A VC Explains Why It Takes So Long for Startups to Raise Money

December 15, 2016, 1:00 AM UTC
Close up of stopwatch on 20 dollar bills
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This article is part of Tools of the Trade, a weekly series in which a variety of experts share actionable tips for achieving fast and effective results on everything from forming good habits to raising money.

This week Diane Fraiman, a partner at Voyager Capital, offers a look at the dynamics at play during the fundraising process.

A fatal mistake when raising money is not giving yourself enough time.

You have the disruptive model in a very large market and the team who can articulate the value. But do you have realistic expectations about how long it will take to raise that first institutional round?

Time and again, smart entrepreneurs with great ideas underestimate how long fundraising will take. I watch behaviors modify as they get more desperate for money and I watch them blow it in the process. And from a VC perspective, a frustrated entrepreneur is not an attractive investment.


An insider’s look at funding politics

Funding takes awhileas it should. So many entrepreneurs think they’re going to be able to close in 90 days. Maybe you’ll get lucky and close your round after two meetings, but that’s not the norm. Outside of the Valley, it almost always takes longer. We’re not throwing $3 million or $5 million at anything that reasonably moves. When it gets easy to raise that first round, other trends are following, like questionable valuations that could come back to hurt you later.

One consideration is calendar, of course. Avoid the late summer hiatus (mid-July through August) and the holidays (mid-November through December.) That’s a logistical decision within your control.

What’s not in your control are the VC politics: all of the circumstances at the firm that can impact your funding timeline. There may be other deals in the queue before you, weeks where the partners are not meeting, other partners who have a bias against your deal, or funds on their last legs where the partners are looking for the perfect last deal. All of this slows down the timeline to evaluate and make a decision on your deal.

For instance, a startup raising their Series A round recently was delayed several months due to competing deals inside the firm. The main concern was initiating a capital call from their limited partners for multiple large deals coming through at the same time. You have no control over this dynamic, and might never find out the real reason you were slowed down or turned off, but the result is you are left waiting.

Related: Here’s Why You Can’t Stop Procrastinating

Underestimating the time required inevitably leads to aggravation. While you can jump up and down and get pissed, we’re holding the money. If you battle the process, you’ll end up running on fumes, and then you’ll need to alter your funding strategy to include diverting attention to a bridge loan from your angel investors or a bank. Doing so will only add more time to the process.

Successfully raising money is as much about process and behavior as anything else. Here’s what you can do about it:

Settle in and stay cool.

Be realistic about the timeframe and add double the amount of time to your funding runway. Desperation doesn’t look good and will only slow things down further, so don’t let your frustration show. Take a deep breath and be patient. Once you understand the process, be a part of it and try to enjoy it.


The shortest path to a “yes” is sitting right in front of you. When you stop selling and start listening, you’ll hear the VC telling you exactly what you need to do to get to a yes, whether it’s diving in on market size or better articulating go-to-market strategy. When you listen carefully, you can also figure out relatively quickly which VCs will never invest in you. Don’t waste more time; move on.

Related: Here’s Why You Shouldn’t Multitask, According to an MIT Neuroscientist

Focus on relationship building.

Fundraising is a dating game. Even if we fall in love quickly, it’s still going to take some time to date. Case in point: my initial introduction to Jake Weatherly, CEO of SheerID, sparked a very good relationship built far in advance of a term sheet. Jake consistently set up meetings to ask advice and keep me updated at different crossroads, which continued for over three years before Voyager invested in SheerID’s Series A round. His focus on relationships continues today, as connections he made during the Series A round are now benefiting his next round.

I understand: it’s tiring to give the same pitch hundreds of times to people who get it, who don’t get it, who like it, who don’t like it. If you can stay committed and passionate – for a longer period of time than you were hoping – not only will you have a better shot at the money, but you’ll benefit from the process. Because even if we don’t invest, if we like you we will help you. Building that relationship can offer immediate market and competitive insight, as well as long-term network effect that will help you build the great business you deserve.