The 4 Fundamentals Every Founder Must Master Before Raising Capital
Learn how to build the perfect team, craft a winning pitch, and turn your vision into a magnet for investors.
Dive into this week's insights:
From Team to Pitch: The Essentials for Investor Attraction
I met Alex, a biotech founder, in a bustling café near her co-working space. The kind of place where ambition and caffeine mingle in the air. Alex’s eyes sparkled with the sort of excitement that can only come from truly believing in one’s idea.
“Can you help us get some warm introductions to investors?” Alex asked, eagerness palpable in their voice.
“Maybe,” I responded, a note of caution in my tone. “But first, tell me, how strong is your team?”
Alex seemed momentarily thrown. “We’re scrappy. We plan to hire the experts once we secure funding.”
I sighed, knowing this was a common misconception. “And what’s your investment case? How are investors going to make their money back?”
Alex’s response was more of a vague hope than a plan. “The market is huge. If we build it, they will come.”
“And your story?” I pressed on.
Alex chuckled. “We’re about science, not fairy tales.”
Finally, I asked, “How do you make investors feel when you pitch?”
“We have the best science,” Alex grinned, “Isn’t that enough?”
This conversation was taking the scenic route to nowhere.
Alex wasn’t the first founder I’d met who thought raising capital hinged on warm introductions or a slick pitch deck.
The truth?
That’s the icing, not the cake.
DocSend analyzed data from 2022 and 2023 and discovered a surprising trend: investors are spending less time reviewing pitch decks.
Why?
Because the real purpose of a pitch deck isn’t to close the deal—it’s to qualify the team and secure that crucial first meeting.
I decided to challenge Alex. “Let’s focus on the fundamentals before you worry about meeting investors. Do you want to know the real secrets?”
Usually founders laugh, think they already know it better after their 5th incubation program, and move on.
Not Alex. She decided to give me 30 minutes to explain to him what it takes to close deals with investors that not only can provide capital, but move your company forward.
Fundamental #1: Team
“Investors don’t bet on potential teams; they invest in completed ones,” I began.
“But we’re bootstrapping,” Alex protested. “We can’t afford experts yet.”
“That’s exactly the mindset that can sink your ship,” I clarified. “Investors need to trust that you can execute, not just that you have a good idea. Consider BioNTech; before their COVID-19 vaccine breakthrough, they had already invested years in cultivating a team of world-class scientists and drug developers. This was a testament to their commitment, not just their science.”
Alex’s eyes widened with realization. “So, assembling a robust team from the start is crucial?”
“Absolutely,” I confirmed. “Investors look for domain expertise and operational excellence right from the beginning. Building a company isn’t a solo endeavor; it’s a team sport.”
The point is, no investor wants to invest in a lot of hopium.
Investors prioritize funding startups with comprehensive, experienced teams over those with potential but incomplete teams. A study by the Stanford Graduate School of Business revealed that venture capitalists consider an average of 100 companies for every one they finance, emphasizing the importance of a solid management team, a large potential market, and high growth potential.
Investors prioritize startups with strong, complete management teams, as they are critical to a company’s success. A survey of 437 European investors revealed that 49% consider a startup’s management team the most important factor in investment decisions.
BioNTech exemplifies the importance of assembling a world-class team. Before their COVID-19 vaccine breakthrough, they spent over a decade building a team of leading scientists and drug developers, which instilled confidence in investors, and ultimately Pfizer to partner with the company during the pandemic
In summary, investors seek startups with experienced, cohesive teams capable of executing ambitious plans. Building such a team early is essential for gaining investor trust and securing funding.
Building companies in the VC world is a team sport like football, and not for solopreneurs.
Fundamental #2: Investment Case
Alex took another sip of coffee, the steam curling upward like a question mark. “We’ll sort out the business model as we go. The science will sell itself, no?”
I raised an eyebrow. “Do you think investors are in the game for charity, or for profit?”
Alex laughed. “Profit, of course.”
“Correct. They need to see how their investment will grow. Moderna didn’t just say ‘mRNA technology’; they presented a multi-faceted pipeline with potential high-return applications. You need to map out the financial journey for them.”
Alex nodded thoughtfully. “So, we must show a clear path to significant returns before we even pitch?”
“Exactly. No viable path to a 10–100x return? No deal,” I emphasized.
Venture capitalists (VCs) are primarily driven by the potential for substantial financial returns. They typically seek a gross internal rate of return (IRR) of around 30% on successful investments, which often translates to a 10x return over an average holding period of eight years.
To achieve these returns, VCs prioritize companies with clear, scalable business models and well-defined paths to profitability.
For instance, Moderna didn’t merely present itself as an mRNA-focused company; it developed a diverse pipeline of 45 therapeutic and vaccine programs, nine of which were in late-stage development as of early 2024.
This strategic approach demonstrated multiple avenues for revenue generation, aligning with investors’ expectations for high returns.
In summary, while groundbreaking science is essential, investors require a comprehensive business strategy that outlines a clear trajectory toward significant financial returns. Without this, securing venture capital becomes exceedingly challenging.
Fundamental #3: Storytelling
Alex leaned back, crossing her arms. “I still don’t get the storytelling thing. Isn’t science enough?”
“Not even close,” I said. “Data rooms are for facts. Pitches are for stories.”
I paused, letting the words sink in. “Stories resonate because they connect emotionally. Science might be the backbone of your pitch, but storytelling is the heart. A good story activates an investor’s memory, empathy, and decision-making centers — it makes you and your idea memorable.”
I pointed to Airbnb. “They didn’t start their pitch with market projections or revenue potential. Their story began with two guys renting out air mattresses to pay their rent. That small, relatable story grew into a vision — transforming how people travel. That story is what secured their first round of funding.”
Alex frowned, clearly still unconvinced.
“Let me give you another example: Tesla. Elon Musk didn’t sell investors on electric cars alone. He told a story about a sustainable future — a future where Tesla would disrupt the automotive industry and change the world. That vision wasn’t just compelling; it made people want to invest in Musk’s mission, buy his cars, and root for Tesla’s success.”
Alex’s arms slowly uncrossed, and a thoughtful expression replaced her skepticism.
“Investors want to see your science, but first, they need to believe in your vision. A compelling story is the bridge between the technical and the human — it turns your pitch into something they can champion.”
Storytelling isn’t just a nice-to-have; it’s a must-have, backed by science. Research from Princeton University highlights how narratives synchronize brain activity between the storyteller and the listener, creating a connection that raw data alone cannot achieve. This connection makes stories not only more engaging but also easier to remember.
Ben Horowitz, co-founder of Andreessen Horowitz, emphasizes that “a compelling story puts the company into motion.” The role of storytelling in building trust and fostering emotional connections is widely acknowledged — both critical factors for securing funding.
The data is clear: a strong story makes your pitch stand out in a sea of facts and figures.
Take the case of Warby Parker. The founders didn’t just say, “We sell affordable glasses.” They told a story about the frustration of losing an expensive pair of glasses and realizing there had to be a better way. That story resonated with investors and customers alike, propelling Warby Parker to success.
In summary, storytelling transforms your pitch from a list of features and benefits into a memorable, emotional journey. Investors want to hear who you are, why you care, and why your idea will succeed. Data may close deals, but stories open the door.
Fundamental #4: Emotions
Alex leaned back in her chair, her confidence momentarily shaken. “I feel confident when I talk about the science,” she said. “But emotions? Isn’t that…irrelevant?”
Emotions in business pitches, Alex seemed to think, were as relevant as fairy dust.
I shook my head. “Far from it. Science gives your pitch structure, but emotions give it life. Investors don’t just fund ideas; they fund people. And people are driven by emotions.”
She raised an eyebrow, still skeptical.
“Let me ask you this,” I continued. “If two founders presented the same breakthrough technology, would you invest in the one who speaks timidly, avoiding eye contact, or the one radiating energy, conviction, and purpose?”
“The second one,” Alex admitted.
“Exactly. Confidence is contagious,” I said. “Investors want to feel secure in their decision. They need to believe in you as much as your idea. When you show urgency and conviction, you make them feel that you’re the right person to lead.”
Alex hesitated, then nodded. “So it’s not just about the science; it’s about how I present myself.”
“Yes,” I said, smiling. “Think of Elon Musk pitching Tesla. He didn’t just talk about electric cars. He told a story about a sustainable future, with Tesla as the catalyst. His vision made people believe in him. It wasn’t just about the cars — it was about trusting him to lead the charge.”
Alex leaned forward, her skepticism replaced with curiosity. “I think I see what you mean.”
“Good. Remember, every pitch is a performance. It’s not just the idea — it’s the person behind it.”
Emotions aren’t just an intangible aspect of pitching; their impact is backed by psychological research. Studies show that confidence plays a pivotal role in shaping perceptions and influencing decisions.
Research published in the Journal of Personality and Social Psychology highlights that individuals with higher confidence levels are more persuasive and influential in group settings, making them more likely to gain trust and support. Similarly, findings in the Journal of Experimental Psychology: General suggest that self-efficacy — one’s belief in their ability to succeed — encourages persistence and risk-taking, qualities that resonate strongly with investors.
For founders, this means that projecting conviction and clarity can significantly enhance their ability to inspire trust and attract investment. Investors don’t just back ideas — they back confident leaders who exude purpose and belief in their vision.
Consider Steve Jobs. His iconic product launches weren’t just about features; they were performances. Jobs captivated audiences by presenting Apple as a brand that wasn’t just selling products but changing the world. His energy and confidence inspired not only customers but also investors to believe in his vision.
Even Sara Blakely, the founder of Spanx, used her enthusiasm and belief in her product to win over investors. She didn’t have traditional business experience, but her passion for her idea made people believe in her ability to succeed.
In summary, emotions are the bridge between you and your investors. Confidence, conviction, and energy make your pitch memorable and compelling. Investors don’t just assess your science — they assess your ability to lead, inspire, and execute under pressure. Show them you’re the person they can trust to turn vision into reality.
Over the next few weeks, Alex got to work. She rebuilt her team, bringing on a seasoned clinical trials expert.
Together they crafted an investment case that showed exactly how they’d achieve a 10x return.
They rewrote their pitch, centering it on their story of resilience and grit. And they practiced delivering that pitch until they radiated confidence.
Three months later, I got a call.
“We just closed our seed round!” Alex exclaimed.
“Congrats,” I said. “What changed?”
“You were right. Investors didn’t just want science. They wanted to believe in us.”
The 4 Fundamentals
Alex’s journey highlights the 4 fundamentals every founder must master:
Team: Build a complete, experienced team before you pitch.
Investment Case: Show a clear roadmap to 10–100x returns.
Storytelling: Craft a compelling narrative that inspires belief.
Emotions: Radiate confidence, energy, and urgency.
Warm introductions and pitch decks might open doors, but they don’t close deals. Success begins with mastering the hard stuff most founders avoid.
If you’re ready to level up your startup and master the fundamentals, let’s talk.
What’s your take? Are you focusing on the right priorities? Let’s keep the conversation going.
Is Your Startup Ready for Its Next Leap?
Are you confident your business is investor-ready? Do you have the team, roadmap, and story that will make investors believe in you and your vision?
Let’s turn uncertainty into clarity and prepare your company to thrive.
🌟 Book a complimentary discovery call with me today to:
✅ Assess your team’s readiness and identify critical gaps.
✅ Craft a tailored investment case that showcases a clear path to returns.
✅ Develop a narrative that inspires belief and sets you apart.
This isn’t just a conversation—it’s a roadmap to elevate your pitch, refine your strategy, and ensure your startup is positioned for success.
➡️ Schedule your discovery call now and take the first step toward securing your next big leap.
Upcoming Conversations and Events:
December 10, 2024 - 01:00 pm CET - Christopher Uhde, SEB, Biotech/Pharma Investment Banking, IPOs
December 17, 2024 - 04:00 pm CET - Marie Schroeder, Novo Holdings, Seed Investment
Podcast Episodes and Clips
#148: Think Long-Term, Thrive Always: 7 Lessons From Investing Titans
SPARK 20 - 109: Philipp Baaske, CEO of Nanotemper
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