Here’s one thing early-stage founders should do to raise investment in this environment, according to two VCs

EQT Ventures
Published in
4 min readJan 25, 2024

By Doreen Huber and Naza Metghalchi

If you’re raising money for your startup, there’s no shortage of advice out there. Whether it’s building a winning pitch deck, running a competitive fundraising process, or navigating a term sheet, tried and tested methods are easy to find.

But we’re in a more challenging environment now. The bar is much higher to reach each stage of investment. The rounds themselves are also taking much longer compared to a few years ago, when VCs like us had just a few days to offer a term sheet. Given funding rounds are slower and less frequent, you have to think about them differently.

There are two schools of thought: some early-stage founders will tell you they’re always fundraising, while others say they’re heads down building and will only speak when they’re looking for investment. If you’re in the second camp, you should think again.

There are some understandable reasons not to speak to an investor. You might just not be ‘there yet’ — you haven’t validated your idea or reached your first milestone — or things might not be going well. If you have a couple of calls with a VC and there’s still no traction, it’ll be difficult to build hype later.

On the other hand, it can be tempting to focus on other things, whether that’s growing revenue or building a team, but you should be working on your business, not in it. One of your roles as CEO is to have a view on how your category is evolving, and your company’s role in that change. To do that, you need to gather external feedback and bring it back to your team. One way of doing this is by speaking to investors, who can give you both their own observations and the views of experts in your field. Plus, you should always be laying the groundwork for your next round, in both good and bad economic times.

The biggest mistakes founders make on investor calls

If you’re open to taking investor calls before you’re ready to go out on a full roadshow, you need to know how to get the most out of them. There are four things to bear in mind.

First, be selective about who you speak to. It’s not a good use of your time to say yes to every investor who approaches you, especially when you’re not necessarily fundraising. For a Series A, pick six to eight who are the best fit for you. Maybe they have a track record of investing in similar companies or have been writing about your market recently.

Second, make sure you’re driving the conversation. Don’t treat it like a job interview. So many early-stage founders we speak to immediately launch into pitching mode. Instead, think of the call as an opportunity to get to know the VC better and find out if they’re a good fit.

One useful thing to discuss is their view on your market. You should also have some thoughts to share. You don’t necessarily have to agree with them. The important thing is to get a conversation going. This will help you build a relationship with the investor and encourage them to let their guard down.

Third, ask questions. Staggeringly, only a minority of founders ever do this. For example, have they invested in other companies with a similar next milestone, go-to-market motion, or ideal customer profile? Any VC worth your time has either been in your shoes as a founder or has seen many other companies do what you’re doing, and will have valuable lessons to share.

Questions are also a good way of doing some early due diligence. For example, no one ever asks us what our values are or how we work with founders. It’s an easy way of learning how we operate. Similarly, how would we work together on the board? First-time founders usually ask this right before they sign the term sheet, but it’s crucial to know as early as possible.

Finally, establish whether the investor is serious. VCs asking how they can be helpful is such a regular occurrence that it’s become a meme — tell them how! It could be introducing you to a potential customer or another founder in their portfolio.

The task shouldn’t be onerous and you shouldn’t make demands. If the conversation has gone well it’ll lead there naturally, and if they suggest it first, even better. As well as testing how keen the VC is, it’s also a helpful way to understand whether they’re interested in building a relationship that goes beyond providing funding.

How to keep your VC relationships warm

If you’re speaking to investors before you’re ready to fundraise, it’s important to stay in touch with them. It may be worth scheduling another catchup. There’s no rule about how regular these should be, but once again you should qualify them well and find out if they are only interested in a casual conversation or in an actual investment in your company.

Another method is to send updates to your top targets. The downside is you risk burning bridges if things are going badly. But all being well, it’s a great way to build competitive tension. The investors receiving your updates will know that other funds are reading them as well. As a result, there’ll be more urgency when you do come to fundraise.

Raising early-stage investment is a challenging process, especially in this economy, but there’s always something you can do to make the most out of whatever part of the cycle you’re in. So take those calls, get to know investors, and when the time comes you’ll be in a stronger position to raise your round.

This piece was originally published in German in Gründerszene.