Why some rounds never close

Everyone tells you to talk to investors long before you raise. So you start early, and it's two hundred cold emails, a few calls, and "not for now". Meanwhile someone you know closes their round in a few weeks.

Part of the difference is when each of you asked for money. Your round opens the first time you ask somebody for money. A lot of founders do it without noticing, in a first cold email with a deck and an amount in it. The founders who close in weeks tend to ask later, once somebody already wants in.

Before you ask, investors are more likely to tell you what's missing, because there's nothing on the table for them to turn down. After you ask, they decide. If it's a no, you usually get the polite reason, the "not for now".

So don't ask until you have a reason to: somebody wants to put money in, you've fixed what they told you was missing, or you've hit your next milestone. When you do ask, the round has two weeks to get to a decision.

A round run like this can still end in a no. The difference is that you find out by the date you set.

When raising turns into a routine

A round opened in a cold email has no end date. For a lot of the founders we talk to, it turns into a routine. You send a few messages, you click connect on a few profiles, you get on a call, then another one. Something happens every week and it feels like the round is moving, but no cheque closes.

It's comfortable, because there's always something to do and nothing has to be decided. Nobody walks out of something comfortable on their own, so a round needs a start and an end. Without a date, it goes on until the money runs out. In DocSend's data, pre-seed raises that failed went on for five months on average.

Easy test: if you've already asked for money and can't say what date your round closes, you're in the routine. If that's you, give yourself a deadline. If nobody's in by then, stop asking and go back to talking.

Before you talk to any investor

When we start with a team, the first thing we write down is why their raise could fail. The main risks, most serious first. How to lose your round in one call has four to start from.

Do the same before you send anything. Each risk is a question a fund will ask. You won't fix all of them before you start, but you'll know which question comes first, and you'll have an answer ready.

Check runway first. It's one of the four risks in that article, and it decides how long you can afford to wait before you ask. The same article has the math, and what to do when it comes out short. If you're down to two months of money, you'll end up sending everything to everyone and hoping something lands. That's desperation, and it rarely brings money in. So do the math before you start talking, while there's still time to wait for a reason.

Who to talk to, and how to get to them

Only investors who can write the first cheque or lead the round. Nobody else.

The first check on whether a fund can lead is its cheque size against your round size. Nobody will lead your round shows how to do it.

Some people tell you to practise first on investors who can't lead, so your pitch is sharp when it counts. I get the logic, I just don't agree. If somebody can't lead or write the first cheque now, you don't need that meeting now. You'll have a million better things to do. You don't need to rehearse the ask either, because there won't be one in these conversations. The numbers still have to hold up, and that's what the risk list is for.

As for getting to them, most deals don't start with a cold email. The best numbers I've seen on this come from a ten-year-old survey of 885 VCs. Back then, only one deal in ten started with the founder reaching out on their own. Most of the rest came through people: the partners' own networks, other investors, the fund's own portfolio founders. Almost a third the fund found by itself.

Cold emails are fine, as long as there's no ask in them. But it's worth the patience to get an intro, and the best one comes from a founder the fund already backed who knows your work. Funds that lead or write first cheques usually have big portfolios, so there's often somebody to ask. If one of their founders is willing to introduce you, the fund hears something good about you before your first call.

The main work starts after the intro, in the conversations. So put the time you'd spend on two hundred cold emails into getting a few intros.

What to say before you ask for money

This is what talking to investors before you raise should look like. Nothing in these conversations looks like a round. No amount on the slide, no data room, no closing date. Still, work out a range for how much you want to raise, and the lowest valuation you'd take. That's your floor.

Don't be vague about the raise either. "We're not really raising, but happy to chat" sounds like you are and don't want to say it. Say where you are instead.

"we're not raising yet. we'll open the round when [milestone]. if you'd want in before that, tell me."

If they ask how much, give them the range. You still haven't asked them for anything. If they ask about valuation, let them go first. A fund that wants in will propose one anyway, or work it out with you. Keep your floor to yourself. It tells you when to push back.

What you shouldn't say is that you don't need the money. That tells a fund you have no reason to raise. The reason you're raising goes into why.

When a fund says yes

Stop taking meetings for feedback and close.

A yes means an amount and a date. "Interesting, let's keep talking" has neither. It costs them nothing to say, so treat it like a no and ask what they'd need to see.

When you get a yes, set the round's date two weeks out and ask that fund one thing.

"what do you need from us to be in by [date]?"

If they can tell you what they need to be in by that date, the round is moving. If they can't, it isn't a yes yet.

Then tell the other funds you've been talking to that you have a first yes, and give all of them the same date. They already know you, so two weeks is enough for them to decide. The date is for decisions. The paperwork and the money usually come later.

The same day, bring in the investors who couldn't lead. Most of them were waiting for somebody else's number. Now there is one, so they can decide inside the same two weeks.

Other funds will only keep to your date if they have a real reason to: the first yes, a target you just hit, a signed contract. Saying "other funds are looking" won't make anyone decide faster.

If you can't agree on price, split the round in two. The first part goes in at a price that works for both of you now, as long as it's not below your floor. The second goes in at a higher price that kicks in after a milestone you already have coming. The two weeks decide the first part, and the milestone moves the price of the second. Nobody will lead your round uses the same split for a round with no lead yet.

On the date, count anyone who hasn't said yes as a no. If you move the date instead, it starts to look like a round that isn't closing. The next fund hears about that first.

When a fund says no

A no before you've asked costs you nothing. So ask what they'd need to see.

"fair enough. what would you need to see? if we open a round i'd rather know now."

People like answering that. I do too. I like being a know-it-all, and everyone likes being listened to. You also get a more honest answer than after a pitch, because there's no ask on the table for them to turn down.

Write down who said what, next to the risks you listed at the start. Some of it you can fix and some you can't. Before you spend months fixing something, check it's the real reason.

"if that was fixed, would you be in?"

A real reason usually gets a yes. A polite one gets another reason.

Going back to funds that went quiet after you asked is harder, and that's what Nobody passed and nobody moved is about. Here you never asked, so once it's fixed you go back with a date.

"you told us [X] was missing. [X] is done. we're opening the round, decisions by [date]. want to take another look?"

It's an easier yes for them. They passed on a company without [X], and now it has [X]. Sending that message opens your round, and the two weeks start.

Back to work.

TL;DR

• Your round opens the first time you ask somebody for money. A lot of founders do it without noticing, in a first cold email with a deck and an amount in it
• Don't ask until you have a reason to: somebody wants in, you've fixed what they said was missing, or you've hit your next milestone. Once you ask, the round has two weeks to get to a decision
• If you've already asked and can't say what date your round closes, you're in a routine. Give yourself a deadline, and if nobody's in by then, go back to talking
• Before you talk to any investor, check your runway, then write down why your raise could fail, most serious first
• Only talk to investors who can write the first cheque or lead. Get to them through an intro if you can, ideally from a founder they already backed
• Before you ask, say where you are: you're not raising yet, you'll open when a milestone lands, and they should tell you if they want in before that
• A yes is an amount and a date, and interest counts as a no. Set the round's date two weeks out, give every fund the same one, and count anyone who hasn't said yes by then as a no
• On a no, ask what they'd need to see, check it's the real reason, fix it, and go back with a date