Advice for the Fundraising Founder

Founders are making some of the most difficult decisions now than they’ve ever before. Over the past two weeks I’ve talked with a number of early stage founders around the country about their product teams and what’s on their mind, and it’s frightening to hear how many people are concerned about the viability of their company.

Why? Let’s cut to my incredibly simplistic explanation for why the early-stage investing landscape suddenly got so challenging. Venture capital is seeing a cascading effect. Series B investors will be deploying capital to their portfolio rather than new investments, which means Series A companies have to go back to their original investors. This means the companies that were trying to raise a series A are now going back to their original seed investors. This leaves the companies that were trying to raise seed rounds on an island.

For companies with recurring income, founders will choose to seek capital. But for early stage founders still on the climb toward stable revenue, the options are more limited. They may have to reduce staff, cut operating expenses, go back to previous investors for bridge rounds, or shut down completely. Ouch.

But what confounds many founders is that the amount of money that exists to be invested isn’t really any different today than it was in January (the NCVA provides a more detailed…