The phrases that pay during VC fundraising

By Brent Willess, Associate

One surprising thing I’ve learned in my first year in VC is how “We’re not raising right now” is a powerful phrase an entrepreneur can say to an investor. A big reason is that it tends to uncover other aspects of the business, for example:

“We got creative with marketing”

Startups that can self-fund also tend to be more creative about their go-to-market strategies. Expensive paid advertising is seen as a last resort and clever, low-cost alternatives are sought out and uncovered.

“We have strong margins”

The freedom to forego fundraising usually comes from profitability derived from predictable revenue and stronger than average margins. If you can postpone raising funding until after reaching product/market fit you’ll be in a powerful position.

“Money isn’t our gating problem”

The combination of the two previous factors usually results in founders who are keenly aware of where their highest-value growth opportunities lie. These companies focus more on recruiting talent than chasing capital.

“We want to keep our options open”

Some founders aren’t sure if their startups are “venture scale.” Others prefer the optionality of 100% ownership. In most of these cases, founders have higher than average self-awareness and see capital as a means, not an end.

These phrases are powerful, but I don’t want to overstate them. Bootstrapping isn’t inherently virtuous and in some cases, you could lose ground to better-funded competitors. However, we can learn a lot from startups that thrived without an initial infusion of VC.