Exclusive: How Slack’s Marriage to Salesforce CrumbledRead Now

Art by Mike Sullivan

How the Myth of the Hot Round Hurts Founders

By  |  Feb. 16, 2022 9:00 AM PST
Photo: Art by Mike Sullivan

Here's a fun little paradox in fundraising: Founders and the media love to talk about how quickly funding rounds happen these days—think about the big, rapid-fire raises from OpenSea, DataBricks and others—but when you watch a fundraising process from start to finish, it’s never as fast as it seems. Even the tidiest-looking processes, ones that seem to kick off on day X and sign term sheets on day Y, aren’t what they appear to be.

The best-run rounds are always running, just at different levels of intensity. This breaks some brains because founders want to believe you’re either fundraising or you’re not. In reality, great founders are always fundraising. It’s just that sometimes they call it “fundraising” and sometimes they call it “building relationships.”

This is an important point for founders to internalize because the illusion of fast, aka hot rounds hurts companies. Specifically, founders come to expect that they can emerge from a hole, say “We’re raising” and be done in a few days.1 The early-stage market hasn’t taken quite the same beating as later-stage or public markets, but still, now is no time to be stupid. The truth is that nearly every fast round I've ever seen (and I’ve seen many) actually started months earlier with careful relationship- and narrative-building or extensive work by an investor—or in many cases both.

Get access to exclusive coverage
Read deeply reported stories from the largest newsroom in tech.
Latest Articles
 
Exclusive e-commerce
Walmart Plans to Offer Buy Now, Pay Later Loans Through its Fintech Venture
Photo by Bloomberg.
The ambitious fintech venture backed by Walmart is planning to launch buy now, pay later loans as soon as next year, three people familiar with the matter said. That could put the world’s largest retailer in competition with fintech lenders like Affirm and Klarna, as well as Apple, another consumer giant set to launch its own installment loans. Walmart has been pushing deeper into...
Latest Briefs
 
Airtable Lays Off 20%, Replaces Product and Sales Chiefs
Ex-Twitter Employees File Class Action Lawsuit Alleging Sex Discrimination
Meta Faces FTC In Court Over VR Acquisition
Stay in the know
Receive a summary of the day's top tech news—distilled into one email.
Access on the go
View stories on our mobile app and tune into our weekly podcast.
Join live video Q&A’s
Deep-dive into topics like startups and autonomous vehicles with our top reporters and other executives.
Enjoy a clutter-free experience
Read without any banner ads.
Microsoft CEO Satya Nadella. Photo by Bloomberg
Exclusive microsoft
Microsoft Eyes ‘Super App’ to Break Apple and Google’s Hold on Mobile Search
Microsoft recently considered building a “super app” that could combine shopping, messaging, web search, news feeds and other services in a one-stop smartphone app, in what would be an ambitious move by the software giant to expand further into consumer services, according to people with direct knowledge of the discussions.
Illustration by Josh Brill.
Opinion economy
A Raise May Be Out of the Question, but You Do Have Other Options
Layoffs have swept through the tech industry (and more may be on the horizon ), flooding the job market with qualified candidates—just like you—as even the large companies are fighting to stay afloat.
The 1:1 policy
A Billionaire Couple Goes for Broke: How John and Laura Arnold Plan to Give It All Away
On Election Day, John and Laura Arnold found themselves deep in the lion’s den: a few blocks from the White House, working from the new Washington D.C.
Animation by Clark Miller
The Big Read
The Passion of Cathie Wood: Why the ‘Wackiest Portfolio Manager on Earth’ Isn’t Losing Faith
Cathie Wood was sitting in a phone booth in the New York office of Ark Invest when she heard Tasha Keeney, one of the firm’s analysts, let out a scream—“a happy scream,” Wood recalled.
Exclusive startups crypto
Crypto and AI-Focused Sequoia Partner Is Leaving the Firm
Sequoia Capital partner Divya Gupta is leaving the firm just weeks after the storied venture capital firm apologized to limited partners about its $214 million investment in the now-bankrupt crypto exchange FTX.
Org Charts google
Google’s Sundar Pichai Has More Direct Reports Than the CEOs of Meta, Amazon, Apple
Meta Platforms’ Mark Zuckerberg isn’t the only CEO spending more time overseeing the development of costly consumer devices.