How We Raised $100MM+ for a Stealth Startup

As one of the first institutional investors into Compass Therapeutics (a company reported to have raised $120MM-$170MM+ in stealth — no comment from me) I’ve gotten an inside look on the best practices of raising funding for a stealth startup.

Here are some tips I’ve picked up along the way:

Tip #1: Go-to funds you know and have a previous working relationship with.

The longer the existing relationship the less likely they will act unethically (yes, unfortunately some VC’s act unethically).

Tip #2: Go-to investors that have previously invested in the space.

The higher likelihood the investment and the higher your hit rate, the less likely your information will be compromised.

Tip #3: Keep information on a need-to-know basis.

Layer information on a need-to-know basis so that you only share full information with investors that has shown a high level of interest.

Tip #4: Consider going to other geographies and investors outside your social network.

The less connected the capital source (geographically and socially) the less likely information will be spread. Consider siloed capital sources such as family offices or large institutions that typically do not share dealflow with the outside world.

Tip #5: Don’t be afraid to say you are a stealth startup to everyone else.

It’s not rude to say you are stealth — it’s strategic.