Warning: Multiple Voting Classes Amongst VCs Can Control Your Startup

Most people think that closing a VC round means startup success, the reality is much different. The tech media tends to celebrate startup success as a synonym to their ability to close funding rounds from VCs and private equity investors. It sounds so impressive and grand - The startup closed a $21m round led by this mega VC. The truth is that I have never seen a founder after closing a funding round, consider themselves as successful, in fact, most founders just feel more pressure to deliver. Getting investors on your cap table with more money allocation, means that you need to return more to your shareholders now. The more money you raise, the more capital you commit to return. You probably have new faces on your board. The dynamics might change and now you need to navigate a new reality in the company. You need to hire faster, deliver faster and show growth. If you have been a part of a company that closed a VC round, you know that there will be great momentary joy, maybe a party that the company will organize to recognize that funding event. Employees are dancing, swag is everywhere, some will get bonuses. However, in those moments, look at the faces of the co-founders. Of course, they are happy, but the amount of thoughts running in their heads are emotional, complex and sometimes confusing. Being a close partner to many founders and CEOs during those times, it is like a fast moving movie that runs in their heads. Things are moving at all different directions, a mix of short term and long term ambition, plans, scenarios. It's like being in a dream that goes from a dream come true to a nightmare and alternate quickly. I have three pieces of advice for founders on how to act after they close a fundraise: 1. Set up individual 1:1s with your advisors and mentors - no agenda, just check ins. Focus on how you feel, your thoughts and reflections and listen. 2. Write down your thoughts - some would do this in public in a blog, or just a simple diary that you can run for your own sake. Sometimes sharing this writings with your close circle would allow them to support you better. 3. Take a week off or go a bit early every day to spend time with your family - family and kids keeps you grounded, give perspective on what matters most, it also a way to get people who love you to surround you in chaotic moments. Next time you hear of that massive funding round, look into the founders eyes, and know that for them, it's just the beginning. ✍ Join today to my new Newsletter, with more learning and content for startups, VCs and innovators on illai.substack.com. #VentureCapital #Founders #Startups #Entrepreneurship

I met Henry at a C100 event last year. Since then, I've been following his content closely. For the entrepreneurs in my network looking to build hyper-scalable AI companies, he's the person you need to follow. 🚀 Here's why: Most AI content is either too theoretical or too surface-level. Henry bridges that gap. He shares the actual mechanics of scaling AI startups (the stuff you only learn by doing it). • Frameworks and tech stacks that scales • The economics of AI at scale (not just the hype) • Building teams that ship, not just prototype • Navigating the chaos of hypergrowth The Canadian tech ecosystem is producing world-class AI builders. Henry's one of them. For anyone serious about building AI that scales beyond POCs, his feed is mandatory reading. 💪 #AI #Entrepreneurship #CanadianTech

I’ve raised $27M without a single pitch deck Here is exactly what I’ve done to close deals in week not months (and be oversubscribed on my most recent $5M seed round) Instead of obsessing over slides, I focused all my effort on the right conversations Because the truth is early-stage investors don’t fund your deck They fund you! And late-stage investors don’t fund your deck either They fund your growth! This is what’s worked for me: 1/ Have a clear thesis for the business For my first startup, it was the rapid growth of online education and the creator economy For my second startup, it is the explosion of independent income in the US and value of tax optimization for these folks 2/ Speak directly to investors that align with my thesis Typically the most time was spent just finding these people! I truly believe building the best product on the market makes this easier At my last company, some of our first investors were our first customers At my current startup, this story is super similar Becuz often your power users are your best advocates (& investors) 3/ Write a one-page Notion doc that clarifies the problem, solution, and why it should be built now Investors love tipping points Show them why the market is changing and there is a ton of white space for your business We never had those fancy 20-page decks Just a clear story, conviction, and the numbers to back it up Ironically, our “deckless” raises were often oversubscribed And my process went against all the conventional wisdom I’d been told by “experts” If you’re a founder or aspiring entrepreneur, I’ve worked with the Notion for Startups Team to put together a comprehensive AI fundraising kit & special offers on tools so you replicate my process for your next raiseIt includes: - The exact doc I used to raise the $5M seed round for my current startup (+50 more examples from the likes of Eleven Labs, Artisan AI, Series, and more) - Free offers for founders that qualify from Notion Business + Notion Agent, v0, Supabase, & Framer while supplies last - A list of 10,000+ angels, accelerators, and VCs you can reach out to today (can’t even imagine how long it would take to do this manually!) - A fundraising agent workflow built right into Notion with step-by-step instructions on how to use the prompts (no GPT or Claude required) - AND $500 off tax prep & filing services for your business and personal returns this year on Carry (becuz taxes are complicated and you should spend your time on product & growth) I didn’t have these kinds of resources when I was getting started but this genuinely would have been soooo useful (and probably save me months of my life lol) To receive your copy, all you have to do is: 1. Like this post & make sure we're connected 2. Share this post with a friend 3. Comment “KIT” & I'll send it your way

💰 Peyush Bansal's Fundraising problem and the Legal Solution for Startup Founders! Peyush Bansal, much like any early-stage entrepreneur, is facing a common fundraising hurdle, currently amplified at Lenskart's IPO stage: valuation. The company is demanding a valuation that many critics find excessively high, reportedly seeking $70,000 crores, which is about 10 times its sales. This has led to harsh comments about the asking price of ₹420 on the upper price band and fears that it "will leave nothing on the table for investors." This valuation problem is critical for all founders. For early-stage startups raising their first funds, the difficulty is compounded by a legal requirement: a valuation report becomes mandatory if you issue equity to investors. This means you must formally justify your startup's price right at the beginning. Fortunately, there is a legal workaround that allows early-stage founders to raise capital while delaying or skipping the mandatory valuation report process. The solution is simple: do not issue equity immediately. Instead, founders can issue a Compulsorily Convertible Debenture (CCD) or a Convertible Note. These instruments allow the startup to raise funds now, with the understanding that the debenture or note will convert into equity at a later date, typically upon the next major funding round. This effectively postpones the binding valuation process, making fundraising easier and faster for founders who are not yet ready to set a concrete, defendable price for their company. Would you like me to explain in detail what a Compulsorily Convertible Debenture (CCD) or a Convertible Note is? Just comment the word “CCD”.

Founders pitch to raise money. VCs pitch to manage it. Here’s how VC fund decks differ from startup pitch decks, slide by slide: (btw, if you missed it, yesterday I shared 18 VC fund decks so you can see how they look!) ⬛ 1. Opening Focus → Startups: “Here’s the problem and how big it is.” → VCs: “Here’s our mission and what makes our fund unique.” ⬛ 2. Traction / Proof → Startups show MRR, users, or revenue. → VCs show track record - exits, fund returns, or past wins. ⬛ 3. Financials → Startups: 3-5 year forecasts are expected. → VCs: LPs care more about thesis than projections. ⬛ 4. Team → Startups: 1-2 slides max. → VCs: Team is the star - often a third of the deck. ⬛ 5. Competition → Startups: Full matrix of competitors. → VCs: Brief - just “why this fund wins.” ⬛ 6. Risk → Startups must show how they de-risk the idea. → VCs show it indirectly through portfolio diversification. ⬛ 7. Storytelling vs Data → Startups = 30% story, 70% metrics. → VCs = 70% story, 30% data (can vary depending on how many funds raised already). ⬛ 8. What’s Emphasized → Startups: TAM, traction, and growth. → VCs: Brand, deal flow, and community. ⬛ 9. Social Proof → Startups: Customers and revenue milestones. → VCs: LPs, co-investors, and portfolio founders. ⬛ 10. Deck Length → Startups: 10-15 slides. → VCs: 20-40 slides, often with appendices. Of course, some of these will differ depending on the VC firm and whether they are raising their first fund or more. Hope you enjoyed this week's look into pitch decks for startups & VC! Join the weekly EverythingStartups newsletter for more on startups & where early-stage capital is flowing: https://linktr.ee/ivelinad #startups #venturecapital #VC #funding #fundraising #limitedpartners #generalpartners

This is a great chart illustrating the differences in pitch decks between convincing VCs versus other investors of a startup.

Instead of building out a full product with all the features, startups can focus on creating an MVP. A lean version of the product featuring the core functionality.

As a pre-revenue founder, you probably had this experience: you go pitch to a VC whose website says "we invest pre-seed, from idea, pre-revenue, first check", and they tell you after the pitch "you're too early, please let us know when you have more traction". You probably felt like you were lied to - didn't they say that they invest pre-revenue? I can share what actually happens. Most likely, the VC firm does invest in pre-revenue startups - they just chose other startups they believed in more, and that was a soft pass. What's a "soft pass"? It's when a VC isn't ready to invest in your company now, but likes it to keep tracking it for potential investment later. For example, I'll share some internal numbers from Geek Ventures. We do invest from an idea to $1.5M ARR. This year we invested in 6 companies, and 5 of them were pre-revenue. In 2024, we invested in 11 companies, 7 of them were pre-revenue. At the same time, we saw several thousand other companies, and while we told most of them that it was not a fit, we told many pre-revenue companies "we love what you're doing, and we'd like to chat again after you gain more traction". In our case, it meant that we made a difficult decision internally to allocate our investment dollars to other companies. Why don't we just pass? Because, frankly, I don't think I'm always right. I might have been completely wrong when I decided not to invest in that particular company when it was pre-revenue; and if it suddenly starts doing really well, I hope I will have a chance to invest in the next round (of course, it will be higher valuation and I'll have to fight for the right to invest, and founders always have a choice to not let investors into their next round). Fundraising is hard.

One of the biggest lies in Silicon Valley: "We're pre-revenue by choice." No. You're pre-revenue because no one wants to pay you. Pre-revenue used to be acceptable. Even fashionable. Now it's a red flag that screams: "We haven't talked to a single customer." I took a dozen pitches last week. All AI startups. All pre-revenue. All dead on arrival. The first founder spent 30 minutes explaining his TAM. The second showed me letters of intent. The third had "strategic partnerships in discussion." You know what none of them had? A single paying customer. Here's the brutal truth: we don't fund potential anymore. We fund proof. The smart VCs never changed. They've always demanded evidence. Customer traction. Real revenue. Actual validation. While others chased hype cycles and burned LP money on lottery tickets, the disciplined investors stuck to fundamentals. They're the ones still deploying. Still winning. I've seen this movie before. Founder raises $2M on a dream. Burns it building the "perfect" product. Launches to crickets. Pivots. Burns more. Dies. **Even $10K MRR beats your $10B market opportunity.** Why? Because that $10K proves what your deck never will: • You can find customers • You can close deals • You can deliver value • You can collect payment Your TAM slide shows me you can use Google. Your revenue shows me you can build a business. The best investors never forgot this. They didn't fund pre-revenue in 2019. They won't fund it in 2025. They understand that discipline beats hype every single time. Find VCs who ask about your customers before your TAM. Who care more about your unit economics than your valuation. Who've been consistent through every cycle. Those are the investors who'll still be here when the music stops. Stop hiding behind "we're perfecting the product." Ship something. Charge for it. Learn from it. Your first invoice teaches you more than your first million in funding. Revenue isn't just validation. It's education. #VentureCapital #StartupFunding #FounderAdvice #Revenue #Fundraising #startups

Thank you Startup World Cup, Syndicate, and Hustle Fund's Angel Squad for inviting us to sit on the judges panel at the LA regional competition. Me and my fellow panelists had a blast listen to all the great entrepreneurs telling us about the incredible things they're working on. Big congrats to the regional winners Lyubov Artemenko and her team at Go To-U, I know you'll represent us well at the SF finals! I did want to address one thing that came up that the tight competition pitch timeline didn't allow us to dig too far into. One of the entrepreneurs who was pitching started hemming and hawing when she was asked the dreaded "it seems like your solution will be capital intensive, how much capital do you think you'll need to fully deploy?" I've seen this question and its variations come up so often since I joined the investing side of the startup world, and so many deep tech entrepreneur try to dance around the question by offering a conciliatory "we'll license" or "we'll do contract manufacturing" and I think that is a mistake, here's why: You need to remember investors, unlike procurement managers, are paid to take risk, not avoid them, and frequently, in the world of early stage startups where there's only so much you can do to offset risk coming from all directions, the key is more about why the risk is worth taking than how much you can mitigate the risk. It's about the upside, not the downside, or "what can happen if everything goes right". Taking a step back, even if licensing is actually your best and most logical go to market plan for full-scale deployment, to large coporates, given the plethora of options available on the market, they're much more likely to license proven options than not, and their army of ip lawyers are certainly more polished than your fractional team if you don't have proprietary, non-trivial know-how that can only be gained through meaningful deployment of your tech. I know it's hard not to reflexively recoil after so many rejections are prefaced with "I think it's too capital intensive", but remember, it's about why your risk is worth taking, not about how little risk there is.