5 fundraising tips from David Sacks - legendary investor and AI "czar"

* This week's newsletter is supported by ​Wefunder​ - the largest Regulation Crowdfunding platform. Wefunder has enabled startups like Substack, Mercury, Replit, and Levels to raise more than $5M from their customers and community.

You can save up to $50,000 when you visit them ​through this link​. You can also ask me for an intro to their team to get the same benefit - I've been working with Wefunder and their founders for years, and they are awesome.

***

Today’s fundraising tips come from David Sacks, one of Silicon Valley’s most successful founders and investors.

Sacks was the COO of PayPal and later co-founded the venture capital firm ​Craft​. He invested in more than 20 unicorns, including Airbnb, Facebook, Uber, Palantir, SpaceX, Lyft, Reddit, Quora, and many others. He was part of the famous ​All-In Podcast​ and was recently appointed by the White House as the “czar” of AI and crypto.

We went through his articles and interviews and gathered five of his best tips for founders raising capital. Here goes:

1. Pitch Your Idea in 10 Words or Less: You should be able to pitch your idea in 10 words or less to investors. You’re not going to stand out unless you can concisely describe your idea. Make your pitch descriptive of what the business idea is, but also make it provocative enough to prompt investors to ask for more information and generate genuine interest.
2. Prove Execution Over Idea: A great idea alone isn’t enough. Investors want to see how well you execute the idea, be it a prototype, a functional mockup, or even a simple website. Show you have tangible progress to reassure investors of your capability to turn your idea into a reality.
3. Avoid Valuation Talks in Early Meetings: It’s a good rule of thumb to never discuss valuation or terms in pitch meetings. The focus at this stage is to get the investors interested. To get a good valuation, you need multiple bidders. Therefore, don’t set a floor or ceiling for your valuation. After getting multiple interested parties and term sheets, you’ll know what your valuation should be.
4. Strategize Timings: Timing is critical. Schedule your investor meetings to follow each other in quick succession and secure multiple term sheets around the same time. With this approach, you prevent delays and enhance your negotiating power. Investors respond better when they can see active interest from multiple parties.
5. Raise Aggressively, But Wisely: While you should focus on securing enough capital to give you sufficient runway, only raise as much as you can realistically justify, without needlessly accelerating dilution. Constant evaluation of your valuation can help you figure out how much equity stake you are giving up to retain control and strike the optimal ownership balance.

References/recommended deep dives: ​“The burn multiple” (on Sacks’ blog)​, ​Sacks in a talk with founders by Craft Ventures​.

***

 Recommended for founders:* 

1. Pitching/storytelling: Learn to sell your vision with ​Moti Elkaim​.
2. Book: ​How to Get Rich​, by Felix Dennis
3. Get a dedicated fundraising partner and guide at ​Founder15​ 
4. The best equity crowdfunding platform: ​Wefunder​ 
5. Free lists of active startup investors: ​InvestorLists.vc​ 

More from Meet.Capital:

1.  ​Meet investors​: We get you in meetings with qualified angels and VCs, via LinkedIn. ​Learn more and apply here​.
2.  ​Investor connector course​: quick and actionable video course to get you in meetings with angels and VCs. ​Special: 50% off​.

* Recommended services and products may be our sponsors or affiliates, but all are genuine recommendations.