Two Steps Ahead


Most entrepreneurs that are fundraising focus their pitch for the current money needed, with some 5-year supporting financial plan. The storyline is about the now and about the far future. I would argue that the successful raise is the one that focuses on the next funding round, not this one. The logic is straightforward: no investor wants to be left holding the bag and they rarely are willing to lead the next round unless the business shows Twitter-like growth. Those already around the table are always look for new money, new faces, new validation that the model is working. A new investor will bring fresh ideas to the business, their own contacts plus the non-trivial point of another pocketbook to fund the growth.

So when the current potential investors ask questions like “so what does your company look like in one year?” they are actually asking, “What are you going to be pitching to the next funders? Is it different enough that a new investor will want to buy shares at a big step-up price so everyone gets rewarded for it?”. Said another way, if the current round does not create enough positive change or momentum, then the next guy will kill everyone on price. Not a good outcome.

Thus, if I am a potential investor, your current raise has to not only make me excited about putting money in today, but also has to show me what the NEXT round’s pitch deck is going to look like to excite the next funder. This is not just an exercise in creative deck-writing. What you have to answer your potential investor is:

1)   What are the milestones the current money will buy that will make the business more valuable for the next funder?

2)   How much time will it take to reach those milestones?

3)   Given the above, is the current raise enough to hit the milestones plus the time needed to fundraise?

Most experienced investors will be looking for these answers, but I have found that very few will actually come out and specifically ask. It is on you to be very explicit about how this funding leads to the next one at a higher valuation.

This process, by the way, should also drive the amount of money you are asking for. Jan Leeman, a close mentor and friend, helps me write the next deck before we finalize the current one. Why? Because then we know exactly what we have to prove or what holes we have to fill with the current raise, so we know how much we need in money and time. And by being transparent about it, you have a solid justification for the amount of money you are raising, not some arbitrary round dollar number or amount of runway.


  1. thanks gabe, i appreciate your sharing your thoughts here.

    when i was fundraising for my latest startup, we created a “we’re raising $x to accelerate our progress” slide which showed the product, sales and technical milestones we planned to achieve with the funds. these milestones were critical to raising the next round of funding.

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