How to raise your first VC round like Zuck, Larry & Sergey, Evan & Bobby, Patrick & John

Five simple tips for first time founders.

Venture capitalists are motivated by greed and fear.

Why? Because the obligation of a VC is to return big bucks to the firm’s Limited Partners (institutions or individuals that give the VCs their capital). Moreover, VCs don’t want to look stupid in front of their partners and LPs if other VCs invest in stuff they pass on. Especially if it subsequently takes off.

Now that you are aware of this psychological dynamic, fundraising can be a fun game to play. Below is the playbook:

1. Attack a giant market
   If you are going after disrupting a $1 billion plus market that is opening up in front of everybody right now, then you’ll see the $ signs in the VC’s eyes. Throw in a few big numbers that they can easily validate (by calling their banker friends). Put the VCs (or their associates) in touch with some of your customers (or prospects) who are dying to pay you hefty amounts for your product. Make the incumbents look like slow moving dinosaurs that are one step from being extinct.
2. Have incredible metrics
   Did you make it to the top of the app store and have 1,000+ new user reviews per day ? Great news! You will shortly receive more emails from VCs (and their associates) than texts from your significant other. If your user base and/or revenue are growing 100%+ monthly over the last 12-18 months, you probably will not have to say much during the pitch. If engagement and retention are off the charts and/or your net margin is uber high, then VCs will quickly give you a term-sheet.
3. Be an inspiring story-teller
   VCs are sheep; they simply follow big trends and then try to invest in them. Most of the time, VCs have no idea how markets are going to develop. They want to be in business with visionaries, who will lead them to the promised land. If you can paint a picture of the future and how you will get there — in great detail — then VCs may get enchanted by your reality distortion field. They will also have peace of mind that you are able to hire the best and the brightest, raise more dollars in the future and sell the business (if going public is not an option) to bored corporate executives with deep pockets.
4. Spur controversy with your product
   It is widely understood that the best VC deals are the ones that were very controversial when they got funded. Airbnb almost offended investors’ intelligence when they heard about the product’s value proposition during their first round. Facebook was “Friendster for students” and the competitive landscape was super crowded when they raised their Series B at a stunning $500M valuation. Snapchat’s product was predominantly used by teenagers that loved to send each other disappearing selfies’ when they raised their Series A. Didn’t sound like a billion dollar idea for most.
5. Build strong momentum in your fundraising process
   Be introduced to the venture capitalists you would like to raise capital from by several portfolio founders of theirs. Ask a couple credible investor-type friends to whisper to VCs some details about your company. Brief the press about all the amazing stuff that you are working on and how disruptive it is. Talk to several firms at the same time in order to create optionality for yourself (and maximize your chances of fundraising success).
   While giving a VC pitch, please make sure that calendar reminders pop-up about your next meeting (always with another tier-1 VC). Tell VCs that you love them and really want them to be involved, yet only have limited room left for them in the round.
   It is the fear of missing out (if other firms are interested) that motivates a lot of VCs to make up their mind faster and issue term sheets. Receive a handful of term sheets first and then decide who to go with. Pick your VC partner carefully; your partnership will be like a marriage. Except a VC is harder to divorce.