Venture Capital Insights

Founders are turning down millions in venture capital. Their reason? "I don't need the money. We're already profitable." 10 years ago, unthinkable. Today, common. The Information wrote an insightful piece on "Seed-strapping"—raise once, focus on profitability: → $3.7M revenue per employee (10X industry standard) → 80% lower development costs → 90% less capital to reach profitability The uncomfortable truth for VCs: → Companies need just one funding round → SAFEs never convert → Founders keep 70-80% ownership → The traditional model breaks For investors, survival requires reinvention. New Fund Economics: → Smaller funds with more concentrated bets → Lower management fees, higher carry → Faster distribution timelines → Many smaller wins vs. few unicorn exits New Deal Structures: → Revenue-based financing with capped returns → Dividend rights if companies don't raise again → Profit-sharing without requiring additional rounds New Value Proposition: → Capital efficiency expertise over growth-at-all-costs → Customer connections & distribution support → Operational support over financial engineering → Alternative liquidity paths beyond traditional exits The era of "We'll figure out profitability later" is over. What comes next? Imagine a VC landscape dominated by smaller, specialized firms helping founders build profitable businesses from day one. In this new world, the winners won't have the biggest funds—they'll understand AI has fundamentally changed capital efficiency. For founders: Why dilute when you can profit after one round? For investors: How do you add value when capital isn't the constraint? The answer determines who thrives—and who vanishes in 24 months.

If you're a founder trying to fundraise right now, it probably feels like the entire venture world has gone quiet. The response times are slow, OOOs are on and it’s easy to feel like you’re losing momentum. Don't stress. The summer slowdown is predictable, and it's not a setback, it's a gift of time if you use it well. I see this every year... The founders who scramble to send frantic emails in July/August are the same ones who struggle in the fall with an over-shopped deal and the fatigue of an endless fundraise. But the founders who use this quiet period for deep, focused preparation are the ones who run a crisp, successful process after Labor Day. The fundraising race is won in the prep lap. Here are a few things you can do right now to prep for a big fundraising push this fall: 1. Build a High-Fidelity Investor Pipeline. Go beyond a simple list of names. Create a comprehensive document that tracks every firm and partner, their specific thesis, your history with them (if any), your connections to them and crucially, the feedback they've given you in the past. This turns your outreach into a strategic campaign. 2. Assemble a "Push-Button" Data Room. Don't wait for an investor to ask. Build your data room now so it's ready to go at a moment's notice. This includes your customer contracts, cohort analyses, deck, references and financial model. A well-organized data room signals professionalism and creates momentum. 3. Craft a "Juicy" Forwardable Blurb. The best introductions are easy to forward. Write a tight, compelling, one-paragraph teaser. It must include a unique insight on the market, why your team is going to win and any key metrics. This makes it effortless for people like me to advocate on your behalf. 4. Pressure-Test Your Narrative. Use this time to pitch trusted advisors, mentors, and other founders. This isn't about memorizing a script, it's about finding the weak spots in your story. Ask them to be ruthless. The tough questions you answer now in a friendly setting will save you in a rapid fire partner meeting later. 5. Get Your "Diligence" in Order. This is the one everyone forgets. Talk to your lawyer now. Make sure your corporate governance is tight and your cap table is accurate (and clean). Uncovering a messy problems during late-stage diligence can kill a deal. Solving it now is a massive de-risking event. 6. "Warm Up" Your References. Your best customers are your most powerful asset. Don't wait until an investor asks for a reference call to talk to them. Re-engage with your top 3-5 champions now. Check in, share your progress, and get them excited about your vision. A reference who is prepped and genuinely enthusiastic is infinitely more impactful. The fall fundraising season will be here before you know it. The work you do in the quiet of August will determine the success you have in the chaos of the fall. We are prepping for our next fundraise as well so this is how I'm spending my time💥

As a founder who raised a $500K pre-seed 💰 Here are my biggest (updated) takeaways about fundraising: 1) 𝐄𝐚𝐫𝐥𝐲 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬 𝐛𝐞𝐭 𝐨𝐧 𝐲𝐨𝐮, 𝐧𝐨𝐭 𝐲𝐨𝐮𝐫 𝐢𝐝𝐞𝐚. It’s about trust...they need to believe you can figure it out and make it happen. You matter more than your pitch deck. 2) 𝐃𝐨𝐧'𝐭 𝐰𝐚𝐬𝐭𝐞 𝐭𝐢𝐦𝐞 𝐨𝐧 𝐕𝐂𝐬 𝐭𝐨𝐨 𝐞𝐚𝐫𝐥𝐲. Unless you have multiple exits or significant traction, focus on your product and users. Early VC calls should be about understanding the milestones you’ll need to hit. Don’t ask for money, ask: “At what point would a business like ours be exciting to you?” They’ll tell you. 3) 𝐑𝐚𝐢𝐬𝐞 𝐚 𝐬𝐦𝐚𝐥𝐥𝐞𝐫 𝐫𝐨𝐮𝐧𝐝 𝐟𝐢𝐫𝐬𝐭. Don’t aim for a $4M seed round out of the gate. Too many founders try and fail. Start with angels or your personal network. 4) 𝐘𝐨𝐮 𝐝𝐨𝐧'𝐭 𝐧𝐞𝐞𝐝 𝐨𝐮𝐭𝐬𝐢𝐝𝐞 𝐜𝐚𝐩𝐢𝐭𝐚𝐥 𝐭𝐨 𝐛𝐮𝐢𝐥𝐝 𝐲𝐨𝐮𝐫 𝐌𝐕𝐏. If you think you do, you’re probably not being resourceful enough. 5) 𝐅𝐮𝐧𝐝𝐫𝐚𝐢𝐬𝐢𝐧𝐠 𝐭𝐚𝐤𝐞𝐬 𝐥𝐨𝐧𝐠𝐞𝐫 𝐭𝐡𝐚𝐧 𝐲𝐨𝐮 𝐭𝐡𝐢𝐧𝐤. Plan accordingly, and don’t underestimate the time commitment. 6) 𝐃𝐨𝐧’𝐭 𝐭𝐚𝐤𝐞 𝐫𝐞𝐣𝐞𝐜𝐭𝐢𝐨𝐧 𝐩𝐞𝐫𝐬𝐨𝐧𝐚𝐥𝐥𝐲. I made this mistake early on. A “no” isn’t always about you. Sometimes it’s about them—investors often like to appear wealthier than they really are. 7) 𝐑𝐚𝐢𝐬𝐢𝐧𝐠 𝐦𝐨𝐧𝐞𝐲 𝐰𝐡𝐞𝐧 𝐲𝐨𝐮’𝐫𝐞 𝐝𝐞𝐬𝐩𝐞𝐫𝐚𝐭𝐞 𝐢𝐬 𝐚 𝐥𝐨𝐬𝐢𝐧𝐠 𝐠𝐚𝐦𝐞. I know sometimes this is hard to avoid but investors can sense desperation from a mile away. Walk into meetings with confidence, believing they’re lucky to get on your cap table. 8) 𝐊𝐞𝐞𝐩 𝐲𝐨𝐮𝐫 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬 𝐮𝐩𝐝𝐚𝐭𝐞𝐝. Investors are people, and knowing others are excited about your idea gives them comfort. Set expectations upfront, send regular updates, and don’t just rely on email...pick up the damn phone. 9) 𝐑𝐢𝐝𝐞 𝐭𝐡𝐞 𝐦𝐨𝐦𝐞𝐧𝐭𝐮𝐦. When you secure one investment, it’s the best time to close another. Keep the energy going. This is underrated. 10) 𝐒𝐮𝐜𝐜𝐞𝐬𝐬 𝐚𝐧𝐝 𝐟𝐚𝐢𝐥𝐮𝐫𝐞 𝐥𝐨𝐨𝐤 𝐭𝐡𝐞 𝐬𝐚𝐦𝐞 𝐚𝐭 𝐟𝐢𝐫𝐬𝐭. Both are full of “no’s.” The difference in a successful raise is they didn't give up. To all the founders out there fundraising...Stay positive, stay persistent, and keep building. 💙 #startups #venturecapital #fundraising

1 month as a VC, and I already received 600+ cold pitches. Only 3 were worth my time. Here’s why the rest failed - and how to ACTUALLY get a VC’s attention. 📚 Do your homework  Most founders spam every VC in sight. Mistake. VCs focus on specific industries and stages - find out who’s a match for YOUR project. Pro tip: Check their profile or website for investment focus areas like DeFi, AI, or gaming  🎯 Quality > quantity  Stop blasting the entire team at a VC firm. If you send the same message to 5 partners, you’ll look clueless. Research who’s most relevant and reach out to 1 or 2 max. 🔥 Warm intros win  Got a mutual connection? USE IT. A trusted referral completely transforms your chances of getting a response. No connections? Make them.  Focus on networking in the VC’s circles - events, groups, or mutual interests. 💌 Respect their inbox  Don’t send a random connection request on LinkedIn. Use InMail or get an intro.  Cold adding is the fastest way to get ignored. 🎤Nail your opener  Keep your intro short and to the point: - What problem is your project solving? - Why does it matter? - Why YOU are the team to do it. 3-4 sentences max. Nobody has time for your essay. 🍴Ask for a bite, not the whole meal  Don’t beg for a meeting. Ask for 15 minutes to gauge mutual interest. This makes it easy for them to say yes - and if you nail that first call, they’ll want more. 🌎 Engage in their world  Are they active in specific LinkedIn groups, Twitter Spaces, or Discords? Show up where they are and contribute value.  Being part of the conversation makes you memorable. ⏳ Play the long game  Building relationships with VCs takes time. - Show up at the events they’re attending - Engage meaningfully with their posts - Ask insightful questions If you do these things, you'll build familiarity - now you're no longer a stranger. Cold pitches fail when you treat them like a numbers game. Put in the effort to build a real relationship, and the right doors will start opening. 🔓 What’s your strategy for standing out in a crowded inbox? Drop your pitch below, and I’ll tell you if it’s VC-worthy. 👇

"Don't worry about page 17," the VC smiled. That clause gave them $25M of your $30M exit. And founders are still signing the same deal today: Two words buried in a term sheet: "Participating Preferred" Sounds harmless. Until it steals your future. Real example: - Company raises $20M - Sells for $100M five years later - Founders expect to split $40M - Actually split $5M - Less than big tech salaries The term sheet had teeth: - 2X participating preferred - 8% annual dividends - 5 years of compounding The brutal math: - Investors get 2X money back: $40M - Plus 8% compound dividend: $50M - Plus % of remaining: $50M - Total to investors: $140M Wait... how is that possible? The exit was only $100M. That's the point. Investors get paid first. With multipliers. With dividends. With compounding. Founders cover the shortfall. The press celebrates: "Startup Sells for $100M!" Reality hits: - 5 years of work - "Successful" exit - Founders break even - Investors 7X their money This isn't rare. It's the standard playbook. Before you sign that term sheet: Circle every instance of "preferred" Understand every multiplier Calculate every scenario Because your "big exit" tomorrow Might be worth less than a salary today. The finest print always has the sharpest teeth.

One of our companies just closed their Series A. Here are my takeways 1) Budget 6 months to get it done We spent ~2 months getting things ready Then it took 4 months from initial investor conversations to close Don't be misled by talk of deals being done much faster - they are outliers in a small subset of the market - great when they happen, but not a solid plan 2) Put in place robust support structures One founder needs to own the fundraise and this will be 80-100% of their time each day Other founders or team members need to take the day-to-day load Outside of work, ensure you take time to rest and relax when you can otherwise you'll show up to pitches unable to give it your best 3) Be prepared for a confusing attitude to risk Many individual investors want to lean into risk where the upside is appealing and they can see an opportunity to generate alpha Investment Committees are on the whole more conservative and many operate with a traditional partnership = consensus model Don't be disheartened when 'I love it' turns into 'my IC isn't keen' Any questions? Let me know in the comments 👇 #startups #venturecapital #technology #innovation #future #founder #entrepreneur #entrepreneurship #fundraising #business #ceo

The best founders don't just think about their next funding round. They think about their funding STACK. And honestly? This shift in thinking is the biggest pattern I'm seeing right now across SXSW Sydney - from FKS community chats, partner & investor conversations, coffee catch-ups with Tractor portfolio companies, and pretty much every other startup event I've been to lately too. It's like something clicked for founders in the last 12-18 months. 𝐇𝐞𝐫𝐞'𝐬 𝐰𝐡𝐚𝐭 𝐜𝐡𝐚𝐧𝐠𝐞𝐝: Founders used to see funding as this linear path: raise seed → burn through it → raise Series A. One round after another. Now they're architecting something completely different. They're building mixed funding stacks. 𝐖𝐡𝐚𝐭 𝐝𝐨𝐞𝐬 𝐭𝐡𝐚𝐭 𝐚𝐜𝐭𝐮𝐚𝐥𝐥𝐲 𝐥𝐨𝐨𝐤 𝐥𝐢𝐤𝐞? Think of it like this: you wouldn't build a tech stack with just one tool, right? You've got your CRM, your analytics, your payment processor, your comms platform. Each one does something specific at the right time. Funding works the same way. 🚜 The founders getting this right are layering different capital types strategically: → Equity capital for the big milestones (seed, Series A, Series B) → Non-dilutive capital for extending runway between rounds → Revenue-based financing when you've got predictable income → Bridge capital when you need 6 months to hit the metrics that'll 2x your valuation It's not about picking one. It's about knowing which lever to pull and when. 𝐈'𝐯𝐞 𝐬𝐞𝐞𝐧 𝐭𝐡𝐢𝐬 𝐩𝐥𝐚𝐲 𝐨𝐮𝐭 𝐝𝐨𝐳𝐞𝐧𝐬 𝐨𝐟 𝐭𝐢𝐦𝐞𝐬 𝐧𝐨𝐰: A founder raises their seed round. Hits $1.5M ARR. Has 8 months of runway left. They COULD raise their Series A now at a $10M pre. Instead, they add $400K of bridge capital. Extend runway by 6 months. Launch their enterprise tier. Hit $2.5M ARR. Then raise their Series A at $18M pre. ̲𝘚𝘢𝘮𝘦 $3𝘔 𝘳𝘢𝘪𝘴𝘦. 𝘉𝘶𝘵 𝘵𝘩𝘦 𝘥𝘪𝘧𝘧𝘦𝘳𝘦𝘯𝘤𝘦? 30% 𝘥𝘪𝘭𝘶𝘵𝘪𝘰𝘯 𝘷𝘴 16% 𝘥𝘪𝘭𝘶𝘵𝘪𝘰𝘯. On a $50M exit, that's $7M more in their pocket. All because they knew when to add a different type of capital to their stack. 𝐇𝐞𝐫𝐞'𝐬 𝐰𝐡𝐚𝐭 𝐈'𝐦 𝐬𝐞𝐞𝐢𝐧𝐠 𝐰𝐨𝐫𝐤: Founders are using non-dilutive capital to: → Buy time to hit the metrics that actually move valuation → Launch revenue-generating features before their next raise → Close enterprise deals they've been nurturing for months → Test profitability without needing to raise at all And the best part? None of this is about avoiding equity funding. Most founders I work with WANT to raise VC. They're building venture-scale businesses. But they're being strategic about when they raise and how much they give up. The mixed funding stack approach gives them options. And options mean you're making decisions from a position of strategy, not desperation. How are you thinking about your funding stack? (send me a DM if you’ve ever got questions on how Tractor Ventures may help!). 🙂

I’ve raised two funding rounds - $1M in our first, and most recently $3.6M at a ~$20M post-money valuation. Here’s what nobody tells you about fundraising (that I wish I knew before starting). How to run the process: 1. Warm intros >> everything else: Cold emails and LinkedIn DMs rarely work. Try to get intros from portfolio founders of the VCs you’re targeting. 2. Batch your meetings back-to-back: Don't fundraise in drips - it kills your leverage. Hit the market hard over 2-3 weeks with tightly clustered meetings. Investors want deals that other investors want. Without urgency, it usually makes sense for them to just wait & watch. 3. Start small: Begin with angels to perfect your pitch and get early commits. Then move to smaller funds for practice before approaching your target lead investors. This builds confidence and helps you refine your story with lower stakes. 4. Set a hard deadline: Announce upfront- “We’re closing this round by [date] and moving on.” This forces decisions and prevents endless diligence cycles. Investors respect founders who control their process. Remember these points: - Associate outreach ≠ real interest: Associates reaching out on LinkedIn is normal - they’re doing their job (meeting lots of founders). Don’t mistake it for serious interest or momentum. - Time commitment is brutal & it's a huge distraction: Budget 3-6 months of full-time CEO attention. From first meetings to signed docs and wired funds, it's a complete distraction from building. The quicker you finish and get back to work, the better. - The only hard part is finding the lead: You'll hear "we'd love to participate once you find a lead" for weeks - it means nothing. Close your lead investor and suddenly everyone who was "interested" wants in immediately. Your round goes from hard to close to oversubscribed in 48 hours. Final thoughts: Run a tight, time-boxed process. Get warm intros, batch your meetings, set a deadline, and focus entirely on finding your lead. Everything else is noise until that lead commits.

This is what success looks like in VC. Founders in the portfolio succeeding is one part. But the numbers are key too. How to measure real wins in VC: ❇️1. DPI (Distributions to Paid-In Capital) - Measures actual cash returns to limited partners (LPs). - Reflects tangible profitability for LPs. - Usable to fund future fund commitments. ❇️2. TVPI (Total Value to Paid-In Capital) - Combines cash distributions and unrealised investments. - Provides a broader view of fund performance and efficiency. - Takes into account private market valuation. ❇️3. IRR (Internal Rate of Return) - Evaluates time-adjusted yearly return rates. - Measures fund performance over time. ❇️4. Bulge Bracket Follow-on - Assesses follow-on funding from top-tier firms. - Demonstrates investment quality and outcome potential. - Particularly valuable for early-stage funds. ❇️5. Gross MOIC (Multiple of Invested Capital): - Measures performance of underlying investments - Excludes fees and expenses which are front-loaded and can distort performance at early stage of fund. These key metrics help LPs evaluate the health of VCs. Peeling back all the snazzy branding, press and glowing reviews... End of the day, VCs are investors and trusted stewards of capital. They need to pick not just the right businesses but at the right price. And, they need to deliver value to their LPs. Anything more to add?

During my career, I’ve secured tens of millions in funding. But looking back there are some things I wish I’d known before I started. Here are four tips I’ve learned the hard way about approaching potential investors with your business idea: 1️⃣ Know your numbers inside out Investors want to see not just passion but also a deep understanding of your business model. It doesn’t matter if you’re not a “numbers person”. Frankly neither am I. I just work hard to master them. Be prepared to discuss your financials in detail: multi-year revenue projections, cost of sales, fixed expenses, and break-even points. Comfort with your numbers demonstrates that you’ve done your homework and are serious about your venture. 2️⃣ Tailor your pitch to the specific investor Not all investors are created equal. Research who you're pitching to and adjust your message accordingly. What do they value? What sectors do they invest in? Who else have they backed and why? Use part of your pitch meeting to ask them about their history and motivations. This is absolutely not about changing your business plan or finances, but thinking about what you emphasise to align your narrative with their interests. 3️⃣ Have a clear exit strategy Investors will back enterprises for all sorts of reasons: a passion for the sector, enthusiasm for the founder, or market potential. But the number one reason they’ll back you is to yield an attractive rate of return. Be ready to discuss how and when they’ll make money from investing in you. Whether it’s through acquisition, IPO, or another exit strategy, showing that you have a plan to return a multiple of their initial investment will instil confidence. It’s not just about the immediate future; it’s about how you envision the long-term growth of your business. 4️⃣ Practice your storytelling People connect with stories, not just facts and data - important as those are. Use storytelling to convey your vision, the problem your business solves, and why you’re the right person to tackle it. A compelling narrative that links to the forecast performance of your business will engage investors emotionally, making them more likely to remember you and your pitch long after the meeting is over. What’s your experience of pitching for funding? What are you still wary of with investors? Share your tips or questions in the comments below!