Transcription
This video is everything you will ever need to fundraise for your startup. If you follow the four steps and the four plays in this playbook, there is no way that you can fail. Here's everything that you're going to learn in this video.
Firstly, the art and science of a fundraise. After that, we're going to dive into the three stages of the funding process: pre-seed, seed, and post-seed. After that, I'm going to tell you about the tools and strategies that I've used to raise over $14 million for Connected, and the biggest mistakes that, as a founder, you need to avoid. Finally, I'm going to give you a full breakdown of the perfect investor update, everything that you need to get those investors that you've been speeding to over the line and on your cap table.
I've seen it from both sides of the table. I've invested in over 20 startups, as well as raising for my own companies, and I've invested in businesses like Kaman and Laps, which have gone on to raise over $150 million in the last few years.
Part One: The Art and Science of Fundraising
Raising a pre-seed round of investment for your startup is 80% art and at most 20% science. The science is the pitch deck, the financial model, the forecasts that you've built, and as well as the addressable market that you're tackling. But at the end of the day, when an investor is investing in a pre-seed round, they're investing in you, the founder, and the founding team. That's what they care about. That's what you've got to work on, and that's what you've got to put at the front and center of what you're building.
Yes, the science, the numbers, is what gets you in the door, but the storytelling is what sells it. The second you secure that first meeting, the deck goes out the window. Really, at the pre-seed stage, the deck is more of a tick-box exercise. It's more just a mark to say, you know what, you're doing this. This is how you think about it. This is how you're thinking about the growth. But the second an investor meets you, it's all about you. So you've got to really work on yourself, your confidence, your storytelling, your vision, your narrative, all of the things that when an investor speaks to you, they're going to say, "Yes, take my money. I'm going to put my money with you," rather than the hundreds of other founders that are out there.
Exceptional founders know how to stand out, and at the pre-seed level, it's not going to be the numbers in the deck or the science. It's going to be the art. Investors are busy people, so you're going to want to create a pre-read deck, something which is, you know, two, three pages, which investors can share with other people in their network, and that you're really happy to get shared around. Something which really closely focuses on who you are as a team, what you're trying to build, and what you're about.
The main deck that you have should be 12, 15 slides max and focus on these key five areas: Firstly, the founding team. Next, the value proposition. Key metrics. Traction so far. This one is really, really key. And then finally, your ask: how much are you trying to raise and why?
Over the last 12 years, I've developed this amazing framework that helps founders get into the mindset of investors at the different stages and the things that they care about. At the pre-seed, the way you want to think about it, and the way investors think about it, is: number one, team. Number two, revenue. Number three, data. At the seed stage, that becomes: number one, revenue. Number two, team. Number three, data. And then finally, when you're getting into an institutional investment environment, Series A and beyond, it's going to be: number one, data. Number two, revenue. And number three, team.
So, what does this all mean? At the pre-seed level, team is number one. Everything else comes after that. They care about who are the people executing this plan, because guess what? The plan's going to change, but the people don't. As an investor myself, and every other investor will tell you, you would rather the A-team with a B-plan than the B-team with an A-plan. The plan will change, the people won't.
Seed stage, revenue is going to be number one. You should be able to sell that product without it even existing. This is testing your ability to go to market, your ability to find partners, distribution. And in the age of AI, it's not costing millions of dollars anymore to get a product out there. You should be able to monetize from day one. It's what the best teams do, and it's what investors want to see at the early stage. At that seed level, that's not to say you're going to be making millions of dollars yet, by any means, but it shows your ability to monetize in your space, understand your customer base, and understand what they're going to pay for.
And then, when you're getting into the institutional environment, raising that Series A, the big money that you've been thinking about, it's all about data. At the end of the day, when you're trying to raise venture capital, that's when you're going to scale in a big way. That's when you're ready to take over the world. So if you haven't got the data that's going to inform the way that you scale, no investor is going to back it easily. That's not to say it won't happen, but for most people who don't have these networks, who aren't ex-Google, ex-OpenAI, if you don't have that unfair advantage, for everyone else, the way to do this is show how you think about that data, show how you keep it, show how you think about the way that you're going to scale.
The science of fundraising: financial model, valuation, market size. These three things are going to change. You don't know your business yet. You're a pre-seed company, still figuring things out. So why does science matter? The science matters because investors want to see how you think about the most important parts of your business. The difference between success and failure, life and death in the startup world, is the hyper-focus on the core metrics. If you don't even know what those core metrics are, how are you going to hyper-focus on making sure that you're moving them month on month and growing them? The science is all about showing investors how you think about the business and how you're going to measure it moving forward.
The art of fundraising. This is the bit that if you have it, you've got all the chances in the world. And if you don't have it, this is the thing you've got to change. To the point where I even say to you, if you don't have the art side of being a founder, you should find a co-founder who does. This is not about ego. Ego is the enemy in this game. Know what you're really, really good at, and know what you're not as good at, and where you need a bit more strength to really help you flesh out your team and go to the next stage. You can be an amazing technologist, and that's so important, but if you're not able to sell your vision, if you're not able to sell that all, it doesn't matter. It's a tree falling in the woods with no one around, doesn't make a sound. Who knows? But what I can tell you is, if you're a founder without that ability to tell a story, you're not going to get very far.
And investors know this, because if you can't sell an incredibly wealthy person to put a very small part of their capital into your vision, how are you going to convince some of the smartest, brightest young talent in the world to come and join you on your vision, to give you some of the best years of their life? It's not going to happen, and they know it.
There is part of this art that you can work on and can develop in a more quantifiable way, and that's really your founder and market fit. These are the things that when an investor sees, "Oh, I see why this person is doing this thing," that's something which is going to give them a lot more comfort and conviction. If you look at my story, I built a business for content creation within the worlds of sports and gaming, but my story with Connected actually comes from that time after setting that business, where I started to invest in startups and work with startups in a fractional way. Now, I was only working with startups in that way for one year before I started Connected, so I don't have this incredible domain expertise. I never worked in banking. My family didn't come from that world. You know, it's not a case of having all the knowledge. It's a case of being able to tell a story that inspires people and says, "Oh, I see why this person is doing this thing."
Part Two: The Three Stages of Fundraising
Now, some founders think about fundraising as an on or off. But I can tell you that is not the case. Fundraising is a never-ending cycle of three stages: pre-funding, mid-funding, and post-funding. And they all flow into each other as this never-ending Mobius strip of investor relations. This is something that is lost on most founders. And the difference between businesses that can consistently have strong relationships with their investors, consistently have routes to raising additional capital to fuel the vision that goes into fulfilling their dream, is the ones who get it and the ones who don't.
The first thing to understand during the pre-raise is that investors don't invest in a snapshot. They invest in a journey. They invest in a trajectory. Anyone can make a snapshot look pretty. So what investors want to see is that consistent movement and growth in those core metrics. You really need to understand the most important things for your business and understand how to move them monthly.
Now, I don't want to hear from any founder, "Well, how can we make things happen if we don't have the money, and investors don't want to invest in us and give us the money if we don't have things happening?" It's this chicken and egg problem. I can tell you that problem does not exist other than in your mind, and it's just an excuse. If you're pre-product, you can still sell that vision. And if you don't feel like you can sell that vision, you could start building a waitlist, a pipeline of excited would-be customers who are just waiting to buy your product. If you're trying to get a hold of your customers and you're trying to get access to them, build a subreddit, start a WhatsApp community, build a TikTok following, become a thought leader in your space. These are all things that you can do to move the needle monthly on those hyper-focused metrics that are going to show to an investor, pre-raise, that when you are ready to start accepting capital, the only thing that's missing is the fuel in the car to make it go.
Investors don't want to fund you spending two years just sitting around waiting for ideas to come or waiting for some golden opportunity that may or may not appear. You need to make it happen for yourself. This is how fundraising works for the 99%. You'll see the 1% on TechCrunch, they just spun out of Google, they've just come out of banking. Like, "Okay." And if you've got that, you're probably not watching this video. But for the 99% of us who didn't come from that, this is the way that you do it. You've got to make it happen for yourself. You've got to show, pre-funding, to an investor that you're a train leaving the station, and they can either get on or they can watch it go. You're not waiting for them. You've got to show them that monthly movement on those metrics.
The next stage is mid-raise, and this is where you can really, really fumble. Because if you meet an investor who likes you and likes what you're doing, and they say, "Great, I'm going to give you $50,000 to help you with your business," but you're looking for $250,000, this is a really dangerous moment in time where, if you don't keep that investor engaged and following that trajectory, following that journey, that $50,000 can go anywhere else. Investors like to put their money into things which are going to work for them. And if you stop showing that in the background, that potential future asset is working for them, this is where you're going to lose them while you're trying to look for other routes to capital. You need to keep them in the loop.
At Connected, we've actually designed a perfect system for really taking investors on that journey. But it doesn't matter how you do it, keep showing them every month. This is how we're progressing those hero metrics, those core metrics that you've identified that are going to take you to success in your business. Don't let an investor forget how hyper-focused you are on achieving growth within them. Every business is different. There are the types of core metrics that you want to be hyper-focused on: your annual recurring revenues, the size of your waitlist, how many letters of intent you have from potential customers. And of course, depending on the stage that you are, you're going to have different metrics. If you're a bit more advanced, or you're a business that's been trading for a while, you might be focusing on your churn, your lifetime value, your cost of acquisition. But it doesn't matter, every stage has got those things. That is the difference between success and failure. If you're pre-seed, there's a really helpful list here. If you're seed, there's a really helpful list here.
When you're in that mid-fundraise part of the process, remember there are really helpful things that will help you close that investment quicker, to shorten that gap between someone saying, "Yes, I'm in," and then, "I'm actually transferring funds." In the UK, you can use an advanced subscription agreement. In the US, a SAFE note is much more common. When you're speaking to investors, they also want to see that you've understood the legal considerations that will go into the core documents, your shareholders' agreement, your subscription agreements. They want to understand that when it gets to the next level, and you're in that stage for hyper-scaling, your lack of knowledge around the legal side of things isn't going to cause problems. So make sure you're really up to date with this. There's loads of good tools out there, loads of understanding, but have a look at drag-along, tag-along, most-favored-nation, all of these types of clauses that will determine the shape of your business moving forward. And remember, it's all about the long game. It really is a marathon, not a sprint.
Carter, in a recent study, mentioned that 40% of founders experience burnout during the fundraising process. We've all been there. I actually had a situation the other day. We were closing out a big funding round, and we had one of the investors who sent me an email saying that we're ready to make a $500,000 investment into the business. We've raised $14 million so far, but a $500,000 ticket still means a lot to us. 10 minutes later, I got the follow-up email saying, "I'm in, send me the docs." But I actually meant $50,000. These things happen, right? And that's just like one insight into the ups and downs of the fundraising journey. So, we all go through that roller coaster. It's really, really emotionally exhausting in many ways. But the more you do it, the longer you've been in the game, the easier it gets. So, just remember, it gets easy with time.
The single biggest thing that's going to determine whether your investors will reinvest or introduce you to their wider investment network is all depending on how you treat them in the post-fundraise process. A lot of founders are tempted to say, "We've got money in the bank, head down, I'm just going to focus on building." That's where you'll fail. Your ability to keep your investors in the loop and to treat them with respect as human beings, to see, "You've given me your money, every single month, this is how we're getting on, this is the good, this is the bad." It doesn't matter what's in the reports in the sense of, no one's going to be disturbed if things are going wrong. If people were looking for a safe bet, they would be making angel investments. They know the risks. So don't hide. It doesn't matter if there's bad, good things, you're struggling with. It's all about communication, transparency, and building relationships.
At the end of the day, everyone has a bit of fear of failure, and no one wants things to go badly. And if you're measuring, if you're managing, if you're talking about the issues, and there'll be so many great things as well, so many exciting things that keep people bought in. Those monthly updates are the difference between success and failure. I had investors that I've known for years, and only after years of them seeing how responsible, how consistent, how transparent I am, I get an introduction that changes things completely. And you have that in your power. It all comes down to communication in that post-fundraise process. Build something out which says, "Every month, this is how we're getting on. These are the core metrics. This is how we're improving. This is how we're growing." That's what investors want to see, and they want to see that you understand the importance of it.
Part Three: Tools, Mistakes, and the Importance of Investor Relations
The amazing thing about building in 2025 is the amount of tools that you have at your disposal as a founder. It's not like building 15 years ago. The amount of tooling in the venture ecosystem makes now building your startup easier than it's ever been before. The types of tools that will make a massive difference in the way that you run your business, and some of the key ones that you should really use, are those around SPVs and syndication.
For those who don't know, SPVs are Special Purpose Vehicles. These are one-off vehicles set up that allow lots of different underlying beneficiaries to invest as a single line on a cap table. They all still have the full rights of preemption, drag, tag, etc., but it just keeps your cap table really, really clean. If they decide to invest again, you can set up another SPV. So you might end up with three, four, five, six SPVs on the cap table, but that's better than ending up with 30 or 40 different lines if you went direct. The types of SPVs you might want to use include AngelList and Vban, which is acquired by Carta. There are some awesome cap table management tools out there as well, like Vested and Capdesk. And then finally, for everything that you need for investor reporting and to discover the best talent that can help you go through these stages and grow, of course, there's Connected.
Now, this is a bit you're going to really want to pay attention to. These are the key mistakes that founders make that will put off any investor. The single biggest mistake that you can make during the fundraising process is blaming your lack of traction on a lack of funding. Every year that goes by, this advice gets more and more important. In the age of AI and social media, there are zero barriers to entry for growth. If you blame the fact that you've got no progress on the fact that you've got no funding, you look ridiculous, because there are 20, 30, 40, 50 other entrepreneurs running rings around you without funding.
Another huge red flag for investors is if you're blaming other investors for not getting what you do. That's your job as a founder. Tell the story. Make what you're doing, as complicated as it is, so digestible that a five-year-old can understand. We're in an age where the types of technology that is being built, the things people are doing, are so complex, but they're still raising funds, not because of their complexity, but their ability to distill that complexity into simplicity. This is a key thing. So if you're blaming other investors for not getting what you do, that's your fault, not theirs.
Investors want analysis, not pettiness. It doesn't matter what your competitors are doing. "Oh, you didn't agree with that campaign?" or "Oh, that feels a bit, you know, gray area." It doesn't matter. Focus on yourself. Focus on understanding what's going to make you great. Y Combinator, one of the best pieces of advice any founder will ever get from Y Combinator, which incubated businesses such as Airbnb and so many of the other household names that came from Silicon Valley, their advice is: "You're 10 times more likely to die from suicide than murder." If you've picked a big enough market, and most markets are big enough, there's going to be other players in the space. You're never going to own 100% of the market. So don't worry too much about your competitors. If you get to the stage where market share is one of your biggest issues, you've already killed it. You've already killed it. The things that are going to stop you from getting to that level are the things in your control. It's your ego. It's how you deal with your team. It's how you think about these things. You're more likely to die from suicide than murder. Get your own house sorted out first before you start thinking or blaming competitors.
Why do investor relations matter so much for your next round? At the end of the day, this world is all about reputation. And in the same way that you want to make a good impression for your investors, your investors also want to make a good impression for their networks. This is all about access. It's all about who can get into the best deals. And trust me, with the best deals, the founders aren't pitching, the investors are pitching to get it. So when you make regular, reliable updates to your investor network, they then trust that they can make a further introduction to their network. And every angel investor you know has got like 10 friends who invest far bigger than them. And for them, it's great to be able to introduce that business. We're all trying to help each other out, right? So how you treat your investors post-investment, that investor relations piece, is the biggest indicator of whether they're going to open their doors for you or not. And although it's always good to think about the positives, if you do end up in a situation where a VC needs you to clean up the cap table, or you've got to get some investors off the cap table to make things a bit easier for another investor to come in down the line, if you've maintained good relationships with your investors, or you haven't, your ability to get the design docs, to see it from your point of view, to really, really care about good outcomes, it's all going to come down to the quality of that relationship.
Part Four: A Breakdown of the Perfect Investor Update
If you follow this formula every single time, your email drops into the investor's inbox, stopping whatever they're doing and reading it will be the first thing they do. If you're a great entrepreneur, you know how to make the most of your investors and get them working for you in a really, really smart way.
A core section of that monthly update should be the asks: How can they help you? I can't tell you the amount of times that I've asked for crazy things from my investors that have paid off in a big way. I've asked for the most outrageous introductions to customers, to other investors. I can't tell you the things that we managed to achieve with Connected and Real Sport because we had the confidence to ask our investors to really work for us. At the end of the day, you're in this together. So asking them for things which seem outrageous, which seem crazy, you never know where it's going to take you.
Another core section of the investor update is going to be the quantitative metrics. At the end of the day, if you're looking to grow your business to a level which is going to change your life and change the life of those around you, you need to set up every single unit of operation of your business for a cadence of monthly growth. So that transparency that you have with investors when you're updating them every single month, you've broken down your business so that all of the key leaders, and it might just be yourself at the start, so that every single unit of operation of your business can grow monthly. Whether that's the cost per lead that the marketing function is bringing in, whether it's the conversion rate the sales team is getting, whether it's the retention that you're getting through an amazing product. Every single part of your business needs to be set up for monthly measurement and monthly growth.
And then, of course, the storytelling that brings it all together. Trust me, numbers on a page without that context can look terrifying. For the best founders, it's all about helping your audience understand either why those numbers going up and to the right are a really, really good thing, or why those numbers going down and to the right are a really, really good thing. Every time there's a failure, every time there's a step back, it's an amazing learning opportunity. It's all about growing. It's all about learning. There's no way that you can fail if you have the mindset that every single setback is just a hurdle to eventually winning that race, especially when that race is just you against you. Forget the competition. It's about being the best version of yourself and helping your team become the best version of themselves, and together getting over that finishing line.
Fundraising is not a one-time event. If you're a CEO or a founder, you have to get used to the idea that the rest of your life in that business is going to be managing investors, either trying to find new ones, trying to get introductions to existing ones or ones that are in the existing network, or just continuing to build relationships with your shareholders. This is the job and the life of a CEO and a founder. My key takeaway is: it's all about transparency, all about respect, and all about confidence as well. The confidence to be open and honest when things don't go to plan, and the confidence to talk about why you are amazing, no matter where you are in your business lifestyle cycle. Start building investor relations now. You need to get your house in order. You need to figure out what are the things in your business, what are those key metrics, what are the clear identifiable elements of your company that when you show the month-on-month growth, you're showing to any investor that you are clearly on the road to success.
If you're doing something that is truly innovative, that means you have zero experience in what you're doing. And in order for you to give everything that you have to give, to make all those sacrifices as a founder that you will need to do to get your business to be where it wants to be, you're going to have to have something that I call founder delusion. Normally, the word deluded is not great. Having delusion is not ideal, but in this context, you need it. Founder delusion is that unwavering belief in yourself that says, when all the evidence tells you why this won't work, to keep on going. And then, with every win, it's about building up that bank of undeniable proof that you have with yourself that you can achieve and that you can do this. So, just remember, if you have that mindset, you can't fail. And the monthly updates that you're building for your investors, taking them on that journey with you, is again going to build this undeniable proof that with their help and your team, you can't fail.
Fu, as a CEO, time is always against me. And this is my first ever video on this channel. But as a challenge to myself, we're going to drop a new video every single month to make sure that all the founders in this community have everything they need to make sure that they don't fail. If you've learned anything from this video, please subscribe to make sure that you don't miss another one. And please, please, please share this with all the founders in your network. There's nothing more challenging than going on this journey. The ability of a company to scale and grow is the ability of the founder to manage their mental health journey. So try to share this information with as many people as possible to break down those barriers. As we've said, for the 1%, don't worry about them, they've already got this baked in. For everyone else, for the 99% who are trying to go on this journey, it's all about information. And the more that we can share this free knowledge with everyone to help them understand how they're going to succeed and make sure that they don't fail, the better. To make sure you don't miss any of this knowledge, make sure you hit the subscribe button. And if there's anything you want to see, please add a comment below and like this video too.