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🔻 top-down vs. 🔺 bottoms up fundraising As pre-seed investors, we get to work with many founders thinking through their initial fundraise. I’ve noticed that many founders pursue a top-down fundraising strategy when a bottoms-up one would be better. Some thoughts for folks gearing up for fall fundraising: 1st, what buckets of capital can founders pull from? 💰 VCs ⏩ Accelerators 👼🏽 Angels 🆓 Non-dilutive funding 🥾 Being customer-funded ie bootstrapping 🔻 top-down Many founders start at the top of the list and work their way down, creating a wishlist of Tier 1 VCs & submitting apps or asking for warm intros. I try to talk most early-stage founders out of this. VC is often a force ranking exercise. Which company is the best bet for the fund/LP capital given team, valuation, market size, competition, traction etc. Isn't pre-seed more about art than science? (h/t Peter L.) As a friend said yesterday, 90% of pre-seed is about the founding team. At Hustle Fund, we see teams pivot ~30% of the time after we write an initial check! But the imbalance of supply of/demand for capital in this market means that there are more companies with seed traction ($20k MRR+) at pre-seed valuations. Many early-stage VCs are unwilling to make pre-revenue bets, esp if a team is not already well known/networked or fits w/in their subconscious 🦄 company template. 🔺 bottoms up In lieu of institutional capital, often the founding team’s best bet is to go bottoms up. How much runway do you need to make the problem more legible to institutional investors? Often this is a waitlist, usage or revenue milestone. Do you have to raise to get there? Can you sell ahead of the product to customers? Are there grants or other sources of non-dilutive capital that can help? (yes, inc pitch events) If you decide to go the 👼🏽 route, identify people who understand the problem you’re solving &/or customer you’re serving, & invite them to join your cap table. I’d think about this like a hiring exercise. Like founders, great 👼🏽 can look like anyone and come from anywhere. It doesn’t necessarily matter if someone has “angel investor” or “board member” on their LinkedIn, look instead for the knowledge & networks that can support your company. Send a *short* personalized note introing -yourself - the problem you’re solving - why you want to work w/ them Try to group a lot of angel meetings close together. Setup an SPV to enable small check ($5k or under) investors to get involved. They can have an outsized impact. If you’ve already started with top-down, that work isn’t for nothing. Often the combination of signal from early believers (customers and strategic investors), hitting the angel round milestone, and keeping investors in the loop is enough to tip the scale in your favor. At Hustle Fund, we invest in ~7 companies/month and will run a workshop in August to help portcos who are raising in the fall think through their blurb, deck, and process. Get in touch!

🍯 Fundraising motion: Top down or bottom up? In Angel, PreSeed and Seed rounds, founders often build captables that are bigger than "just" a lead investor. A key question to answer early on in fundraising preparation is, which fundraising motion you want to engage for this fundraise. ↘️ Top down - You first go for a lead investor (often a VC fund) - You then fill the round with angels and microfunds once you have a termsheet from said lead. ↗️ Bottoms up - You first "fill the restaurant with friendlies" (i.e. smaller tickets / angels / microfunds) - You then go shopping for a lead investor with a bunch of "commitments" already. There are pros and cons for both approaches and Simon Leicht and I have seen both work very successfully with our portfolio companies at SDAC (Simon & Daniel Angel Collective). That being said, here are a couple of consideration points: - Top down is the dominant strategy if you are very confident you will find a lead investor and feel like you can stomach a lot of "no"s. This is usually more the case for serial entrepreneurs, people with very strong VC networks and valuations that are chosen realistically. - Bottoms up is the dominant strategy if you want to get started faster and have an okay network to a couple of super connector angels that can introduce you to 10x more "friendlies to fill your restaurant". It's easier to maintain motivation in this motion and you can build momentum more easily. If I had to chose, "bottom up" seems like the dominant strategy in the very early stages, given that a) you want some amazing angels and microfunds (hi there 👋) on your captable anyway b) these angels and microfunds are the best ones to introduce you to the right lead investors c) momentum is the name of the game in fundraising. How to best do the bottom up motion and how to think about the right PreSeed and Seed lead investors for you, are topics for another post. Good luck out there and talk to us if you wanna spar on your fundraising plans! ____ SDAC (Simon & Daniel Angel Collective) 💰We invest 100k € tickets in Angel, PreSeed and Seed rounds. 👩💻We invest in product centric founders at the frontier of technology. 👨🔬For us, that's mainly AI, web3 and SynBio at the moment. Say hi: daniel@sdac.io 👋

Founders: your next fundraise could be a make-or-break moment. Don’t let inflated valuations or poor cash flow management sidetrack your success. As down rounds and flat rounds become more common, now is the time to focus on building a sustainable, capital-efficient business that thrives regardless of market trends. In 1H 2024, flat and down rounds hit a decade high at ~30% of all deals largely due to inflated valuations from previous years. Founders who raised at inflated valuations but couldn’t meet expectations during their next fundraise are now raising in flat or down rounds. If you're raising a seed now, research related Series A deals to understand the benchmarks. Use that data to reverse-engineer your seed round and the milestones you’ll need to hit by Series A. Let’s say you’re raising a $3M seed on a $10M post$ valuation for 18 months of runway. You’re currently at $800k ARR and expect to close the year at $1M ARR, projecting 400% growth YoY. In 18 months, you’ll need to raise again unless you hit breakeven. Fundraising can take 3–6 months, meaning you’re likely back in the market in 12 months. What will your fundraising story be in 12 months? If your industry comps are seeing 10x LTM revenue, you’ll want to aim for $3M+ ARR by the time you raise your Series A for a $30M valuation. You should project $9M+ ARR the following year, with a well-defined pipeline that backs it up. For those aiming for unicorn status ($1B valuation), there's a widely followed rule known as 'triple, triple, double, double.' This means after you achieve $1M in ARR, you triple your revenue for two years, then double it the next two. If you're at $1M ARR today, you’ll aim for $3M ARR next year, $9M the year after, and eventually $36M ARR in year five. Not every company will follow this, but it’s a powerful framework for setting aggressive growth targets. Keep in mind, venture capital investors have investors, too. There are return profiles we need to see and believe in before writing a check. I’ll dive into that in another post. Cash flow management is critical because anything can happen between rounds. Customers can churn, prospects can ghost, and entire deals can vanish due to a leadership change at the company. “Growth at all costs” is no longer the standard. Many investors now prefer capital-efficient startups with strong margins and a path to profitability. Once you’re out of cash, you’re out of cash. You do NOT want to raise for 18 months of runway only to find yourself raising again in 6 months because of poor spending discipline. This will shift your focus from growing the business to raising capital, and you’ll lose more equity than necessary and dilute your current investors prematurely. Set weekly, monthly, and quarterly budgets. Regularly compare them to your actual spend to keep your financials in check. Raising capital is about more than just runway. It’s about sustainable growth and setting your company up for long-term success.

Searching for funding? 💰 💸 At MyCofoundr.AI, we've put together this list of investors that are putting billions to work to actively fund diverse founders and reshape venture capital. 🚀 The Black Vanguard List 2025 (https://lnkd.in/ekAbZ7cG): Investors 11-15 Redefining VC 🚀 Here’s who’s making moves and how they’re investing: 🔥 15. Brian Brackeen – The Bias-Busting VC Visionary Assets under Management (AuM): $50M (Lightship Capital) Stage: Pre-seed to Series A | Check Size: $250K–$2M Thesis: Investing in under-networked founders in the Midwest, turning bias into opportunity. 🗽 14. Collide Capital – Building the Future of Venture in Brooklyn AuM: $66M Stage: Seed | Check Size: $500K–$1M -- Brian Hollins – The Brooklyn Bridge-Builder: Connecting Black founders to capital. -- Aaron Samuels – The Renaissance Investor: Blending creativity and venture to uplift diverse entrepreneurs. 💪 13. Collab Capital – The Changemakers Forging New Paths AuM: $51M Stage: Pre-seed to Series A | Check Size: $200K–$1M -- Jewel Burks Solomon – The Tech Titan Turned VC: From founder to funder, driving Black-led innovation. -- Barry Givens – The Engineer of Equity: Structuring success for Black entrepreneurs. 🌴 12. Slauson & Co. Strategists – Transforming LA’s Tech Landscape AuM: $100M Stage: Pre-seed to Seed | Check Size: $250K–$1M -- Ajay Relan – The Neighborhood Alchemist: Investing in overlooked communities. -- Austin Clements – The Equity Architect: Designing pathways to capital for diverse founders. 💼 11. GV Trailblazers – Elevating Diversity in VC AuM: $8B (GV (Google Ventures)) Stage: Early to Growth | Check Size: $1M–$5M+ -- Candice Morgan – The Diversity Dynamo: Championing inclusion as an investment imperative. -- KJ Sidberry – The Consumer Tech Visionary: Backing transformative early-stage consumer companies. These trailblazers are proving that diverse investments drive exponential returns – financially and socially. They're not just investing; they're redefining the future of VC. On Monday, I'll release the investors that we ranked 6-10. 🖤💬 Which of these investment theses inspires you most? Who are your favorite investors that you think should be added to the list who are big supporters of Black founders? Drop a comment and join the conversation! #BlackVanguard #VentureCapital #DiversityInTech #InclusiveInvesting

Fundraising Lessons ____ In the next week or two, we will complete the final close of PHX Ventures Fund II. It's been a successful process as we exceeded our fundraising target by 20% and will hit our goal of $30m. I've been contrasting my experiences raising VC funding as the Founder / CEO of CampusLogic to my experience raising a VC fund as the Founder / General Partner of PHX Ventures. Here are five similarities I have observed: - Founder Market Fit. Fund investors seemed drawn to our personal experience scaling VC-backed software companies. It would have been hard for us to raise money for a climate tech or biotech fund as we know nothing about those areas. Investors need to believe that a VC deeply understands the areas in which they invest. - Differentiation. We aren't the only B2B software investor in the world but we are differentiated. Our operating experience, concentrated portfolio, institutional mindset, diligence framework, community investments (i.e., PHX FWD), founder support model, and network of later-stage VC / PEs are unique. Investors value differentiation. - Track Record. The last year has not been the easiest time to raise a fund but thankfully the track record from our first fund is strong. That fund was fortunate to be an early investor in Virtuous, Trainual, Nectar, equipifi, Nurture Boss, and other winning software companies. These past investments provide valuable reference points to investors. - Skin In The Game. When I decided to start PHX Ventures, I committed to be the largest investor in every fund we raise. That has resonated with our new investors. We regularly hear that the percentage of dollars coming from us, the partners managing the fund, is 5X-10X higher than they have ever seen. Our investors feel aligned with us. - Cast A Wide Net. Like founders, VC firms must talk to myriad investors when raising a fund. Many investors passed on our fund for various reasons and some that we thought would come in fizzled out at the end. That's all normal, but next time we raise a fund I will likely cast an even wider net to ensure we get in front of the right investors at the right time. I'm excited about PHX Ventures Fund II. We have already made four investments including Soraban, Fluint, AudiencePlus, and Rivia Health. I love these founders and the high-growth companies they are busy building. Lastly, I am thankful for our investors who have joined our efforts to find, back, and support ambitious founders building high-growth software companies that will change the world for good. ____ #venturecapital, #b2b #software, #saas, #VC

Considering whether or not to raise VC funding for your hardware startup? You won't want to miss part three of the series Raising Venture Capital, from guest writer Andrew Chan. We appreciate his no-nonsense approach to dissecting the fundraising process, while managing to keep it fun, factual, and real. #ICYMI - here are parts one and two of the series: 👉 Raising venture capital: the pre-fundraising checklist https://lnkd.in/eGWuaG3p 👉 Raising venture capital: selling technical ideas to non-technical investors https://lnkd.in/eGhYAcvd #hardwarestartups #entrepreneurship #businesstips #techindustry #startupjourney #budget #finance #planning #riskmanagement  #venturecapital

Fundraising is a trip. An investor told my co-founder and I that we are walking red flags because we have the “ambitious” goal of exiting our business — which we founded in 2019 — in another 5 to 7 years. Another said that they wanted to take a call with us, simply, because we’re “resilient.” Something I’m sure they deemed a compliment. And, yet, another, said that we are just not building a VC-backable venture. Well. Here are some stats. Only 3.47 percent of founders seeking VC funding are Black. Funding to Black-founded startups dropped 71% in the past year. Of the $140 billion in venture funding allocated in 2023, only 0.5% went to Black founders. Zero. Point. Five. For Black women founders, that number is even smaller. This is not to say that Black founders deserve, simply for existing. Or simply for being in the space. This is to say that we are working twice as hard, with less than half as much, and still innovating, still enterprising, still pivoting, and still believing in ourselves when no one else will. This is to say that VC breeds a culture of competition amongst founders who understand the power of community but must prioritize the viability of their businesses above that. This is to say that the problem is not in the pitch deck or the business model or the traction or the financials — but in the whole entire system itself. The disparities in VC are jarring. The gumption you must possess to push through has to be unshakeable. For my peers and colleagues who understand this, from a first-person perspective, salute. Keep waving those “red flags.”

💡 Do female founders really need VC funding to succeed? This semester, I’ve attended and hosted countless panels and events for female student founders and aspiring entrepreneurs. A common question that comes up: Is raising VC funding truly essential, especially for women in the startup ecosystem? The startup world often glorifies the "move fast and break things" mentality, which has been inherited from male-dominated startup culture. Many founders see VC funding as the key to success. However, many incredibly successful companies found success without relying heavily on VC funding—some avoided raising VC money altogether. ✨ Success Stories Sara Blakely, Spanx Sara bootstrapped Spanx with just $5,000 from her savings, proving that innovation, customer focus, and grassroots marketing can create a billion-dollar brand. She retained full ownership of Spanx for nearly two decades until 2021, when she sold a majority stake to Blackstone. Intuit Mailchimp Ben Chestnut and Dan Kurzius built Mailchimp as a profitable side project, scaling without external funding. By reinvesting their earnings, they grew it into a $12 billion company, eventually acquired by Intuit—the largest exit for a bootstrapped business. Microsoft Bill Gates and Paul Allen built Microsoft without external funding for the first five years, focusing on profitability through software licensing. Their sole VC investment in 1981 was a strategic move to prepare for going public, not out of financial need, demonstrating their deliberate and sustainable growth strategy. 🚩 The Trade-Offs of Venture Capital Accepting VC funding isn’t just about receiving money—it means giving up equity in your company and facing intense pressure for rapid growth. This can result in: - Conflicting priorities between founders and investors - Emphasis on short-term metrics over long-term sustainability - Reduced control over the direction of your business vision 🎯 The Alternatives? Stay Lean and Strategic - Prioritize understanding your costs and achieving profitability from the start. - Expand cautiously, aligning growth with key milestones and sustainable progress. - Explore non-traditional funding options such as revenue-based financing or crowdfunding. 🚀 The Bottom Line Fundraising isn’t one-size-fits-all. Success can be built on your own terms. For female founders, challenging the VC-first mindset and exploring alternative paths can be both empowering and lead to better outcomes for your startup, while also helping to avoid the burnout often caused by the demanding fundraising process.

Most fundraising advice is written by investors for founders Here's my best advice, founder-to-founder: 1 - Understand venture capital incentives and how they are different from yours You make as much money selling a company for $200M where you own 50% as selling a company for $1B where you own 10% But investors don't make that much money with the first outcome! How do you use this information? When pitching your startup, talk about the biggest and most ambitious vision of what the company could be 2 - Optimize for the "medium success case" I'm stealing this from Immad Akhund, but this means you should: • Raise a fair, but not crazy valuation • Get to a place where your team does well even if you don't blow every metric out of the park There is an entire spectrum of outcomes that can still be life-changing for you and your team, and you want to keep those in play. 3 - Dilution and price matter more as time goes on It's a waste of time to worry too much about these in the early days Your startup is worth nothing upfront so your efforts are better spent on investors who increase the probability that it will be worth *something* one day Once the switch flips and you've built a business that is worth something, capital becomes more of a commodity and you should think about dilution and price 4 - You don't want to always be on the venture treadmill Almost every early stage startup takes an injection of cash upfront But if you can build your company in a way where you don't *need* venture funding after the first 1-2 rounds, you will end up owning more of the business at exit And have a substantially more enjoyable time building your company 5 - Play long-term games with long-term people You are building a company for a decade, if not longer Your lead investors will have a significant impact on the quality of your life for the entire decade So many of my early investors at Teachable have become lifelong friends and were worth trading lots of terms on. --- Anything in particular you would add to this list?

💰 💵 "Raising capital is no small feat, whether for venture capital managers like us at Grand Ventures or for #startup #founders and #CEOs. Fundraising requires time, preparation, and endless meetings, but running the process efficiently can make all the difference." In her most recent blog, Camila Noordeloos shares some lessons she's learned "from a few of our portfolio companies that recently secured multiple term sheets within days, giving them strong negotiation leverage". Know a startup who is raising? Or about to? Please share these valuable tips with them! ⬇️ https://lnkd.in/gQ8hX9RD