The fundraising process is very similar to the mating behavior of animals, stresses B-Hive founder Jurgen Ingels, who’s writing a book about the topic. In his first column for, Ingels elaborates on the rules to be followed and the steps to be taken. “Fundraising is an art that can be learned.”  

A courtship display is a set of display behaviors in which an animal attempts to attract a mate and exhibit his desire to copulate. Many species of animals engage in some type of courtship display to attract a mate, such as ritualized movements (dancing), the creation of sounds and displays of beauty or strength. Often, males and females will perform synchronized or responsive courtship displays in a mutual fashion. Misreading the signals or not responding in an accurate way might mean that the possibilities to mate are gone…

Over the years in the course of my work with investors and entrepreneurs, it became clear to me that  the fundraising process is very similar to this mating process. There are certain rules that need to be followed, certain steps that need to be taken into account and not understanding these signals or not responding to them in an accurate way might lead to no funding at all. Similar to the mating process you only get one shot. Therefore, I see fundraising as art. An art that can be learned…

I distinguish 3 periods in the fundraising process namely before, during and after the fundraising. Each period has its own specifics and understanding these technicalities will increase the odds of getting funded.


Before putting a lot of effort in the process you must ask yourself the question if you really need Venture Capital (VC) to grow your business. Of the fastest growing private companies in the US over the period 1997-2007 only 16 % has taken VC money. It proves that it is perfectly possible to grow a business without VC money and that raising VC money is not the only model for successfully building a major company.

If the answer is still yes, you need to realize that out of 100 pitches, 10 will get closer inspection and only one will get funding. Most companies do not qualify for venture capital and never will simply because the company is not in the preferred industry, does not have the right team or does not have enough potential. For me, the main question you have to ask yourself is this one: “does my venture allow for growing gross margins over time”. Not having growing gross margins over time does not mean the company is not interesting but that the model is simply not suited for VC money. Companies with growing gross margins over time can be found in the software industry or the biotech industry.

“Make sure somebody watches the shop while you are out fundraising”

Another point that is sometimes underestimated is the amount of time that raising venture capital consumes. The process will probably take 60 % of the CEO’s time, 60 % of the CFO’s time and 40 % of the CTO’s time and might take 6 to 9 months to complete. In the meanwhile, somebody has to run the company and make sure the sales numbers, operations and finances stay on track.

So make sure somebody watches the shop while you are out fundraising. I’ve seen plenty of companies, which did not take this into account and missed the numbers because of this lack of attention towards the business during this whole process. Something that is always paid the price for at the end of the fundraising process by means of a lower valuation.


Set up an audit committee, remuneration committee and exit committee and make sure you have minutes of these meetings. This will help you in showing that the company is well organized. Creating an exit committee is something every company should have. This committee follows competitors and describes potential buyers of the company. The best investment any company can do is buying a scanner. Collect scans of your key documents and organize them in a clear logical folder system. Provide on-line access to a VC during the due diligence. That way you can follow what the VC is doing and can track which documents he is examining. It will allow you to determine if the VC is seriously looking at your company (or not). That way the VC does not have to be physically present in your company and can’t ask annoying questions to your staff.  

Do not use your divorce lawyer who believes it is cool to do a VC deal and wants to learn from it. The contractual aspects of a VC deal are so specific that you really need an expert and somebody who is familiar with this type of contract. Having a lawyer that understands numbers is a surplus and not a luxury in this kind of deal. 

You do not need an investment banker to organize the fundraising process. As founder or entrepreneur you know way more about your company or your industry than the investment banker ever will. Besides, they ask between 4 to 7 % on the funds raised which is quite expensive.

Last but not least operational wise, creating buzz around your company by getting into the newspaper helps a lot. For some reason if your company is mentioned in a newspaper it creates credibility and people (including investment managers of VC funds) take your company more serious. Doing a market survey around your product and preparing a press release with fancy statistics helps you in achieving that goal. Moreover, the VC world is a very small world, in which everybody knows everybody. They all talk with each other at receptions. Getting into the buzz circle will fortify the talks about your company and will increase the overall interest.

VC funding

Manage your existing shareholders by asking them upfront what they would accept as conditions and let them sign off on these conditions. That way you will save time by not having to go back and forth between the potential VC and your existing shareholders.  Make sure you are aware of your shareholders’ whereabouts during the fundraising period. Chasing a signature of a shareholder in the Bahamas might be problematic and increases the stress levels when it can be foreseen.

Remember that it is a red flag if you go for fundraising just before you are running out of cash. The best time to go out for fundraising is actually when you do not need the money.

“When a VC sees a large business plan he is less inclined to read it”

A lot of VC’s call companies to introduce themselves. Typical the people calling are young associates whose job it is to gather information and market intelligence about a certain industry. Although being called from a big US or UK VC might sound cool and might boost your ego, but do not respond to inbound inquiries from anyone but a partner. If your company is really interesting, the partner will take time to talk to you. All the other situations are for mere info gathering or market intelligence.  

It is much better to get introduced to a VC versus calling them yourself. Getting introduced increases your odds significantly. You always know somebody who is directly or indirectly linked with the partners of a VC fund. LinkedIn is a great tool to find out who is connected.

Business plan & Pitch

Don’t write out a full business plan. When a VC sees a large business plan he is less inclined to read it. If there is no executive summary, the plan goes in the dust bin. So stick to 15 slides. 

An important part is the preparation of your financials. Do not make a financial plan of more than 3 years. The world is changing so fast that 3 years is already an eternity. Spend time making an analytical profit and loss and a correct cash-flow statement. In most cases the cash flow statement is incorrect as people struggle with the concept of cash.

What is powerful is to construct an excel sheet that allows you to make all kind of permutations and see what the effect is on EBITDA and cash. That way you are able to simulate real time any situation the VC throws at you like lower revenue or higher costs.  Practice your pitch…a lot. Test your 15 slides with friends, family and your mother in law. If she understands it then your pitch is on the right track and not too complicated. Also make use of the appendix. You can have 10 slides of nerdy graphs and technical stuff in the appendix that you can use to answer questions.

Make sure you study the numbers as CEO of your company. Prepare yourself by learning all the key numbers by heart so that you are able to respond immediately on raised questions without having to depend on your CFO to answer these questions. Questions like “what was your EBITDA 2 years ago or how much R&D is the company spending” should be common knowledge.  


Never send your full powerpoint or deck before you meet the VC. The best strategy is to send a three-page teaser upfront that does not contain all the information. Enough to spark the interest of the VC.  Remember that it takes on average 20 powerpoint presentations to receive one term sheet. 

Test your pitch first with some low level VC’s so that by the time you get to the VC’s that really interests you, your story is crisp and sharp and you can anticipate most of their questions. Do not forget to continuously adapt your slides based on feedback from the VC. A deck should be a living document.

When you are in front of the VC, never read your slides and be authentic and passionate. Passion sells. Show energy and excitement. Do not sound desperate during the pitch and don not use jargon. Keep it as simple as possible. If you are planning to do a live demo, be sure you have tested the connection upfront.

“Never send your full powerpoint or deck before you meet the VC”

Discuss upfront who will tackle which questions during the pitch and prepare answers on possible questions and do not send somebody to replace you at the pitch. No, the excuse “our CEO is with a client” is not a credible one. Next to that make sure you do not go with an incomplete team to the market. Saying “key team members have committed to join us as soon as we get funded” is not the best move.

Never present alone. Go with your team and makes sure everybody speaks. I’ve seen a lot of pitches in which only the CEO speaks and the rest are bag carriers. Not good. Also if you have part time people in your core team do not present them. It gives bad points. Try to replace them with full time members. If that is not possible, acknowledge the weakness and develop a plan to resolve the issue. Also, be aware that the pitch is not the time to have big disagreements in the team.  

After the pitch, keep in touch with the VC. The trick is to be a pain without being a pest. Do a follow up and ask the VC what he thinks of the company. Use a tool to keep track of which documents you send to who and when. Too often companies send new numbers and are not ware what they have send before in previous versions. Keep in mind that most VC’s keep track of the plans and numbers they received in a database in case you would ever come back.

Remember that it is a red flag if you repeatedly push back the timeline of “closing the round” or change the “size of the round” every week.

The deal 

Do not propose a valuation yourself but leave it to the VC. After all, they are the specialists. Say this regarding valuation expectation: “we obviously want a fair price but price isn’t the only consideration for us. We want an investor who helps us to move forward and brings added value to the table”. Keep in mind that a valuation that is too high might make raising money difficult in the future. A valuation that is too low possibly reduces the amount that can be raised.

Use an excel sheet that helps you understand the economics of the deal. That way you can quickly simulate any impact a dilution of warrants, SOP’s, earn-outs etc. can have.

Never give any kind of exclusivity. Negotiate with 2 VC’s until the very end and make sure they are aware of each other. That will keep them honest and avoid last minute changes or squeezes.

Don’t be obsessed by dilution nor by the pre-money valuation. Other terms have bigger effects on a deal like sales preferences or anti-dilution provisions. If you have to accept an anti-dilution, go for an average one.  

“Do not accept extra ordinary things in your shareholder agreement”

Ask for a 10 % stock option plan and make sure legally it remains like that going forward. In other words, you should always have the right to increase the SOP to 10 % after an acquisition or a capital increase. 

Avoid complex legal structures. It will make things more difficult in the future. Do not accept extra ordinary things in your shareholder agreement. You will not be able to get rid of them later.
 Most VC’s take the existing shareholder’s agreement as basis and want the existing conditions as a minimum condition in the new shareholder’s agreement.

Try to go for a very detailed term sheet. It will make the process afterwards easier when you want to elaborate on the final legal documents as a lot of things are already covered in the term sheet.   

Avoid partial funding based on milestones. Partial funding leads to partial spending and not being able to achieve what you want.

  • AFTER 

Once the VC’s are on board, make them work. Ask them to perform market research or analyze competitors. In most cases the investment managers of a fund have more time than you to do these kind of analyses and they are pretty good at it.

Send your cash position on a weekly basis and create a graph with all that data. Over time you will see how your cash-flow behaves. Make one reporting set for the VC’s and make sure to include weighted and unweighted sales pipeline. VC’s love these kind of statistics.

Finally, keep in mind that a VC relation is a long-term relation and life is too short so make sure you get along with the VC and don’t forget to have fun from time to time.

By Jurgen Ingels is organizing fundraising workshops all over Belgium in the next few months. Need extra fuel to take your business to the next level? Join us and become an expert!