Fundraising Playbook

Core Rule

Raise when you have traction, not when you're desperate. Investors fund momentum. Your binder is the paperwork. Your traction is the pitch.

Should You Raise?

Ask honestly:

• Do I have a clear use of funds that will 10x the business?
• Have I validated PMF, or am I raising to find it? (If the latter — wait)
• Am I comfortable with dilution, board seats, and investor obligations for 7–10 years?
• Is venture-scale (10x+ return) the right model for this business?

Alternatives to VC:

• Revenue-based financing (Clearco, Pipe, Arc)
• SBIR / STTR grants (up to $2M for tech + research)
• State/local non-dilutive grants and accelerators (check your regional playbook)
• Grow to ramen profitability → raise from position of strength
• Angel investors — faster, less dilutive than institutional

Funding Stages

SAFE Note Basics

Key terms:

• Valuation Cap: The max valuation at conversion (lower = better for investor)
• Discount Rate: % off the next round price (typically 15–25%)
• MFN Clause: Early investors get better terms if you offer them to others
• Pro-rata rights: Right to invest in future rounds to maintain %

Use YC's standard Postmoney SAFE: ycombinator.com/documents

Pitch Process (End-to-End)

Step 1: Build binder (references/investor-binder.md)
Step 2: Build target list (50+ investors)
Step 3: Warm intro campaign (priority) + cold outreach (parallel)
Step 4: First meetings — listen more than you pitch
Step 5: Send materials (exec summary → deck → data room if interest)
Step 6: Follow-up cadence — persistent but not annoying
Step 7: Diligence — provide data room, reference calls
Step 8: Term sheet → negotiate → close
Step 9: Post-close investor relations (monthly updates)

Building Your Investor Target List

Filter by: stage match, thesis match, check size, portfolio fit.

Target 50 names in 3 tiers:

• Tier 1 (dream): 10–15 — best fit, most active in your space
• Tier 2 (strong): 20–25 — good fit, less active
• Tier 3 (backup): 10–15 — loose fit, use to build momentum

Strategy: Start with Tier 2 to practice. Save Tier 1 for when you're sharp.

Tools: Crunchbase, Signal (NFX), Landscape.VC

Warm Intro vs Cold Outreach

Warm Intro (strongly preferred)

Ask for a "forward intro" using this blurb:

"I'm building [Company] — we help [ICP] [outcome]. We have [traction signal].
Raising [amount] and would love an intro to [Investor].
Here's my exec summary: [link]"

Cold Outreach

Subject: [Company] — [One-line value prop]

Hi [Name],
[1 sentence — why them specifically. Reference portfolio or thesis.]
[Company] helps [ICP] [outcome] — [traction signal].
Raising [amount] on a [SAFE]. Worth 20 minutes?
[Name] | [Email] | [Deck link]

Meeting Prep

Before: research portfolio + thesis. Know your top 5 metrics cold. Prep for top 10 Qs. During: lead with traction. Ask "What would make this a yes for you?" After (within 24 hours): send follow-up addressing their specific questions + clear next step.

Handling Rejection

When you get a "no": thank them, ask what held them back (data, not argument), ask for a referral, log and follow up in 6 months with traction update.

Typical seed funnel: 50 outreach → 25 first meetings → 10 second meetings → 5 diligence → 1–3 term sheets

Due Diligence Checklist

• [ ] Clean cap table (fully diluted)
• [ ] All legal docs (incorporation, vesting, IP assignments, SAFEs)
• [ ] Financial model (12–24 months)
• [ ] Key metrics dashboard
• [ ] Customer contracts or LOIs
• [ ] Product demo
• [ ] Team bios + LinkedIn
• [ ] References: 2–3 customers willing to take a call

Full data room structure → see references/investor-binder.md

Post-Funding Investor Relations

Monthly update (send even when things are hard):

Subject: [Company] — [Month] Update
Highlights: [Win 1] / [Win 2]
MRR: $X (↑ X% MoM) | Customers: X | Runway: X months
Challenges: [Honest]
Ask: [Specific intro, feedback, or connection]

Missouri + Regional Funding Resources

Verify details directly — program availability changes.

Disclaimer: Educational context only. Consult a startup attorney before signing any term sheet or investment document.