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Common Mistakes Founders Make When Raising Pre-Seed Funding and How to Avoid Them

Updated: Aug 8, 2023



Venturing into the world of startups is both exhilarating and fraught with challenges. One such challenge is raising pre-seed funding. It's a critical juncture where you're seeking validation for your idea while trying to attract capital to bring that idea to fruition. However, it's also a stage where many founders stumble and make some common mistakes when raising pre-seed funding. Here's a look at those missteps and how to avoid them:


1. Treating Fundraising as a Transaction

Fundraising is not a one-and-done deal—it's a relationship-building process. Your aim should be to cultivate trust and rapport with potential investors, treating them as partners rather than sources of cash. As Naval Ravikant, founder of AngelList, aptly puts it, "Fundraising is the second hardest part of building a startup. The hardest part is building a business worth investing in." So, take the time to engage with investors before you need their money. Look for feedback and build relationships, but don't rush into taking capital.


2. Failing to Network Early

Your investor relationships should begin long before you need capital. Founders who only reach out to investors when they're actively seeking funding often struggle more than those who've been networking and building relationships early on. Remember, fundraising is an ongoing process that happens in parallel with the development of your business, not an isolated event.


3. Setting a Strict Timeline

Many founders fall into the trap of setting rigid timelines for their fundraising efforts, planting their flag, and starting to market their capital needs too definitively. In reality, fundraising is more fluid than that. It's important to remain flexible, adaptive, and patient. As thought leader Ben Horowitz mentions in his book, "The Hard Thing About Hard Things", "startups can change enormously in a short period, and so too can the context in which they operate."


4. Neglecting the Power of FOMO

VCs are humans, too, and are not immune to the fear of missing out (FOMO). If you can effectively communicate the potential of your startup and the progress you're making, you can create a sense of urgency among investors. This FOMO can be a powerful motivator and can tip the scales in your favor during fundraising.


At Redbud VC, we're not just about writing checks—we're about building relationships. Our network includes hundreds of VCs and angels, all committed to supporting founders and nurturing startups. We've seen first-hand how building these relationships can create a more supportive and successful fundraising environment.


Navigating the world of early-stage funding is complex, and we're here to help. We've built a suite of resources for founders, including articles on VC terms, tips on connecting with investors, understanding term sheet negotiations, and key performance indicators VCs look for in tech startups.


In the words of successful entrepreneur and venture capitalist Marc Andreessen, "A startup is the largest endeavor over which you can have definite mastery. You can have agency not just over your own life, but over a small and important part of the world. It begins by rejecting the unjust tyranny of Chance." With careful planning, thoughtful networking, and strategic fundraising, you too can master your startup journey.

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