What Should You Optimize For In Fund Raising?

You have 3 variables in fund raising-

  1. The Investor
  2. The Amount
  3. The Valuation

In most cases, entrepreneurs are trying to optimize for 2 or all 3 variables and that is what takes away most of the time. If you only optimize for 1 of the 3 metrics, suddenly the problem looks simple. And that may be the difference between life and death of your startup. Which metrics to optimize is dependent on which stage you are at. The only time you can optimize for valuation is when you don’t need the money.

As simple as it sounds, most entrepreneurs with a decent product, fail to identify the priority order.

In general, the 3 choices viz. affiliation, short term quantity and long term value are present in every decision.

For job – Brand name, work experience, salary.  – When should you optimize for what?

For Sales –  The customer’s brand name, the invoice size, the gross margin.

Knowing what you want out of the deal helps you speed up.


Also published on Medium.

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