How fundraising works

Raising money is the second hardest part of starting a start-up after making something people want. In this blog, I summarise the myths discussed in the video.

7 Myths about fundraising 

Myth 1. Raising money is glamourous.   It's just people talking in coffee shops—it's not like Shark Tank! It's one-on-one meetings on Zoom trying to convince investors. It can take time and can be painful, but it's one conversation at a time.

Myth 2. I need to raise money before starting the start-up. The best founders don't wait for money but build a very simple version, a cheap prototype, find users and once they see their product is useful, it gives leverage. Investors want to jump on a start-up in motion, not just one with a pitch deck.

Myth 3. My start-up needs to be impressive to raise money - Actually, the start-up needs to convince investors, not impress them

Myth 4. Raising money is slow, complicated, and expensive.  Actually, it can be quick. There is no need for lawyers. YC has a template that can help with seed money.

Myth 5. I will lose control of my company. With SAFEs, no information rights are granted; only the founders call the shots.

Myth 6. I need a fancy network to raise money. Investors care a lot more about making money than the founders' backgrounds. It is always best to pitch to investors myself rather than someone else. If someone knows an investor, they should introduce me rather than pitch on my behalf.

Myth 7. If investors reject my product, it's a bad project - This is not the case. No matter how good the product is, rejections will come.  

Biggest Myth - This isn't for me!  - There are more investors now with more money now than ever, this is the best time to raise money, so yes, this is for me!