better terms.
• Keep options open to preserve leverage throughout the process.

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Successful fundraising takes preparation, strategic execution, and genuine relationship building. While metrics and market conditions play a role, founders who approach the process with a clear "why now," a well-defined strategy, and disciplined execution are best positioned to succeed. Fundraising isn’t just about securing capital—it’s about finding the right partners who believe in your vision and can fuel your long-term growth. Whether you take a patient, relationship-driven approach or an accelerated, time-bound process, the key is to stay deliberate: build meaningful connections, maintain momentum within your business, and make choices that align with your long-term goals. In today’s market, success doesn’t just come from strong metrics; it comes from founders who communicate their vision effectively, inspire confidence, and execute with precision every step of the way.

Resources

In addition to Lightspeed support, we also have an amazing network of storytelling and pitch experts that can help you through this process. Please reach out to luke@lsvp.com for more information.

Fundraising Checklist

We suggest utilizing the checklist below to ensure you don't miss anything in the process.

Pre-Fundraising Checklist:

• Key metrics defined and tracked
• Story and narrative refined
• Materials prepared and reviewed
• Target list researched
• References prepared
• Team aligned on process

Process Management Checklist:

• Meeting tracker established
• Follow-up system in place
• Data room organized
• Due diligence materials ready
• Communication templates prepared
• Decision criteria defined

Post-Meeting Checklist:

• Thank you notes sent
• Follow-up materials shared
• Next steps confirmed
• Internal debrief completed
• Tracker updated
• Feedback incorporated

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