Founders Asked Us Anything About Raising Money

0:00 The Funding Table: GoldCapital Consulting podcast

[Cold open - highlights from the episode.]

Max: What is going on, and welcome back to The Funding Table, episode number six - all the way halfway to our 10th episode. Big milestone coming up, gentlemen. If you are new to the show, this is a podcast all about venture capital, startups, and raising money, with the hope that you avoid some of the costliest mistakes we made on our own journeys. If you are returning, welcome back - and as always, we'd really appreciate it if you can leave us a comment with your feedback below, like, and make sure you're subscribed, because the last time I checked the channel stats, about 85% of our viewers are not subscribed. So come on - subscribe, show us you're getting some value. Now, this episode is a different style for us. As we talked about last time, we're doing one hour straight of Q&A. Unedited, unscripted questions we've gotten over the past week or two - from leads, from current paying clients, from folks on YouTube, from folks coming in from Instagram - asking about our journeys, what we do, startups, and fundraising. Hopefully this provides a bunch of clarity for those of you tuning in.

2:13 Max Goldberg, Mike Spidaliere, Sam Poon, Cam Owen

Max: It wouldn't be a Funding Table episode if we didn't start by quickly going around the table and doing some light intros with the gorgeous-looking team here. As always, as the host of your podcast, I'll go first. My name is Max Goldberg. I'm a two-time exited startup founder, Techstars alum, and former - underscore former - investment banker, and I'm currently the founder and managing partner of GoldCapital Consulting, where we help startups raise capital. Turning it over to you, Mike. Welcome back to the show - and what a sweater, man.

Mike: I appreciate it, brother. It's getting brisk up here in Boston, so you've got to be prepared. Mike Spidaliere, multi-time founder, founder and CEO of First Time Founder Capital, where we work with early-stage founders to help them get to the point where they're both investable and investor ready. Said "founder" a lot - just realized.

Max: And the founders you work with - do they have to wear J.Crew as well, Mike?

Mike: It's preferred, but no. I was actually talking with a founder the other day and they showed up in a suit, and I was like - just be aware, you look fantastic, don't get me wrong, but when you jump into talking with investors, dress down a little bit.

Max: Nobody likes a suit. The only guy liking a suit is Ari Gold.

Mike: No suits here. You can wear suits on every one of our calls - but suits on investor calls? That's a no-go.

Max: I love that. Turning it over to you, Sam. Welcome back to the podcast, our resident VC.

Sam: Thank you, Max. A little bit about me: I'm Sam Poon. I sat on the venture side for years before joining the team - sourcing companies, taking them through diligence, all the way to the investment committee before we decide to invest or not. That was early stage all the way to Series B, in a generalist, global capacity, with general partners that have done this for over 40 years, having been the earliest and largest investors in the Facebooks, Venmo, Uber, Beyond Meat, and out of NASA as well. Did it all, looked at it all. Happy to be here.

Max: Yeah, you hardly have any experience, Sam. Welcome back. Last but not least, my partner and COO at GoldCapital Consulting, Cam Owen. Welcome back.

Cam: Hey, thanks for having me. I think we should do an episode where we all wear suits one day - we'll look like we're going to prom. I don't know who each other's dates would be, but I call Max. Anyway: one-time exited founder, bootstrapped. I'm the partner and COO here at GoldCapital alongside Max, and I talk with founders every day and bring their questions to the funding table for us to discuss.

Max: Awesome, Cam. Welcome back. As I said, we're entering a full hour of straight Q&A. No real agenda, no headlines - although there's a lot going on right now that I'm sure we'll get to in episode 7. If you've watched at least one episode, you know I don't really shut up. And if you're a client tuning in, you will definitely know I don't really shut up. So for this episode, I'm turning it over to Cam. This is the Cam episode. Cam, you're on the front lines talking to founders all the time, you deal with clients, and you've seen the questions we've fielded from folks writing in from socials. Kick us off.

Cam: Absolutely. If you were hoping for another Max episode, you can go ahead and leave now - I'll be running the ship this time.

5:58 What do investors want at pre-seed vs Series A?

Cam: First question for everybody here. We're talking pre-seed and seed stage: what are investors looking for at pre-seed and seed compared to what they'll be looking for at the Series A?

Mike: This is definitely a question Sam has the most experience with, being on that side, but here's what I always tell founders, generalized: pre-seed and seed are a lot more focused on vision and team, and Series A really starts getting down to the data. It's often the first priced round. Series A investors come in as pros at understanding customer acquisition cost, LTV, all the specific data points - depending on the industry - and they're significantly more focused on year-over-year growth and the numbers that come along with a more mature company that's either finding its footing in product-market fit or has found it.

Cam: And I'll turn that to Sam, because I agree - vision versus repeatable engines. Talk to me about that.

Sam: Mike is absolutely right. At the earliest stages, it's about your vision. I tell founders all the time: go-to-market can pivot, and you can adapt it - a VC will help you with that. Vision is way harder to teach. They want to see how you speak about the business. Can you sell? And that's a loaded term - can you sell? Can you talk to investors, talk to customers, convince me first of all? It's narrative-based. It's not so much about growth at the earliest stages - it's about what momentum you've developed.

Cam: Max, any input there?

Max: I've always found the concept of round names pretty silly. I've fundamentally been confused why we even have them. Obviously priced rounds - Series A and beyond, and priced seeds - are a different structure: you usually aren't using a convertible note or a SAFE versus a priced round, so there's a structural difference. But pre-seed, seed, and everything before a priced round are generally the same from a legal perspective and in how the round actually gets put together. I remember one of my first pitches after Techstars - I didn't bomb it, but I certainly didn't raise from them - and they asked, "What is this? Is this pre-seed?" And I remembered something my dad, who's an attorney, told me: it could be a tomato round. Who cares what it's called? I stole that from him. It always felt like VCs trying to be cute and making something more complicated than it has to be. There are seed rounds now at what would have been Series C amounts of capital only five years ago.

Mike: I do think there's been a monumental shift in the last year and a half, two years on this. Back in the day, pre-seed was the idea stage - we're raising capital to see if this works, a couple of customers have expressed interest. Now you see pre-seed companies going out and raising one to five million. I agree: at this point it should just be first round, and then priced round. The nomenclature is starting to lose any semblance of meaning.

Cam: The way I always describe it: you're an ice cream shop owner with two levers you can pull. You can do vision, or you can do revenue - and you can make a swirl if you have both. But if you have no revenue, you can only pull that vision lever, and you'd better be damn good at it.

Max: That's brilliant. I've never heard anyone describe it like that.

Cam: And one more thing before we roll on - a lot of these questions are, in a sense, founders trying to diagnose their own situation. If you're wondering what the criteria are to raise the round - "I have an MVP now, so give me the money" - these aren't hard-and-set rules. It plays into what Mike shared: things are getting blurred, and there's no official test to know if you're ready. Sometimes you have to get out and see what the market is willing to tolerate. Story always wins. That's what this is - storytelling.

12:09 How do I justify my valuation cap?

Cam: Second question. This comes from Ben and David, some awesome founders I've been speaking with this past week. Our ARR is just over $100K - how do we realistically justify a valuation cap in the millions with that type of revenue? A fair point: a lot of people aren't at $2 million ARR yet, but they're not at zero either.

Max: I can start. Valuation caps are not actual valuations, so it's worth discerning the difference - there might be some confusion here. A valuation cap is a tool investors use to have predictability about how much ownership they'll have - and for the founder, a sense of how much dilution they'll incur - at the next round or a priced round, with a convertible instrument like a SAFE or convertible note. You see all these TechCrunch headlines - "raising at a $50 million valuation" - and a lot of the time those are caps, which is technically incorrect. The shares of the company haven't been given a fair market value yet, so the company isn't valued at that point. So with the idea that a cap isn't an actual valuation, the simpler answer is: you don't have to have a certain amount of revenue for investors to think your company might be worth something. You lean on comparables - that's how this industry works. Go to Carta's data: industry averages, medians, 25th and 75th percentiles, per stage, per country. You can see where similar startups are landing, and if there's a market benchmark - which there is - that's a pretty reliable answer. It's not intrinsically related to your company's value. It's what investors are willing to assume your company might be worth today. External, not internal.

Sam: I'd say it's future expectations - where the investor thinks you'll be by the next round. They look at your business model and think: you can grow into that expectation. And it's a bit of certainty, like Max said: this is the level we want to invest at, future investors in a priced round will want to invest higher, and we have to protect our ownership percentage a little. So even if you're at $100-200K in revenue today, you can grow into it. That's what a valuation cap is: a future expectation, not where you are today.

Mike: Two things. The Carta data point is still a good pull. And at the earliest stages, as we've talked about, the company isn't being valued off ARR - it's off team, off future expectations like Sam said, off the different levers you can pull and the unfair advantages you have as the founder or founding team. If you only base your cap on revenue, what about all the companies that don't have revenue yet? Are they valued at zero? A dollar? That isn't how it works. It's not strictly tied to ARR.

Max: And not to speak our book, but I will for a second: a lot of folks choose to work with us for exactly this, because the real way to assess what caps might be competitive for you is to get feelers from VCs who have no incentive to tell you what you want to hear. We have a specific part of our process where Mike sits down with a client, after our educational series, and shares what some of the friendly investors he's been speaking with think makes sense given the other deals they're seeing, plus what he's seeing from proprietary data across other clients. Valuation is an art more than it is a science - investment banking MDs will say that until your ears fall off. So if you're looking for one formula, it rarely works like that. You want to average out a bunch of different sources.

17:44 How much equity do I give up at pre-seed?

Cam: Next one - a pretty common question, and it goes along with what we just talked about. Early stage again, pre-seed and seed, blur the lines all you want: what's a typical percentage founders are likely to give up in an early-stage round?

Mike: It's a bit of a hefty range, but 15 to 30 is what I'm seeing. Thirty is less common, certainly. It really depends on the industry.

Cam: Quick one on that - why would someone ever go toward that 30? What would make it worth saying yes to somebody taking 30% of the company?

Mike: Typically it's not just one investor taking the entire round - though as we talked about last pod, that occasionally happens. But it depends on the industry. Some industries are significantly less blessed with VC these days - edtech is not on the upswing - so you'll be fighting for lower valuations there. If you're in an industry on the back swing of valuations, with all the comparables, you've got to bite the bullet every once in a while if the investor provides the value to get you to that next round at a beefier valuation. But primarily, 15 to 25 is what I'm seeing.

Sam: Agreed. I'd say 20 to 25 - but 15 to 30 sounds about right.

Max: I wouldn't do 30 out of pure necessity, though what Mike described is real. But there's another reason: you could just raise a lot more cash. This is one question we get asked internally, so I'll give my view. Because of the traditional progression from the first question - pre-seed to seed to Series A - there used to be an anti-signal if you had to raise another seed round. Seed twos, extensions, bridges - bridges never sound good, because it means you ran out of money and probably fell short of the next round's expectations. But run the math: if you're the company that dilutes 15% on the low end and then, because you under-raised on cash, you have to do a seed two to reach Series A, you're actually going to dilute at least 30% - probably 35 to 40 - in aggregate. Versus diluting 30% once, raising triple the cash, and getting to Series A while diluting less overall. The neatly defined rounds are a real disservice to startups that only consume that surface-level information. If you're in a position to dilute more for significantly more cash - not out of dire necessity - that might be the strategic move these days.

Cam: That's a really good point, and something that doesn't get talked about. Google it and you'll get a blanket statement. I'm already feeling like this is going to be a valuable episode - maybe not for VCs, but at least for founders.

22:18 What salary can I pay myself after raising?

Cam: Next question - a really juicy one, and I know we all get asked this from clients too. Is a founder salary something that would scare investors away? If not, what's a fair salary to take once you raise? Asked by Joseph.

Max: I have a buttload of thoughts, but Sam, you were the one evaluating these - start us off.

Sam: There are typical bands, right? At the early stage there's a range expectation for salaries. VCs don't want their founders eating instant noodles and suffering every week. But I've seen raises where it's $2 million and one founder takes $400K and the other takes $400K - and a typical runway is 18 to 24 months, so after two years that's $1.6 million of your $2 million raise. That makes no sense. And the founder is saying, "Maybe I came from a really nice job and I still want the same lifestyle." Being a founder is hard - you can't overpay yourself. There are salary ranges. A salary itself? Not a problem.

Cam: I can attest to that from what I do - I get the exact story Sam describes. They're coming from a good job, usually financial services, making $250-300K, and they want to match it. Especially living somewhere like San Francisco or New York - it's expensive, I get it. But it's hard to justify as a startup founder.

Mike: Sam took a lot of the thoughts right out of my mouth. To extend it: investors don't want their founders destitute, but they also want them to still be hungry. If you pay a founder $400K - especially one that didn't have that lifestyle before - and they're flying private after a pre-seed round, going on vacations, they're less focused, because the carrot isn't dangling in front of them anymore. It's a little messed up, but that's the reality. And there's certainly a range: I've had investors reach out to me and say, "I took a look at the financials - you've got to talk to them. This is too much."

Max: You're being greedy if you're trying to take a mid-six-figure salary off investor funds. Although - the same people you're pitching are doing just that with their management fees, so there's some hypocrisy in the industry. But it's true: don't even bring a mid-six-figure salary to the table. If you were the investor, would you want your money paying for a founder's comfort right after you took on the risk? I took $50,000 a year the entire time I was doing HotDrop - basically the bare minimum. You're not raising a family on $50K, and I didn't have one. There are ranges - you can look up averages by stage. Sam, in San Francisco, New York, Boston - what's the top you've seen pre-Series A?

Sam: Probably 120, 150 tops.

Max: And I think taking over 100 is a little absurd. You're doing this for the equity.

Cam: So to answer the twofold question: is a founder salary something that scares investors away? No. And for the number - there are bands you can look into, and it's also partly a conversation with the investor at the end of the day.

27:56 Can I raise less than $1 million from VCs?

Cam: Next one - I hear this a lot. This comes from Leonor: "I've heard that if you're raising below a million, you can't raise from venture capital. Is that true?"

Mike: It depends on the makeup of the investor. You can raise from angels at less than a million. You can raise from micro VCs - the smaller $50K, $100K checks. But I've put a founder raising $750K in front of an investor with a $250K minimum check, and he said, "I wouldn't be able to pass this to any of my colleagues, because the check size is too big." They don't want to be 33 to 50% of a round in something that's still high-risk, where the company hasn't shown it's mitigated that risk. So it really depends on who you're going after.

Sam: Agreed. My answer is yes, you can do it, but it changes the profile of the investor. Like Mike said - it might be a micro fund with $10 million in fund size that writes those smaller checks. You can, but it changes who you'd be raising from.

Max: The term "venture capital" has become this umbrella for all early-stage capital providers - it's something I talk about early on with clients. VC itself is a different animal from family offices, individuals, angels, and even CVCs: different incentives, different economics, different holding periods, time horizons, hurdle rates, and desired outcomes. VCs are looking for monstrous outcomes, and there are very few large companies that aren't capital-intensive at some point. More optically: if you're raising a small amount - and this is something I learned from Sam - VCs will stress-test whether you actually understand how much money is needed to compete and win your market. Investors aren't fearful of giving you more money. That's literally the point of what they do: allocate capital to get market share and make companies large and valuable. So raising too little can be a sign of lack of ambition - or worse, evidence you don't understand what your space requires. Come in asking for more and maybe settle for less. The crazy-big asks often end up becoming easier rounds, while simple, obvious ideas with smaller asks become more challenging - because nothing about them seems exciting.

Cam: When talking with founders I describe that 250 to 750K range as kind of a purgatory. You're really limiting yourself from the larger VCs and funds - you take the pool of investors and shrink it way down. So it can be harder, to Max's point, than raising an adequate amount from funds that aren't afraid to give you more if the story fits. And it all comes back to the story you're telling investors.

Max: And to founders in Europe, Australia, New Zealand, Canada: you're not greedy for wanting to raise more money for your company. You're greedy if you're raising more to put it into your salary line item. If it's going to actual growth, R&D, or something that builds real unfair advantages, asking for more just makes investors think you understand what you're doing. There's a cultural difference around asking for more money - don't be scared of it.

Sam: And Cam - if it's a $250K round, you've got to empathize with the founder too. Typically that's a friends and family round, and an investor would think you should bootstrap it or raise it from friends and family. But not every founder has that luxury.

33:11 How fast can I close my funding round?

Cam: Next one comes from Barry: "I'd like to finish my round in ideally two to four weeks. Is that a realistic timeline, or am I crazy?"

Mike: Weeks? Is that business days or calendar days? That's my starting question. Are you Elon Musk? Are you Jensen? Were you one of the founders of OpenAI? I'm not going to make a blanket statement and say two weeks is impossible - it is highly improbable. You'd have to have ridiculous pedigree, a resume down the block with some of the biggest names, the relationships already built, a hot company in a hot industry. But it is very unlikely you get a full round done in two weeks.

Max: My response to him was: have you ever used the banking system before? It'll take about two weeks just to get the checks into your business checking account.

Mike: Look, I've seen first conversation to close in five days - that's an experience I made happen. But these things take time. You meet with the investor; the investor has their own internal process. There are investors I talk to with diligence processes of eight weeks - after the first call, it's eight weeks until a decision. That's not the norm, but it automatically disqualifies them if you're trying to close in four weeks.

Sam: I'm thinking of a Japanese fund that takes about 18 weeks.

Max: Eighteen weeks to do what?

Sam: They're golfing most of those days - that's why the diligence takes so long. But seriously: Mike's right, and it's hard to time the market too. Every fund has its own process, and they could also be going through their own fundraise or internal changes. You can't really set a timeline - the market speaks for itself.

Max: One thing to add, because we should have asked a follow-up: is this the first round the company's raising, or have they already raised? If they've already raised, you can definitely close a round in two weeks - there are stories where it happens in 24 hours. Funds preempt; existing investors come in and take more or less the whole thing. It's very rare for a first round. And the other question: does two weeks mean from the day you start talking to investors to money in the account, or from a standing start? The average time for companies to gear up for a raise is anywhere from 30 to 90 days, depending on resources, teammates, co-founders - if you're a solo founder, that timeline is going to be rough. You have decks, one-pagers, data rooms, mock pitches. You want feedback from mentors, founders that have raised, past and current VCs - on the deck, the materials, the forwardables. At the same time, you're lining up your warm introductions: figuring out who you need to reach, who can connect you, whether they're willing to intro you on a certain date. Then they send the forwardable emails, then there's follow-up to book the calls, then time between meetings, then diligence, then maybe fund politics adds a week to the wire. From "I have nothing prepped" to money in the account in two weeks is more an impossibility than an improbability. Now - two weeks of stacked meetings where everything was already optimized, materials ready, a couple of early practice pitches done with VCs you cared less about? Then a tight process like that is definitely possible.

39:26 What is the best time of year to raise?

Cam: Next one comes from Warren: "What is the best time of year to raise from VCs? Are there any points in the year you'd recommend versus avoid?"

Max: The data is public on this. I think the week of December 15th is the highest volume of deals that get done all year - but only because it's the final week or two before the holidays. VCs are done the last two weeks of the year, and they come back a week or so into January after they recover from their trips. It's December 15th because they've waited until the last second - they have to contractually allocate a certain amount of capital by year end. And those aren't new deals arriving in their inboxes on December 14th; those are companies that have been speaking with them since before Thanksgiving, finalizing diligence. It's a weird time though, even though it's hot - and I made this mistake. Techstars, for me, ended December 15th, which was the worst-timed schedule, because I was so close with a number of funds that I loved, and we didn't close before the end of the year. It was too late. And then January was, "Who are you again? What is this?" We'd had five calls, and you basically start from scratch. So the end of the year is the best - but only if you're already in market, which means you've been preparing since summer or early Q4. Right now is the best time, hands down, but you need that prep done. You'd want to be talking to VCs now.

Sam: If you're not on their books by mid-November, they already have existing startups they're bringing through that December 15th window. You might think you have until Thanksgiving - but by mid-November, the year-end deals are already spoken for.

Max: Before anyone gets scared, the second-best time is the first quarter, and there's a lot of data on this. They're back from the trips, the tax year is over, they have a new year to allocate capital, everyone's happy. It's human behavior at the end of the day - these are people investing. The tendency is to procrastinate, under-deploy, then panic-allocate in the last two weeks of the year, then come back with fresh capital and over-deploy early - and by the middle of the year, pull back. So definitely not the summer for closing - but summer is great to prep, and great to engage us.

Mike: I have a thought on summer, because I get asked this constantly: do I just stop fundraising in the summer? The big funds, the GPs - they're in the south of France, as I always say to Max. You're not getting Andreessen on the phone in the summer months unless your deal is incredibly hot. But think about what that means: it gives solo GPs, angel investors, and smaller funds the opportunity to win deals over the big ones, because their diligence cycles aren't as long and they get to hit on these deals and bet big. So don't stop fundraising in the summer - just don't focus only on a16z or Sequoia or the big dogs.

Max: Rapid fire some questions, Cam. Let's cover more ground.

46:56 What do I do if my raise stalls?

Cam: Reframing this one, because it was asked in a roundabout way: basically, what do I do if my raise stalls - and when should I stop looking for investors and just focus on the business? Like, four months in, should I close the round and move on?

Mike: There are specific circumstances for every founder here - it can't be a black-and-white answer. If we say four months, and in the third week of the third month they have 16 meetings with VCs lined up - are they done? And you also don't want to come in telling VCs "the round is closing in two weeks" when you don't have money in yet. Creating that artificial FOMO doesn't work. They see right through it, they laugh, they walk away - and then they text their partners about it.

Max: Shame on you with those urgency tactics. They're not going to work. It's case by case - but the necessity varies too. Are you bootstrapped with runway because you're moonlighting - your job is giving you runway? Then why so concerned? Focus on making your case more compelling. Pause it for a couple of weeks and restart - there's a real benefit to consciously stopping and actually improving the thing that was the bottleneck. What I hate is when founders only blame the VCs - or, if they work with us and a round goes slower than we'd all want, which happens all the time, play the blame game and stay in denial that it'll all solve itself. There's no magic investor, no hypnosis words in a certain order. If people are saying it's too early, you need to make it more compelling. Generate something: hustle, cold email, cold call, get a firm - anything - to say someone will buy your stuff. Post on social media. There are about 150 things you could do that are basically free and purely effort-based, and 99% of people will not do them.

Mike: One last thing on this. If you go out to an investor this month, share your forwardable and your deliverables, and then reach back out three or four months from now and it's just "circling back" - no additional traction, no momentum - then you should probably pack it up.

Max: This happened to us, and I'll give a quick anonymized example. A while ago, Mike and I were working with a shared client - GoldCapital didn't formally exist yet - and the founder would not generate traction. He kept saying, "I just need the money - the money is going to traction so I can run ads." I said: there's literally a phone you can pick up to call and get customers. Do you remember this, Mike? On the call, I looked up a sample customer on Google and placed one call - one - and we got a thread going with a manager who was at least interested in becoming a customer. Served up on a platter. The client never followed up with them. The hundred cold calls a day they committed to? They didn't place a single one. Don't be the person that does no work and blames everyone else. That's a wantrepreneur, not an entrepreneur - and there are a lot of them.

52:01 When should I raise my next round?

Cam: Next question: what is the average time between a company's first round and its second?

Sam: Typically a round lasts you 18 to 24 months of runway. Maybe less, maybe more, but that's the expectation.

Cam: But when should they start raising that next round? Ideally you back into it, correct?

Mike: One year - that should be the goal. It can be a lot shorter. I've seen founders successfully raise and then go out three months later for a much larger round because things are clicking. If you can put the money to damn good use - without burning all of it in three months chasing an unrealistic expectation - yearly cycles are fairly common.

Max: I agree - basically 13 months. And I think you should be very confident taking your remaining runway down to 90 days. There's such immense competition to grow that you have to flirt with the line a little - unless your investors are saying, as happened during the pandemic, "we recommend you weather the storm, hold more reserves, cut burn." That's a conversation with your investors. But be confident running runway down to 90 days, assuming you're already ready with materials to fundraise at the start of those 90 days. You're accelerating growth, burning cash, and entering the market - that's an optimal position. Otherwise you're probably under-burning, which is also a problem to investors. You're not there to hoard the money. It's called burn for a reason.

Sam: And if you're not firing on all cylinders, you're raising, you're almost out of cash, and you didn't hit those metrics and milestones - investors can sniff that desperation, and that puts you in a very bad spot as well.

54:24 Should I tell VCs this is my last raise?

Cam: Next question comes from Andy - he's raising a pre-seed, for context. What if this is the last capital I need? If I don't plan on a Series A after this pre-seed round, will investors expect me to bring in more capital anyway?

Mike: I get this question a lot. I would not mention that to investors - keep it to yourself and leave the door open. If you really are in a strong position and don't need to raise, that's always the best time to raise: when you don't desperately need the money and can put it entirely toward growth. But growing by profit takes a lot longer, you lose speed compared to the peers who are raising - and you won't be able to raise that next round if you push it off and wait and wait.

Sam: I love the confidence and the belief in the business - that's tied to the founder's vision. But yeah, I definitely wouldn't raise it. Look at the market today: LPs are screaming for liquidity, and VCs want to see the paper gains - the land and expand. If this round is valued at $10 million, maybe the next is at 50. They like knowing their company is being priced up in the market. And if your plan is just profitability - not a good look to them. It's revenue, that top-line number, that eventually gets to profitability. So I wouldn't lead with "this is our last raise." The investor is thinking: I don't see that happen very often. They won't say it to your face, but it's not common.

Max: There's a distinction here that some founder clients miss: you can never lie or misrepresent facts to investors - you'll get in trouble one way or another. But there's a difference between that and answering the question honestly. The answer might genuinely be that you don't know whether you'll raise again - plans change, and that's a totally fair answer that can lean toward what they want to hear. What you can't do is have clear records - emails saying "we're never raising again, but I'm going to tell them we are" - because that's misrepresentation and can get you in real trouble. Now, strategically, from a founder perspective: I'm flirting more and more with the idea of seedstrapping. If you're not doing a crazy moonshot, raising one round and getting to profitability is a really smart game right now. Raise one decent-sized round, sell 15, 20, 30% once, and grow off the profits. You're probably not dealing with a major VC in that case - more likely angels, family offices, or a micro VC that's fine with it - and with them, I would be honest, because maybe your business isn't the grow-or-die they usually hold. Maybe there's a cash-flow machine to be built; maybe dividends get paid. I have friends building a big business right now who did exactly this - one round, never raising again - and they're approaching a billion-dollar valuation on real revenue. That's the holy grail: not diluting yourself down to bits. Most VCs we deal with wouldn't be interested, but it's worth seeking the investors who would be - because fundraising sucks whether you have to do it or not.

Sam: When I was meeting startups, I'd say it myself: I know, man - fundraising sucks. You want to go back to building your business and talking to customers. I get it.

Max: One more thing that's been on my mind, since we live it: we haven't raised money for the consultancies - there was no need; it's a service business - and you feel less pressure to grow when you're bootstrapped. Cam and I talk about how to be more successful, Mike and Sam too - bigger deals, win-win with clients, completely aligned - but I don't feel a "sign 100 clients next month" pressure. It could be a great lifestyle business. Whereas when you have VC pressure, you wake up with your heart beating - you must scale, because you will die if you don't grow. Grow or die. Honestly, that's the one thing I miss: that force of pressure. It's unhealthy at times, but it's a real fire. Being bootstrapped or seedstrapped is a different game - you have to be the right person for it.

Mike: At the end of the day, ask yourself: do you want to jump on the VC hamster wheel, or do you want a lifestyle business? Do you want to be surfing at 10 AM in ten years, or on roadshows raising a Series C? It's a different answer for every person.

1:01:51 Do I need a Delaware C corp to raise?

Cam: This one's a bit easier, but I get asked it literally all the time. This came specifically from Chris, another great client of ours: "I heard you need a Delaware C corp to raise capital. Is that true? And if so, when should I start setting that up?"

Sam: Investors typically cannot invest in LLCs - just because of how VC funds are structured. It's not that they don't want to; they can't. And Delaware C corps are the gold standard. Other states - Wyoming and Nevada - are getting hot, but Delaware has the legal precedent. It protects the founders and the VCs. Not legal advice, but that's how a VC thinks. C corps are definitely the way to go.

Max: For the international folks: a Delaware C corp just means a C corporation - the letter C - incorporated in Delaware. There are really three main reasons it's the standard. First, Delaware is where companies have incorporated for the longest time, so there's a huge precedent in case law - the courts are predictable and business-friendly, so you know what's going to happen with shareholder disputes. Second, C corps have shares, where LLCs have percentage membership interests. You need to be able to issue shares to employees and investors - and companies might IPO one day, and to be listed on an exchange you have to be a C corp with shares you can issue easily. Imagine asking how many shares of a stock you bought and answering "0.0107%." Plus other C corps and foreign entities can be shareholders in a C corp - you can't do that with LLCs, so if this gets big, an LLC locks out foreign investors and a public listing, and it's very hard to change later. These are real, practical reasons - not just a way to get you to pay for another incorporation. And Delaware's tax treatment: no state sales tax, and if the company incorporates there but doesn't conduct business in the state, the corporate income tax on that in-state income is effectively zero.

Mike: The one thing to add: if you're living outside the US and looking for US investors specifically, a Delaware C corp opens up the entire market of VCs. Without one, there are some monoliths that invest globally, but they're far fewer and further between. If you don't want to limit who can come onto the cap table, bite the bullet and do the Delaware C corp.

Max: And - talk to an attorney. That's always the easy answer.

1:07:16 How often should I update my investors?

Mike: Sam, I have one for you. At what rate should founders update current investors? Daily? Weekly? I'm sure you've had cases where it's "I've gotten seven emails from you today alone."

Sam: If it's daily, it gets annoying after a while - unless it's a major breakthrough. Weekly might be a bit much, but that's okay. Biweekly is fine. And there are funds that catch up with portfolio companies monthly or quarterly. If it's ten updates a day - I get it, man, I know you're crushing it, that's why we're talking - but seven in a day is way too many. And if it's every other day with the same message - "we're entering discussions with this person" - fantastic: let me know when it closes.

Max: The cadence doesn't make the update stronger. It's honestly better to send less frequently with a huge laundry list of true wins. If every day seems to produce positive news worth sharing, you need a stricter filter on what's newsworthy - otherwise everyone gets desensitized. You woke up today: a win in the grand scheme of things, but not something the VC needs to know.

Cam: You diminish the wins at that point. You've indirectly fattened up the investor - now they're just waiting for their next plate of food, and at some point you'll run out of substantial updates and they'll be annoyed. "My dog urinated" is not an investor update.

Max: "I had the shits today - I just needed you to know that." Believe me, some of the updates we actually get are barely a step above that. Desensitized and diminished. I look forward to the monthly emails stacked with wins - if it's daily, it's just noise. Unless you send the updates in Latin - then that would be kind of cool.

Sam: Shout out to my high school Latin days.

Max: One general piece of advice to close the Q&A: some of these questions, you should ask Google first - and I'd actually use Google, or something citation-heavy like Perplexity, rather than just an AI paragraph, because you should find the primary sources, the actual data, charts, and graphs. Then there are the subjective questions - many of which were asked here - where you do need someone that knows what they're doing, and those lead to much more productive conversations for everyone. Don't ask people questions you can answer on Google in half a second.

1:11:05 Next on The Funding Table: first guest episode

Max: Next week's episode, we are doing something really exciting: for the first time ever, we're going to have a guest star on the episode. And what's kind of crazy is, as of right now, we don't even have that guest locked - we have a couple of feelers out to some clients. We also have some folks committed to come on in a few weeks: founder friends, some non-clients, some YC alums, some really exciting people. But next week there will be a client of ours coming on to talk about their business and their story - why they decided to start their startup - and, if we get time, our experience together, the chemistry we built, and whether they'd work with us again. So we've got to figure out who's coming on the show, gentlemen, because this is going on air regardless.

Mike: I have ideas.

Cam: I do too.

Max: You know who you are. You're going to be watching this - reach out. And again: if you've gotten this far, you are a saint, and you are probably going to make it if you've actually consumed this amount of information. Keep tuning in - like, comment, subscribe, and let us know if you liked this episode. Gentlemen, thank you very much. We have a full day ahead of us - time to get to work.