SH*T

Why this book?

Let me briefly introduce myself and explain why I wrote this book. I'm JT, CEO of MindsDB, a company I co-founded with my dear friend Adam C. In the end of 2023, we raised a $47M seed round from some of the best investors in the world. How did we, the chihuahuas in a pitbull fight, managed to do that?—that's the question I get from many early-stage founders or aspiring founders. Now, depending on the circles you run in, $47M might be seen as either a drop in the ocean or a staggering amount of cash. But, in most circles, that's a pretty decent seed round.

For us, it didn't come easy, and it sure as hell didn't happen overnight. Before that seed round, we had gone through a wild journey of raising about $8 million in pre-seed money, and so much could have been done differently. So, a year ago, as a way to blow off steam, I decided to write 3-4 pages every weekend to send to those who ever so often come to me and asking fundraising questions and like us—plucky little scamps—are walking that early startup journey and need funding to make it happen.

What matters here isn't just how much we raised, but the brutal learning curve it took to get there—the fuckups, the close calls, the lessons they don't teach you in any classroom or startup accelerator. And trust me, we've had our share of those. There are great books on the business principles needed to get from nothing to "scale up" (and please, read them). These tales are only from the fundraising perspective. We learned that no one gives you the real picture for surviving the actual sh*t and the unspoken rules that can make or break your first big round.

Who is this book for?

Specifically, this book is for you if you're somewhere between "I have an idea, this idea needs some moolah to get it off the ground" and "I am just working on a seed round that would make grandma faint." The focus here is just the fundraising part, what is covered in this book is just but one part of a long journey of building a company.

This book is for the dreamers who've decided that working for someone else's dream is about as riveting as watching someone else's loading bar reach 99%. In particular, I wrote this for the underdogs. The ones who don't have a Stanford MBA, a family trust fund, or a cousin who's best friends with Marc Andreessen's barber.

Congratulations, you still get carded at the bar and your liver is younger than most houseplants. Still clueless after graduation? Welcome to the club of many! If you have no idea what to do with your life, join a startup that's tackling a problem so big it makes your parents question your sanity. Worst case, you'll learn what not to do. Best case, you'll accidentally stumble into your life's work while eating ramen at 2am with people who also have no idea what they're doing.

There's a greater than zero chance that you're still working that cushy corporate gig, the one with the nice benefits, the reliable paycheck, the reassuring stability of a 401k that seems to stretch out into your comfortable retirement. You're good at navigating the slow, bureaucratic machinery of the corporate world. And let's face it—you've gotten pretty damn good at milking it, haven't you? But every once in a while, something inside you stirs. Something tells you that maybe—just maybe—you're wasting your life.

If you and I are made of the same, that itch doesn't go away. I believe, it is very likely that one day, too old to hold your farts, while reflecting on the reflection of your saggy butt cheeks in the mirror, you'll look back at your safe life, your stack of savings, your perfectly planned but shrinking future, and you'll ask yourself: What would have happened if I asked for that phone number,... what might have been if I'd just taken the leap,... what did I miss?

Maybe, naive enough, you've already made that leap, and… you're here because you're drowning or like a confused penguin desperately flapping its wings trying to fly before it hits the ground. Trust me, I know how it feels. One day, you're walking on water, feeling like you've cracked the code, like the world is suddenly obvious. And the next, you're gasping for air, trying to claw your way out from under an iceberg that's crushing you. Welcome to the rodeo cowgirls and cowboys. You've chosen this life, and hopefully this book helps you f'it up a bit less.

Rule 1: All Startup Ideas Are Shit Ideas Until They Aren't

Sun-shine, Let's get real here, Investors: They're basically professional truffle pigs, rooting through the mud of mediocrity hoping to find that one precious nugget that doesn't smell like desperation and delusion. At this point, chances are, your idea is about as useful as an ejector seat in a helicopter. No one, other than your daddy is there to worship at your PowerPoint altar or marvel at your revolutionary plan to disrupt the artisanal sock puppet market, your groundbreaking vision it's just more static in the cosmic background radiation of bad startup ideas, right up there with "blockchain-enabled toothbrush". Maybe..., most of times.

Some other rare-times you got a solution so brilliant it'll make Einstein's hair look even crazier, but the problem? It's smaller than a New Yorker's concept of reasonable rent. That's when these venture capital types hit you with that "too early" wildcard, which is fancy-speak for "damn, you saw this coming before anyone else could spell 'disruption.', yet we dont know if we will see money while we are still kicking" And sure as Trump's spray tan isn't found in nature, some of these tiny-ass problems eventually blow up bigger than a Kardashian scandal and they will need a solution.

The real game here, Love, and trust me on this like you'd trust a New York rat's restaurant recommendations, because they have tried them all: is surviving long enough for the market to wake up and smell the disruption or for you to find a real problem. Sometimes you'll find yourself sitting pretty, with exactly the right solution when the world finally catches up to your genius. Other times? You'll have to take your precious baby of a solution out for a spartan cliff drop, because while the problem's still real as rent control arguments, your solution needs a do-over. But this time? This time you've got all those battle scars and war stories to guide you. Think of it as your startup's second draft, and baby, everyone knows the first draft is just where you spill words onto the page like a preschooler pouring sugar and salt at the same time on a drink they've made for their parents.

It's late 2022, the market is awful, there's a war in Ukraine that took the world by surprise, everyone's worried about World War III, we're post-COVID, and investor checks aren't just something you find in your cereal box anymore. Hell, even Sam Altman's mother didn't know about ChatGPT or what her son actually did for work then. I'm on a call with George Mathew from Insight Partners (you can Google him later, but think "really good investor at a really good firm"). Don't ask me how we connected, at that point we were basically the startup equivalent of those people who slide into everyone's DMs with "hey beautiful." But hey, we spammed the hell out of this town like proper founders should, and the proof is we somehow landed that call. Something about our pitch caught his eye, and there he was, methodically dissecting my presentation like a surgeon performing an orchiectomy, the kind where you're pretty sure your startup will never see the light of offspring again. Meanwhile, my soul slowly left my body and started browsing LinkedIn for consulting jobs, wondering if I was too old to become a surf instructor somewhere nice in Brazil.

Mercifully, we'd only scheduled 15 minutes. When that blessed 1/4 mark hit, I practically screamed "OH WOULD YOU LOOK AT THAT!!, LOOK AT THE TIME, GOTTA RUN!" like a teenager ditching prom with their dignity still somewhat intact. I had a very important meeting with my mirror scheduled, where I planned to stare deeply into my own eyes and whisper "what the actual fuck?"

The question haunting me was deliciously simple: What mystical unicorn were we seeing that others couldn't spot with a telescope? What neon-bright red flags were others seeing that we were blind to? Who was the crazy one here? In hindsight: My guess? Oh darling, we all were wearing different flavors of crazy pants in this circus.

I still remember vividly the day I called my co-founder Adam Carrigan. Picture this: it's a Sunday afternoon, and I'm interrupting what sounds like one of those trendy online workout sessions. You know the type; where fit people on screens make you feel bad about your life choices while you wheeze like a broken accordion.

"Hey mate, wanna quit your cushy consulting gig?" I asked, with all the casual nonchalance of someone suggesting we grab coffee, not torpedo our careers. He responded: "Yes yesterday, but no, it depends, what's up?"

Through his labored breathing (apparently planking and important life decisions go great together), I could practically hear his brain short-circuiting. We both had great paying jobs, finally, the kind your parents brag about at family gatherings, after a year of: oh well, they work on their computer playing businessmen. Our previous startup adventure had left us with enough emotional scar tissue to make a therapist retire early. But here we were, like recovering adrenaline junkies eyeing a bungee cord, itching for another fix.

"I think databases will become enterprise AI, they will have a Mind" I declared, probably sounding like a fortune cookie having an existential crisis.

Now, Adam has the built-in risk aversion of a British man facing unscheduled tea time, we're talking about he is the friend who considers jaywalking a gateway crime to full-blown anarchy. But to my utter bewilderment, this gentleman didn't even hesitate. If my partner in business, with whom I'd previously achieved the impressive feat of turning perfectly good savings money into absolutely nothing during our last startup adventure, was ready to leap back into the circus of entrepreneurial chaos, then surely this idea must've been pure, unadulterated, 24-karat gold, right?

...Right?

After back and forths on perfectioning our thoughts. We had this wild conviction that Machine Learning would eventually evolve into applied AI, you know, AI that actually does useful stuff instead of just crushing board games, PhD papers, or writing suspiciously existential poetry about cats. We believed, with the fervor of shroomed prophets, that every company on Earth would eventually crave this magical decision-making juice like it was the last bottle of water in the desert. And the market size? For enterprise AGI? Oh darling, just every company in existence. No pressure. No biggie. Just casual world domination.

But here's the punch: this was pre-2023, when AI wasn't the corporate equivalent of avocado toast, something every self-respecting CEO had to have on their agenda. Our solution, while technically impressive (if I do say so myself), required more attention than a needy ex with abandonment issues. In retrospect, in many ways, it felt like architects trying to sell flying houses before humans had mastered the wheel. Technically brilliant, practically useless. So, at this time, after having put tears and sweat into it. For most people, still, our idea was most of the time shit or at least not gold.

A few weeks after my disastrous pitch to George, I found myself in NYC for a wedding. With the audacity of someone who's been rejected so many times they've achieved enlightened zero-fucks-given status (a state I hope you too will reach), I messaged George: "Remember that startup you verbally eviscerated? Want to grab coffee?" To my eternal surprise, he agreed to 15 minutes of coffee. At the time I did not know him, so I thought it was probably out of morbid curiosity, but; as I later learned that day: he's actually a really cool and curious guy. He just happens to have the bullshit filter of a nuclear-grade truth detector.

Until then, we'd been blessed with magical thinking investors, you know, the kind who see a couple of passionate nerds and think "Well, they'll either change the world or create a spectacular failure worth telling stories about." Later, I will write about how crucial those investors were for our business. But George? George was a product person. He saw the holes in our plan like a wine mom spots judgment at a PTA meeting.

In my notes from our first call, there was this gem: "You're crazy if you think you can compete with existing players that already have the data." We saw ourselves as market disruptors, thinking people would flock to our solution like teenagers to a TikTok trend. But convincing companies to switch data systems is like trying to convince someone to move houses just because you invented a slightly better toilet. Sure, some might bite, but most people are perfectly happy with their current crapper, thank you very much.

The way investors think is brutally simple: how likely is it that this company will become absolutely massive? The question George was probably asking himself was: "How likely is it that these adorable dorks will convince everyone to abandon their perfectly functioning data infrastructure and jump ship to their solution?" About as likely as finding a llama-corn (that rare hybrid born nine months after a llama had a magical night of passion with a unicorn) sipping a pumpkin spice latte at your local Starbucks. But then, while having my profound heart-to-heart with the mirror, it hit me like an epiphany: we didn't need to move anyone's data! We just needed to integrate with every single data source that existed. Forget being data hoarders, we'd become the master plumbers of the AI era, connecting all the pipes without stealing anyone's precious data-toilet.

As we met for coffee, I had 15 minutes and I explained the epiphany with the enthusiasm of a hippie that has discovered that they too can brew their own kombucha, all of a sudden I too saw the parts of the puzzle make sense, like when you go from staring at a Magic Eye poster for three hours seeing nothing but static to suddenly spotting that 3D dolphin that was hiding there all along, mocking your perception. The pieces started falling into place faster than Silicon Valley startups pivot to AI nowadays. It was like watching Bob Ross paint one of his "happy little accidents", starting with chaos and ending with something that actually made sense.

Before we knew it, we were walking the streets of New York way past those promised 15 minutes. And then George dropped the kind of validation bomb that hits different, the kind that makes you feel like maybe, just maybe, you're not completely delusional after all. "This idea," he said, with the gravity of someone who's seen enough startups to develop PTSD, "if you pull it off, this is how a giant business is built." Then came the classic investor one-two punch: "Now you just need to execute and validate." Which in startup speak translates to "You've got a tiger by the tail. Don't screw this up". All of a sudden a "shitty idea" started to look more like a good idea!

Rule 2: You need to grow the skin of a fucking lizard, you can't give up!

So for many of us, this will be a painful journey, the sooner you realize this, the better. When it comes to early stage fundraising, If you haven't yet mastered the art of getting rejected more times than a Nigerian prince's email asking for social security numbers, don't sweat it. It's wasn't technically required in your application form as an entrepeneur. However, this line of work will give you a Post Doc in rejection faster than you can say "so,.. what do you think?." Your skin will grow thicker than a rhinoceros wearing kevlar, it has to. It's like asking if a boxer gets used to being punched in the face. Who knows? Maybe. Either way, You'll build up immunity to rejection like you will build up immunity to ramen; it's not that you enjoy it, you just lose all form of taste.

The important thing is to not give up, to keep learning, iterating. To see opportunities for survival where others don't. Our fable to this rule, is a near death experience. Six or so months into MindsDB. Chon Tang from Skydeck (you can research about him, but essentially like Professor X to the X-Men Academy for startups), our first investor and now friend. This guy had front-row seats to our fundraising circus: watching us pitch to everyone from venture capitalists to that one guy who looked suspiciously like a janitor but we still believed they could be our angel investor, maybe. We were like desperate singles at last call, hitting on everyone in sight.

But holy quantum algorithms, were we working harder than a hamster that found a bag of speed next to a bag of nuts! There's something absolutely intoxicating about building a product from nothing but the fumes of your hallucinations while simultaneously trying to figure out what the hell a "go-to-market strategy" is. Chon met with us for countless hours, probably questioning his choices that one moment he said, 'welcome to Skydeck', but sticking around anyway. He was what every entrepreneur needs at that stage: a "fuck it, let's do it" bouncing wall who'd listen to our fever dreams with the patience of a Buddhist monk at a heavy metal concert.

Because here's the thing about the early startup game: the more lost you are, the more time you can spend debating the stupidest of things, like number of pixels for the left margin of paragraph four on your website, than actually building something and trying it with the market. But with Chon, we were all about trying things like teenagers discovering cooking for the first time: throwing oil-drenched spaghetti at the wall with the enthusiasm of a blockchain newb at a Web3 conference, completely oblivious to the fact that all that oil meant nothing would ever stick. To the outside eye, we were basically conducting a masterclass in how NOT to make pasta while thinking we were the next Gordon Ramsay of startups, but from the inside we were working harder than ever to find that one spaghetti we did not put oil in..

The market wasn't ready for us, or maybe we were too busy being the proud parents of our "super cool solution" to notice that -businesses actually- need, you know, business fundamentals. Details, etc.

So Chon invites me to lunch, and I'm thinking "free food!" but no, it's intervention time. He's giving me the "you fought a really good fight" speech to someone that can't open their eyes from how swollen the wounds are, one more punch in the face it's not worth it, people already saw you being beaten to death, they just want you to be able to walk a few months later. He knows we tried harder than a vegan trying to convince Tyson Foods board about broccoli's exciting flavor profile.

There I am the next day, packing up our office into a sad little box (which mostly contained empty Red Bull cans), and just like that is when fate decides to play one of its practical jokes. Some other team, the darling of our cohort, cancels their investor meeting, because they can't say yes to everyone, and suddenly I'm the backup of the backup dancer called to center stage.

I show up to meet this investor who's crankier than a cat in a bathtub about driving all the way to Berkeley from god knows Santa-somethin' for a cancelled meeting. He suggests a phone call instead so he can beat traffic across the bridge, and I'm like "Sure, one more bullet in the chamber!" I call and pitch with the confidence of someone who wasn't packing their failure into a cardboard box as they spoke, channeling everything opposite to that time Adam and I fumbled the bag in San Francisco way back then. Because now, I know it's not over until it's over.

The phone call ends with that classic investor line: "Aight, send me your terms and deck, I'll look at it while driving." Translation: "Cool story bro, I'll file this under 'Never in a Million Years.'" But remember Rule #2? Never give up? Well, we sent that pitch deck faster than he could put his blinkers on, complete with a signed YC Compatible SAFE agreement (see the glossary for more details about SAFE agreements) and our bank wiring detailed instructions next to the "we will make you rich and looking forward to catching up again soon".

Fast forward a week or two, because time flies when you're busy writing startup obituaries, and my phone rings. This investor, sounding like someone who just discovered an untouched pizza in their fridge after a rave, asks if we've received the transfer they made days ago. Just like that, like a zombie startup that learned to tap dance, we moonwalked right out of the startup graveyard. And here we are, telling the tale like contestants who not only survived the Hunger Games but also managed to steal President Snow's Netflix password in the process.

Before you go full armadillo—rolling through startup land with a hide so thick you can eat rejection for brunch and crap out disappointment for dessert. You absolutely, unavoidably, must stare into the bathroom mirror and ask the startup equivalent of "Does this haircut make me look like I eat crayons?" Here it is: Can you imagine waking up for the next ten years, every single morning, and still giving a quantum-fluctuation of a damn about THIS problem? Not "Do I adore my brainchild solution today, the slick gadget I MacGyvered together after three Red Bulls and a spiritual awakening in my shower?" No. Sober up: If your solution is just a spicy fever dream and the actual problem bores you sideways, hit pause. Don't let your founder romance write checks your motivation can't cash. So here is a subrule, or an exception to the rule of not giving up:

This is so painfully obvious that as I write it, it makes me want to staple my own eyelids shut, but here we are, having this conversation like two people trying to assemble furniture while high. It's one of the most important rules to follow if you want to survive this madness. And I don't mean that in the sense that you need to always be the kind of person who can look at a spreadsheet full of red numbers and think "challenge accepted" rather than "where's the nearest bridge?". I mean that if the problem, the industry that you picked to solve is not something you would want to solve for the next many years, don't do it. Life is in fact short.

Picture this: Adam and I, we were just about to crash and burn with our previous hardware startup that we failed at (Real Life Analytics). We were broker than a piggy bank at a hammer convention, questioning every life decision that led us to believe hardware was a good idea. (Pro tip: Hardware is like dating a supermodel, looks amazing, but the costs of that relationship can kill you). If you've succeeded in hardware, you are my hero, you can and you should look down on software people like they're playing with Fisher-Price toys while you're wrestling bears. It's not even apples and oranges; it's more like comparing one of those walkers that toddlers use to learn their first steps to a rocket.

So there we were, desperate enough to email random people on LinkedIn. By some miracle, this prime-cut hardware-focused fund invited us to San Francisco. I mean,... they didn't pay for our flights, hotels or anything, they just said, if you are in the Bay we can meet in our office, so clearly East coast to SF was a stone throw away, so yes, we were in the area, and we pitched our hearts out to a partner whose face had all the emotional range of Poker world champion. If we'd pitched to actual concrete, we might've gotten more emotions from it. They did ask good questions, and by then we had answers smoother than a VC's LinkedIn humble-brag about their latest unicorn, but our souls had already left the building.

Meeting over, Adam and I stood at that, some random pier where their office was, staring at the bay like two rejected contestants from The Bachelor. "So... this is the end, right?" Adam shared with a smirk, but also with all the enthusiasm of someone announcing their own funeral. "What shall we do?"

Our hearts were more broken than a developer's code after a coffee spill on their only backup. We knew that their "this is interesting you guys, we'll reconvene and message you tomorrow" really meant "Thanks for flying across the country you bosons, but we could've crushed your dreams over the phone."

And then we did what any self-respecting failed entrepreneurs would do: we decided to get absolutely hammered good-bye. Like college freshmen with their first fake IDs, we bought the cheapest booze we could find and went to town.

Next morning, we woke up on our friend's Icelandic ice breaker ship (because believe it or not that's a thing people have in San Francisco), splitting headaches and phones buzzing like angry wasps. I answer, and it's no other than the investors from yesterday: "Hey guys" -this time all emotions- "we'll be in the office if you want to discuss investment terms."

I jumped up faster than a cat in a field of mirrors, found Adam, and we sprinted to their office. Only just before we arrived, looking like we'd just lost a fight with a seafood buffet, smelling like if we had showered in lobster juice, did I realize we probably shouldn't have given up so early. There was still one bullet in the chamber, but we'd already written our own obituary yesterday with ink made out of tequila, we knew we could not see ourselves doing hardware for advertisemnt in the following years. The solution we loved, it was what two nerds like us would enjoy building for fun, but we were looking for a problem to our solution, we couldn't care less if people did or not see the right billboard ad on their way home.

I called back and declined the meeting, which probably made me wonder if we were the first founders in Silicon Valley history to turn down money because their hangover felt like their brain was being used as a drum set by a toddler that just discovered sugar. But here's the real lesson: we had already emotionally checked out. The day before, we'd basically done the startup equivalent of not just burning bridges, but nuking them from orbit, tap dancing on the ashes, and sending a postcard about it. We'd mentally resigned harder than someone who quits their job by storming into their boss's office with an opening line such as "I am glad your mother did not swallow you, but... ", proceeds skywriting with their middle finger "I QUIT" and then parachuting into their exit interview wearing a banana costume. The desire to solve that particular problem was born more dead than my will to ever drink tequila or whatever that elixir was that we killed our last intentions in.

For years, I wondered what could've been if we had taken that last meeting. But now I know it was for the best. We needed that failure like a teenager needs embarrassing yearbook photos. It taught us the most valuable lesson: Before you start taking checks from people, before you burn your savings, your time, put at risk your sanity, your health, your relationships, your sleep, your everything. It's ok to stop, if you don't love the problem your startup is trying to solve, on the other hand, if you see yourself working on this for a very long time, never give up, because sometimes, just sometimes, your lowest moment is right before someone decides to bet on your crazy dreams.

Rule 3: It is never, never too late to fuck it up!

Listen, I need you to tattoo this somewhere visible, maybe on your forearm, maybe on your co-founder's forehead: the startup gods are petty, vindictive little gremlins who feed exclusively on the tears of founders who dared to feel good about themselves for more than eleven consecutive seconds. The moment you let that champagne cork fly before the wire transfer clears? That's when the universe puts on its favorite pair of steel-toed boots and aims directly at your reproductive organs.

This doesn't mean you should never make mistakes: that's as impossible as finding a VC who doesn't mention their "thesis" within the first three minutes of meeting you. No, mistakes are the breakfast cereal of entrepreneurship; you're going to eat them whether you like it or not. But here's the thing: startups are a competition, fundraising is a blood sport dressed up in Patagonia vests, and like any competition where people, other founders, your competitors pretend to be civilized while secretly wanting to watch you choke on your own pitch deck, you should never, ever, bring your guard down. Because the best of your competitors won't.

This rule is about strangling that treacherous little narrator in your skull, the one who sounds like a life coach who just discovered cocaine and Tony Robbins on the same weekend, whispering "You're a genius! The hard part is over! Maybe treat yourself to a Tesla!" the moment a term sheet or a SAFE agreement lands in your inbox. That voice is not your friend. That voice is a sleeper agent planted by the universe specifically to destroy you. That voice has ended more promising startups than lines did to Wall Street in the '80s, except at least those guys believed they had good parties on the way down.

If I am not being clear, let me say it again: The biggest mistake you can make is to let your ego give your ego a handjob. I've seen it happen. Hell, I've been the one with my pants down, metaphorically speaking, spiritually exposed, thinking I was about to close a round when in reality I was about to close my laptop and cry into a bowl of cereal. Everything great; and I mean absolutely, spectacularly, against-all-odds great! that has happened at MindsDB traces back to this rule: we stayed more paranoid than a drug dealer at a family reunion, more vigilant than a parent at a playground full of suspiciously friendly adults. It's especially and more so, right at the exact moment we thought we'd accomplished something.

Because that's when you're most vulnerable. When you're failing, you're sharp. You're hungry. You're a feral raccoon digging through the dumpster of opportunity with the focus of a Navy SEAL who hasn't eaten in days. But the second you think you've "made it"? You become a golden retriever who found a sunny spot on the carpet—happy, stupid, and completely unaware that someone's about to vacuum your entire existence.

When it comes to fundraising specifically, let me be grotesquely clear: until the money is sitting in your bank account, visible, countable, not "pending," not "processing," not "the wire should hit by EOD," you have accomplished exactly nothing. You have done precisely zero shit. You are standing at the altar in your wedding dress, and the groom could still be in a taxi heading to the airport with your maid of honor. Until you can log into that bank account and see those beautiful digits staring back at you like a lover who actually showed up, you need to operate under the assumption that everything—and I mean everything—is actively conspiring to implode.

The final stages of funding are particularly sadistic. Fewer variables, sure, but each one is a landmine of details, often times wrapped in legal jargon and "just one more thing" emails from lawyers billing $900 an hour to ask questions that you are fooled to believe a moderately intelligent goldfish could answer, and thus you can delegate. Hear the word micro-management? This is your time to do it, if managing at all, try not to delegate, and if you do, check everything, make sure you are on top of it all. One wrong signature, one weird clause, one partner at the fund who had a bad oyster at lunch and suddenly decides they need to "revisit the terms," and you can watch months of work disintegrate in front of you faster than a sandcastle at high tide, faster than my dignity at that hardware pitch in San Francisco.

Forget what anyone tells you otherwise. Forget the "we're basically done" and the "it's just paperwork now" and the "this is a formality." Those phrases are the startup equivalent of "I promise I'll pull out" or "the check is in the mail" or "I'm fine" when your partner says it with that specific tone. They are lies. Beautiful, hopeful, relationship-ending lies. And it's when your most vigilant you should shine.

The undeniable truth compadre, is that no one gives a flying fuck if you almost won something. Your landlord doesn't accept "almost." Your employees can't pay rent with "we were so close." Your next employer if you have to get back to that, is never going to say "Oh, you ALMOST raised a ton of money? Well then, let's just skip the rest of this interview, you are hired." Almost is the participation trophy of the business world, and participation trophies are just shiny reminders that you showed up and still managed to lose because you got distracted when the ball was coming straight to your hand.

So celebrate nothing before that moment of truth. Actually, fundraising is just a milestone, out many ahead, celebrate your first paying customer more than your first round of funding. And for the love of whatever deity you pray to when your runway drops below three months, keep your guard up until you can physically see the zeros in your account. Then, and only then, can you allow yourself exactly one (1) fist pump in the privacy of your bathroom before immediately panicking about whether you can actually deliver on all those promises you made to get that money.

Welcome to the pre-seed stage. Try not to die.

As a proxy for explaining market and founder risks in this chapter, let me tell you about my first contact with an investor ever, and illustrate how simple the thought process for investors really is. This was only a few days into my previous startup (the one that failed, rest its soul); our dear friend Rob, who joined us as a co-founder, storms into the room like he'd just seen Elvis riding an alpaca through the parking lot. "You guys know who Mark Cuban is?" he gasped, practically vibrating with excitement.

We were so clueless about anything startups that, frankly, I looked at him confused, mentally flipping through my limited sports Rolodex like a drunk trying to find their house key in a bowl of spaghetti.

"He's the guy from Shark Tank," Rob explained, probably questioning all his life choices that led to this moment. "Mark saw our startup and has three questions: 'Hi guys! Tell me about the market, what's your plan to get that market, and why are you doing this?'"

So we did what any new "founder" should never, ever do (to any investor, or anyone interested in your gig): we wrote a four-page UN-style essay that read like a love letter crossed with a business plan and seasoned with just a hint of desperation. We even invited Cuban to dinner, because apparently we thought TV celebrities are just sitting around waiting for dinner invites from random startup kids that just flew in from the other side of the world. But then again, what if he had said yes?

As I write this and think about that moment, I doubt Cuban made it past "Dear Mr. Cuban, must we start with we love your show about sharks..." before his eyes glazed over and he filed our email under "fucking clueless." We had no idea we were playing a game with rules that everyone pretty much understood; we were playing chess while still trying to figure out what tic-tac-toe is. Now I know, and I hope you learn, that all Cuban wanted to know was how risky our venture was. That's it. Very simple questions that we answered with what was essentially "One Hundred Years of Solitude: The Unhinged Sequel."

So let me break it down for you.

Market Risk: What Percentage of the Net Global Economy Are We Talking About?

Market risk is like that friend who keeps telling you they'll definitely come to your party but never shows up, and when they do show up, it's to a different party, at a different address, in a different dimension. It's the risk that even if you build exactly what you set out to build, even if you execute flawlessly, the market might just ghost you like a bad Hinge date who saw you park your 2003 Honda Civic. This is the risk that should keep you, early-stage founder, awake at 3 AM, staring at the ceiling until you are convinced that the market you are going after is enormous; not "my mom thinks it's a great idea" enormous, but "small nations would trade their GDP for a piece of this" enormous.

Think of it this way: an overused but always useful analogy is that you could build the world's most perfect horse-drawn carriage in 1910, with exquisite craftsmanship and revolutionary boudoir features, but Henry Ford's Model T was already making your entire market obsolete. That, amigos, that is market risk. It's like opening a Blockbuster Video store in 2007; technically perfect execution of an idea whose time had passed. Or like trying to sell life insurance to vampires; solving a problem for people who don't have that problem because they're immortal and also fictional.

The tricky thing about market risk is that it disguises itself as technical risk, like a programmer who shows up to a party wearing a "Trust me, I'm a people person" t-shirt while clutching their laptop like a security blanket and refusing to make eye contact with anything that has a pulse. Most startup literature, written by people who probably haven't written code since BASIC was considered bleeding edge, will solemnly tell you: technical founders are like cats chasing laser pointers when it comes to engineering challenges, frantically pouncing on every shiny technical problem while the actual business opportunity casually strolls out the door, hails a cab, and moves to Portugal.

Let me tell you something that nobody told me early on, probably because they were too busy drawing startup journey diagrams that look like rollercoasters designed by a drunk architect who was also going through a divorce. It's not about the idea; it's about the problem. Before you even think about writing code or making those PowerPoint slides that'll make investors question their will to live, you need to become something of a professional creeper. Not the weird kind; the kind that observes real problems that real people have. And when I say real people, I mean, in some cases, the kind that wouldn't know a REST API from a afternoon siesta. You need to find problems that affect so many people that even your grandmother's bridge club is complaining about them.

And here's the kicker: would you be happy spending the next decade of your life solving this problem? Because let's be real, somebody had to invent toilet paper, and that person probably didn't wake up one morning thinking, "Today, I'm going to revolutionize the posterior hygiene industry!" But thank the heavens they did, because the alternatives were, shall we say, suboptimal and involved leaves. So before you dive into building the next big thing, make sure it's a problem worth solving; this is critical while your savings account slowly dies of loneliness, sending you passive-aggressive bank statements.

Here's rule of thumb #1 that's as reliable as gravity and twice as painful to ignore: if you can't multiply the number of potential customers by the price they'd actually pay (not your fantasy number, the real one that makes them wince but still nod) and get to at least a billion dollars, you're deep in founder risk territory. It'll shine through your pitch like a disco ball at a funeral, catching every investor's eye for all the wrong reasons. You might as well be wearing a t-shirt that says "I haven't done my homework" in neon letters while trying to convince Warren Buffett to invest in your artisanal pickle startup that only serves left-handed customers named Gerald.

Think about it: if your total addressable market calculation looks more like a corner store's daily receipts than a small nation's GDP, you're not just facing an uphill battle; you're trying to climb Mount Everest in flip-flops while carrying a refrigerator full of your own delusions. And trust me, those check-writing veterans, those grizzled survivors of a thousand pitches, they can smell this particular flavor of self-deception from three accelerator programs away.

And here's the thing: this market risk versus founder risk duality isn't just some abstract concept I'm tossing at you like Confucius wrapped in a fortune cookie's existential crisis. Trust me, this particular flavor of metaphysical torment will become your most faithful companion, more constant than your shadow, more persistent than that one bug in production that only appears during demos when the most important person in the room is watching.

Years from now, when you're deep in the trenches of startup life, feeling like you're simultaneously trying to explain general relativity to a goldfish while performing brain surgery on yourself in a moving elevator that's also on fire and running out of oxygen, you'll look back at these early days of fretting about market risk versus founder risk and laugh. Not because it gets easier, oh sweet innocent child of summer, but because you'll have developed the kind of cosmic humor that comes from watching reality repeatedly transform your meticulously crafted plans into abstract performance art.

So after finding a problem that plagues the masses like a particularly persistent existential itch, remember and repeat Rule of Thumb 2.1 from the previous chapter: you must fall in love with it more deeply than any priest has ever loved their calling; we're talking about the kind of devotion that makes religious zealots look like casual Sunday churchgoers who only show up for the free donuts. Or so it begins: Founder risk.

Founder Risk: The Human Comedy

Imagine trying to predict which way a cat will jump while it's still thinking about it, and the cat is also having an existential crisis about whether jumping even matters anymore. This is founder risk: the risk that the founding team might implode, pivot into oblivion, or simply lack the adaptability to navigate the chaos of early-stage company building. It's often less about technical capability and more about that ineffable quality of being able to dance on hot coals while juggling flaming swords and singing "Like a Prayer" backwards, all while your investors watch and take notes on your form.

I've seen brilliant technical founders who could architect complex systems in their sleep but crumbled faster than a cookie in a milk tsunami when faced with actual human interaction. I've seen charismatic visionaries who could sell premium sand in the Sahara to a camel but couldn't execute their way out of a paper bag with a GPS and a team of Sherpas. Founder risk is about the gap between what a team thinks they can do and what they can actually deliver when everything is on fire and Mercury is perpetually in retrograde, and someone just spilled coffee on the server.

Let me paint you a picture that's as common in Silicon Valley as electric scooters and overpriced smoothie bowls made of ingredients that sound like they were named by a botanist having a stroke: two bright-eyed founders, fresh from that magical OpenAI pizza mixer, convinced they're the next Jobs-Wozniak duo because they both like apples and finished each other's sentences about Musk. Fast forward three months, and they're having the kind of relationship discussions that make divorce court look like a tea party hosted by particularly forgiving grandmothers.

Here's the unvarnished truth, served with a side of reality check: your co-founder relationship needs more careful consideration than your last five Bumble matches combined. And let's be honest, at least on Bumble, the worst that can happen is an awkward coffee date and a story for your friends. With a co-founder, you're signing up for a business marriage that makes actual marriage look like a casual fling. You're not just sharing dreams and equity; you're sharing the kind of stress that makes your hair turn gray while you're reading this sentence, which, congratulations, you just did.

Picture this: one founder, usually the CEO type who's watched one too many Steve Jobs documentaries and thinks wearing the same hoodie every day makes them a visionary instead of just someone who needs to do laundry, starts treating their co-founder like they're an entry-level code monkey who just learned what a for-loop is. Suddenly, every conversation feels like a performance review, and the other founder is composing passive-aggressive Slack messages that would make Shakespeare sweat with their subtle brutality, their devastating emoji choices, their perfectly timed "per my last message." It's like watching a marriage dissolve because one person decided they're the "parent" and the other is the "child" who needs to be told to clean their room; except the room is a Git repository and the cleaning is a complete architecture overhaul at 11 PM on a Sunday while crying.

How people tell you to avoid it? They set up elaborate "feedback frameworks" and "communication protocols" that last exactly 2.5 days before devolving into passive-aggressive emoji reactions and cryptic "we need to talk" calendar invites.

The real solution? Let me tell you about the ancient startup ritual of Ego Death By Whiskey™. You and your co-founder, armed with the cheapest bottle of liquid courage Walgreens had to offer, engaging in what I call "preventive therapy for the cosmically doomed." Because here's the thing about co-founder relationships: they're like playing Russian roulette with your career, your savings, and your hairline. If red flags start waving harder than a bored semaphore operator after their double espresso, and no amount of "let's align our chakras" talks can fix it, well... Remember how you dodged that toxic ex with the reflexes of Neo in The Matrix? Time to channel that energy again. Life is short; startups are shorter.

Oh, the sweet agony of realizing you split the equity 50/50 because you were both high on startup dreams and matching friendship bracelets! Three months in, one founder is pulling 20-hour days while the other is "building relationships" by attending every startup mixer in a 50-mile radius and posting LinkedIn updates about "the grind" with more hashtags than actual content. The technical founder is sleeping under their desk, debugging production issues and questioning every life choice that led to this moment, while the business founder is "ideating" over $14 smoothie bowls with other "visionaries." They're avoiding fundraising and customer rejection like that guy who only sends LinkedIn connection requests through a VPN in Antarctica, so when no one accepts, he can blame it on the penguins and the poor Wi-Fi.

How you are going to handle this? Results, baby! Smart founders try to implement vesting cliffs and milestone-based equity distribution. The really smart ones? They actually talk about expectations before splitting equity like it's the last slice of pizza at 3 AM after too many drinks.

How less smart founders handle it? Just passive-aggressively track each other's working hours in a spreadsheet that will definitely never be used as evidence in a future lawsuit, no sir, this is purely for "personal development purposes."

Two founders enter; no founder leaves without emotional scarring! In one corner, we have the technical founder who believes business development is just fancy talk for "lunch meetings and pretending to care about golf" and considers PowerPoint a form of fiction, possibly science fiction. In the other, we have the business founder who thinks debugging is something you do with a fly swatter and believes "just add blockchain" is a valid technical specification that should be taken seriously. They circle each other like wary cats, each convinced the other's job is basically a hobby. The technical founder mutters about "actually building something" while the business founder waves term sheet templates like they're magic scrolls of legitimacy.

Prevention attempts (that you should avoid)? Some try job shadowing, which usually ends with the business founder breaking production and the technical founder accidentally insulting a key investor by explaining what an API is for the fourth time with increasing condescension.

The rare success stories? As obvious as it reads: they learn to appreciate that both skills are necessary. Sadly, however, this usually only happens after a near-death experience involving a failed demo and a very angry investor who had specifically cleared their schedule.

Remember that perfect alignment you had about changing the world through blockchain-enabled sustainable coffee sourcing for introverted dolphins? Well, surprise! One founder now thinks you should pivot to AI-powered meditation apps for pest control, while the other is still committed to the original vision like it's their firstborn child who can do no wrong. You're no longer finishing each other's sentences; you're interrupting them with "actually..." and "well, technically..." until your all-hands meetings (it's just you two, let's be honest) feel like philosophical cage matches moderated by your increasingly concerned whiteboard that has seen too much.

How some blogs tell you to cope? Some founders create elaborate "vision documents" that become longer than Game of Thrones fan fiction. Others implement strict "pivot protocols" that require three rounds of committee approval in a company of three people.

You? Unless you're Moses and your startup plan literally descended from heaven on stone tablets (in which case, kudos on the divine MVP), you're going to have to embrace the art of being wrong. Like, spectacularly wrong. The kind of wrong that makes your past self want to travel through time just to give you a gentle slap and a "bless your heart." Every day is basically a cosmic comedy where the universe looks at your carefully crafted plans and says, "That's cute; hold my beer."

Here's the thing about startup visions: you need to roll with the punches, pivot faster than a caffeinated ballerina, and accept that absolute truths in startups are about as real as your investor's promises to "definitely" make those follow-up intros they mentioned six months ago. The truth usually lies somewhere in the middle, probably hanging out with all your discarded product features and that one sock that always disappears in the laundry.

This one's a classic: one founder wants to bootstrap until the heat death of the universe, eating nothing but expired ramen and coding by candlelight to save on electricity, romanticizing poverty like a Victorian poet with scurvy. The other is ready to raise a Series A before the MVP has even MVP'd, dreaming of office ping pong tables and kombucha on tap while planning the company retreat to Bali for "team building" and "strategic meditation." Every financial decision becomes a proxy war for deeper values, like watching two people try to plan a wedding where one wants a backyard BBQ and the other wants to rent the International Space Station. The phrase "burn rate" gets thrown around like a weapon, and the company credit card becomes a source of more drama than all seasons of Silicon Valley combined.

The prevention playbook on Medium? Some try setting up elaborate budgeting systems that would make an accountant cry tears of joy, only to ignore them completely when the first shiny SaaS tool catches their eye with promises of "revolutionizing their workflow."

The ones who make it? They learn to balance frugality with function, usually after a few close calls with bankruptcy that make for great "remember when we almost died" stories at future company parties.

These rifts, my friends, are as inevitable as technical debt and as common as "disruptive" startups in San Francisco claiming to be "the Uber of" something. They lurk beneath the surface of every co-founder relationship like psychological landmines wrapped in term sheets and equity agreements, waiting to explode at the worst possible moment. But here's the real trick: surviving these rifts is what separates the unicorns from the "whatever happened to that startup" stories people tell at bars. So embrace the learning from chaos, keep your therapist on speed dial if you have one, and remember: if you're going through founder hell, keep going; just remember to pack your sense of humor because that's about as much as you can afford.

Look, until you've wrestled these demons into submission, you're basically walking around with a flashing neon sign that screams "FOUNDER RISK" in Comic Sans. And those savvy investors? They can smell that fear from three WeWork locations away, like sharks detecting a single drop of imposter syndrome in an ocean of startups.

Founder risk is fatal, you precious disaster-in-waiting: if you've got a co-founder (and survived reading those previous tales of startup horror), I'm about to drop some truth that'll save your sanity faster than a shot of vodka saves a bad first date. Before you even THINK about incorporating, be cautious of that one who claims to be a startup guru because he once met Mark Z's barber's dog walker, and figure out who's wearing which hat in this circus.

Now, I know what you're thinking: "But we're a dynamic trio! We're like Batman, Robin, and that guy that is always working; except we all think we're Batman!" That whole "everyone does everything" approach sounds as dreamy as a unicorn riding a rainbow while singing Queen's greatest hits. In theory, it's beautiful; like communism, or those "healthy" cookies that taste like sweetened cardboard with chocolate-adjacent chips. But in practice? It's about as functional as a glass hammer at a construction site run by people who are also on fire.

Want to move at the speed of light (or at least faster than your competitors who are still debating their logo font for the seventh consecutive week)? You need roles clearer than your ex's hints that "it's not you, it's me." And for the love of all things profitable, either make decisions in odd numbers (3, 5 max), or get as fast as possible to the point where you agree who can make the final call when in doubt.

Here's a brutal litmus test that'll save you years of therapy: if you look at your co-founder's skills in their domain and you don't feel like a toddler with crayons trying to reproduce the Mona Lisa, you're probably in for the kind of trouble that makes the Titanic look like a minor boating incident with excellent PR management. You should be in awe of each other's capabilities like a cat watching a ceiling fan; completely mesmerized and slightly confused about how they do that thing they do.

The real trouble? And oh boy, is it trouble; comes when you realize too late that you're basically dating your clone. It's like trying to start a restaurant where everyone's a chef and nobody wants to wash the dishes because dishes are "beneath" them. You need someone who makes you feel like an absolute amateur in their domain, and vice versa. Because when the shit hits the fan (and in startups, there's always a fan, and it's always on max speed, pointed directly at the most important thing), you need to trust that your co-founder has got their domain locked down tighter than a drum while you handle your own circus.

Here's where it gets interesting: these two risks are like conjoined twins who took different life paths, with one becoming more dominant than the other depending on the weather and your karma. In my opinion, you should address the essentials of founder risk first, so you can focus on market risk while keeping founder risk under control. As such, everything about founder risk should be handled efficiently. On the one hand, if you spend too much time perfecting your team dynamics through ayahuasca ceremonies, the market might move on without you. On the other hand, everything about market risk is an ongoing discovery process; perhaps only until you start building product and pitching do you start seeing market gaps you didn't want to see before.

Here's your pre-seed vibe check: if every meeting is a rerun of "So, Who's the CEO?" or "Are you sure you're not just dressed up as a startup on Halloween?"; congrats, you're still radiating founder risk like a Chernobyl reactor at a house party. But if the questions suddenly mutate into "Show me your month-over-month growth, your CAC, your LTV, your secret handshake with the market gods," and you're sweating because you have more metrics in your spreadsheet than dollars in your bank account, that's not a bad thing; it means you've finally convinced people you're a real team and now they want to know if this market even makes sense at all. This also means your market story probably still sucks, so you need to work on that.

As you build some pitching scar tissue, you will also learn that different investors will weigh these risks differently based on their own trauma (I mean, experiences). But you, you need to believe you've got those two risks covered; when you really believe that, not the shallow belief of a startup founder practicing their pitch in front of a mirror while making awkward eye contact with themselves, but the deep cosmic certainty that comes from staring into the void until the void starts taking notes and asking follow-up questions; everything in your pre-seed days will start to happen. The investors will materialize before you like Buddha-nature revealing itself to an enlightened monk, or at least like people returning your emails.

Understanding these two risks is crucial because it shapes everything about how you understand your business and therefore how you approach the pre-seed stage. When it comes to investors: it influences who you pitch to, how you pitch, and what kind of validation you prioritize. It's about recognizing that at this stage, you're not just building a product or a company; you're conducting an elaborate performance art piece where the audience decides if your credit card banks will ask you to "get on your knees" next month.

So when you're out there raising pre-seed money, remember: you're not just selling a vision or a product. You're selling your understanding of these two risks and your strategy for navigating market risk precisely (founder risk coverage is not optional; it can't be a plan; you must show it practically doesn't exist). The investors who get it, who really understand this strange dance, they're not looking for certainty; they know that certainty is not found in nature; they're looking for founders who can tap dance through a minefield while making it look like performance art.

PRE-SEED IT IS NOT a Single Round; It's an Ongoing Round

Here's where the illusion shatters, but trust me, it is actually a good thing: raising at pre-seed isn't a dramatic all-or-nothing moment with champagne and applause. It's an ongoing battle, a financial siege. Investments at this stage are a mosaic of SAFEs and convertible notes, pieced together as you scramble for validation and resources. I am sorry to break to you, but you probably won't get one big, gleaming check; you'll get trickles, possibly starting with breadcrumbs that keep you alive while you scrape for the next. It's not linear; it's an unpredictable patchwork. And here's the paradox: as your idea becomes less terrible, your terms get better. What starts with a few tens of thousands can swell into millions if you prove that you're more than a flash in the pan.

The beautiful absurdity of it all: in the beginning, everyone's waiting for someone else to make the first move. It's like trying to start a conga line at a particularly stiff corporate party: nobody wants to be the first to wiggle their hips. But once a few people join in, suddenly everyone's an enthusiastic dancer.

The psychology works like this: Walking into a room announcing "I'm raising a few million" with empty pockets is like trying to sell timeshares on Mars. But watch how the story transforms: "We're raising 100k and already have 50k", now you're selling tickets to dudes into a party that's already buzzing with chicks on a bachelorette party from Sweden. "Raising 300k with 100k in the bank", the intrigue builds. "Looking for 1M with 300k-600k locked in", if this happens quick enough, suddenly you're the hottest ticket in Silicon Valley.

Now, as we dive in details, here comes the delicate art of terms (keep them YC-safe compatible, as we discussed in the startup lingo chapter). The "cap" (look it up in the lingo chapter too, but a refresher): your theoretical valuation, is like a price tag in a parallel universe where crypto only goes up. It's a number that exists in the realm of "trust me, bro" until enough people nod sagely and say "seems legit."

Start with a cap that makes early investors feel like they're getting in on the ground floor of the next big thing. Then, as more checks materialize, gradually adjust that number upward, like a master chef adding salt; carefully, tastefully, but with conviction. Check Crunchbase or make a friend that will let you peek at their Pitchbook to see what other visionaries in your space are commanding. It's like a sophisticated game of pricing psychology where everyone pretends the numbers are based on complex mathematical models, when really it's more like interpretive dance called the pre-seed evolution!, where your funding journey transforms in stages like a Pokemon with anxiety issues.

This is where you're basically selling hope wrapped in a PowerPoint. Angels look at you the way a parent looks at a child trying to explain why drawing on the walls is actually not good for property values. But here's the thing: you only need one believer, one beautiful optimist who sees past the duct tape and dreams to your actual potential.

Suddenly, you have that magical first check. It's like getting your first kiss; awkward, probably could have gone better, but hey, someone thought you were worth it! Now you can walk into rooms saying, "We've already raised..." which is startup speak for "See? Someone else thinks we're not completely crazy!"

This is where the momentum builds faster than technical debt in a hackathon. Each "yes" breeds more "yeses" like rabbits discovering Viagra. Investors start responding to your emails faster than they ghosted you in Stage 1. You're no longer pitching; you're "updating interested parties on your round's progress." Fancy!

Welcome to the line to the tickets for the entry leagues. You are raising $1m and you already have $500k, And now you know how this game works, you can go up to a few million this way. You can choose to dance this conga to your own playlist, but here once again, a lot of this dance is accelerated if you join an accelerator, and if you do, of course, please do it right, because there is a wrong way for sure.

Time Is Money— And You're Bleeding Both At The Same Time

Now that you know how this dance will evolve into a wallet striptease, let's cover the other variable, time. I guess Time and Money are what everything boils down to, in the future you can use one to acquire the other, however in early pre-seed it's a bit different as you don't have much of either.

Learning how not to waste time is a life or death situation here. I now know that the brass knuckles of our journey weren't just about our stubborn refusal to give up (also important). However, more importantly, it was about letting go of potential investors that were a waste of time, instead we made the mistake of confusing perseverance with intelligence, and it almost killed us; We became the startup equivalent of that person who thinks is your ex, just because you exchanged a few flirty lines, and since then, just won't stop texting! Sadly, early on we haunted investors until they came back with messages like: "Look, I was planning to ghost you, but before I file a restraining order, let me be crystal clear: It's not a maybe, it's a hard no. Not now, not ever, not in this universe or any parallel dimension where unicorns tap dance on Mars to wallabies playing in a band. I've got a million other deals I haven't met yet, and your constant messaging is making my phone vibrate off my damn desk."

So what did we learn? Well, we learned something so fundamental it should be taught in preschool right after "How to Sign Your Name on Crayon Masterpieces 101." Picture this conversation:

Mastering the art of moving on should come as naturally as ghosting comes to investors. Here's the golden protocol: if you spot those classic signs of ghosting—let's say you've fired off two emails and received nothing but the cold embrace of silence—just move on. Early-stage investors are especially allergic to saying "no" because, deep down, they fear you might be that one-in-a-million unicorn and they'll spend eternity kicking themselves for missing it. They all know rule #1: All startup ideas are shitty ideas until they aren't. So, Don't worry; if your round starts to catch fire, you'll be amazed how these same investors will reappear from the shadows with, "Hey sexy! Could you send your deck again? My dog ate the last one… and also my memory."

But beware: there is a monster far deadlier to your time (and sanity) than the vanishing investor: we are talking about the investor who hangs around just to fuck around, dangling hope like a laser pointer in front of a sleep-deprived cat. At least a ghost leaves you in peace. This one will have you chasing your tail until you forget what a life not spent checking your inbox felt like. Lucky for you, There is a pattern and a uno card for this one too:

I often think of those very early times when investors asked for due diligence? were they interested? well we were on idea stage (you probably are too, and that's okay), the point is, we were more early stage than a caterpillar's first identity crisis! That "due diligence", was just them using us as their personal market research interns. They knew it was all speculation at this point; like trying to predict which way a drunk penguin will waddle. So if you are going to indulge in due diligence, at least do yourself a favor: learn, learn something new every time you are asked to jump through their hoops like circus seals chasing premium fish.

So what's the protocol when investors start asking for your grandmother's DNA and a detailed analysis and all things outside of your deck and investor room folder? Here's the deal: ghosting is like a dance-off at a startup mixer; it takes two to tango, baby! But trust me, your response should NOT depend entirely on your dance card. If you are the belle of the ball with VCs throwing term sheets at you like confetti, or are you the awkward wallflower who just got their first "maybe" after 47 rejections?

Either way, channel your inner time management guru and remember: your time and their time is worth its weight in Bitcoin (circa whenever it's high as Friday night Snoopdog). Sure, if you want their money, you can play along and say "Absolutely, I'll send you whatever documentation your heart desires!" But here's the twist: make it conditional on a SAFE agreement. The, show me yours and I will show you mine paradox. That means they commit to investing by giving you a SAFE, if they like what they see, then they wire the money, and on the other side you commit to taking their money if their due diligence doesn't reveal that you're actually three raccoons in a trench coat. It's way better than becoming their unpaid market research intern while they dangle funding in front of an increasingly desperate you.

Avoid the Wrong Investors

The earlier you are, the less obvious this gets. Once your fundraising game has some mileage, you'll mostly be courting VCs, the kind of people whose names you can Google to find out if they're legit or not. But in those squishy, larval days of your startup life, you're splashing around in the kiddie pool with angels, randos, and anyone who so much as replies to your LinkedIn message at 3 a.m. In this slippery stage, spotting the wrong investors can feel harder than finding a vegan at a Texas BBQ. So let me drop a that will make it very simple to dodge the most common mistakes when it comes to "early financial backers", hear me out and repeat:

"Only take money from people who can laugh while watching it evaporate." Not because you're planning to fail —you'll work harder than a rat on a cocaine-coated wheel— but because this is pre-seed, baby. The odds against you are about as friendly as an Australian Magpie in mating season. Pre-seed is not a garden; it's a battlefield. It's where you sharpen your teeth on the grindstone of doubt, where your idea sheds its soft, useless parts and becomes something sharp enough to cut in real interest. So make sure your backers truly understand what level of risk they are betting their money into.

Some call pre-seed that, and if you ever hear this advice, heed me: run. Run like hell. You are not a con artist peddling snake oil under the guise of a brilliant idea!!! Nein! As just explained, and worth diving deeper: The pre-seed stage is the riskiest chapter in a startup's life cycle, a place where even the most determined founder is more likely to fail than to thrive. This is where the unvarnished truth comes out: (once again, repeat after me, 5 times) "DO NOT take the money that grandma saved for your mother's rainy day!" At this stage, when you can't tell your ass from your hand, that money is better off in the S&P 500 or parked in some safe, diversified corner of the financial universe.

The sad reality is, believe it or not, and god bless them, there's no shortage of good souls, eager to believe and eager to part with cash they can't afford to lose. It might seem tempting when you're desperate to make your idea fly, but taking someone's life savings, money they bled years to accumulate, is wrong, and unless you are an asshole, it is the fast track to sleepless nights, moral bankruptcy, and the guilt that will haunt you long after the startup burns out. The path is lined with those willing to bet everything, from the trust fund artist looking for meaning to the retiree with savings that shouldn't be gambled on a pipe dream. These are the ones you must resist. In the pre-seed stage, don't take money that isn't designed to risk disappearing. It's not just about doing the right thing—it's about ensuring that the support around you is rooted in smart, informed decisions. At this stage you cannot be here to be someone's miracle or savior; you're here to build, to prove, and to play the long game with the right backers who understand exactly what they're in for.

Those beings who offer their "expertise" in exchange for equity. They'll promise introductions that never materialize, like crypto gains in a bear market. When they come at you with their advisory agreement PDFs, hit them with the ultimate uno reverse card: "Love your enthusiasm! How about you put some skin in the game? A small check would really align our interests..." Watch them disappear faster than free pizza at a developer meetup or you will find what you want which is that first round of checks.

Acknowledge that for the true investor, the pre-seed stage is a numbers game, and it demands a certain kind of participant—two, in fact: the informed and the strategic. They both spread their bets thinly across many hundreds of startups, knowing that most will fail but one or two will soar high enough to cover the losses many times over.

So, what is the difference between a pre-seed stage and a seed stage?

We will cover Seed stage and Seed rounds in later chapters as well as in the Lingo Chapter. But understand that black and whites are not a thing in early stage. For you, you are in a journey of building a company, this language, pre-seed, seed, series A, etc, its fundraising lingo, and this language helps you set the expectations for when you are asking for money.

When you tell investors that you are in the pre-seed stage, the good investors (meaning those who are used to investing in early-stage startups) will know that they are making investments based on how promising the opportunity looks just by examining the problem you are trying to solve. They will decide whether to invest based on the two risks we cover in Chapter 2: Market risk and Founder risk. The checks you receive will not be given at a set valuation, but rather with the prospect of a future valuation. This means that, at this stage, no one can really say how good the opportunity is, because you are still selling a vision rather than a proven business. They are literally making a bet—please read the glossary for details about convertible notes and SAFE agreements. Essentially, your value is unknown; you don't even have a product yet, but you are convincing people that the problem you are setting out to solve is worth investing in. If you succeed, they hope to turn a relatively small check (tens of thousands to a few million dollars) into a significant return. Investors need to be able to imagine you as someone who could build a wildly successful business (that means picturing you with one to ten horns on your forehead and shitting rainbows).

So, if you are talking to an investor whose LinkedIn profile says "later stage, (A,B,Ω)" you are barking up the wrong chickens. The best thing you can do is ask them for an introduction to someone who invests at the early stage. That introduction will help you get connected in the right direction.

What is pre-seed money good for, you may ask? Well, it's to pay the team, to cover operational costs, and ideally to get you to a point where you can focus solely on building and validating with customers, users that it's not just you and your grandma that think this is a good idea. So eventually, you will be able to have 18–36 months or so of runway ahead of you without having to spend all your time fundraising is, for the most part, that is what a SEED round will likely provide.

Well, this is something that happens a bit more organically than you might think.. you stumble into seed stage. The moment someone wires you money, you're "investor-backed"—which sounds glamorous until you realize it's just you, a spreadsheet, and a redbull can at 2 a.m. The important thing to know is that as you collect them signatures on SAFEs, you must, in tandem, like a juggler of shit-on-fire, you shall perform the ancient art of "progress." This means transforming your idea from "wouldn't it be cool if…" to a "look, it actually solves something!". This metamorphosis is not overnight. Your business will slowly ooze from "pure fantasy" to "mildly convincing hallucination". Suddenly, you're not just selling air in a can—you're selling oxygen for oxygen deprived, with a label and a barcode. That's when early-stage investors start muttering, "Maybe it's time for a priced round," like wizards debating whether it is time to summon a demon or to give you sparklers until you grow a pair of teeth. We'll unravel that particular demon spell in the following chapters, and in the glossary, because you'll need a talisman.

Anyway, If you're not hearing these magic words: "Fuck it, how about we do a priced round?", yet. Focus on building your business, and—just as importantly—on protecting your own and your company's collective butts from the two cosmic banana peels we discuss in Chapter 2 (market and founder risk). Until then, set expectations low and keep telling people you're in the pre-seed stage (Even if you think you are seed stage).

The Seed End State

To get into the details of execution risk, let's start with the end state and walk backwards from there like we're rewinding a VHS tape of your future success. Picture this: you find yourself crossing the seed stage portal. You've actually convinced a room full of Patagonia-wearing venture capitalists that your business isn't just another ayahuasca vision they should politely smile at and forget. You all agree on the value they see in your company! The term sheet is still warm from signatures, ink drying on an investment in the tens of millions; enough zeros to make you question if you're dreaming, enough to make economics professors rock back and forth in padded rooms, clutching their equations and whimpering about fundamentals like abandoned lovers who showed up to a wedding uninvited and are now crying into the appetizers.

If everything is executed with excellence, you will soon after hear a notification on your phone from your corporate bank account, and you will know the seed round money made it in. Suddenly, high on hopes like it's your last day at Burning Man and someone just handed you a golden ticket made of pure optimism, you're strutting around like a peacock who just discovered both Instagram filters and the concept of self-esteem simultaneously. We're talking premium Cup Noodles with actual dehydrated vegetables, baby! I know, I know; contain your bourgeois gasps. The fancy kind that comes in a bowl instead of a styrofoam cup, like you're some kind of culinary royalty now.

But before we continue deeper into this champagne-and-instant-ramen lifestyle, let's rewind as promised and examine how one ascends from the primordial soup of pre-seed to this slightly less primordial soup of seed funding. Welcome to the small-big leagues tryouts, habibi. I hope you brought a good therapist, or at minimum, a stress ball shaped like your former certainties.

The Pre-seed to Seed Stage Metamorphosis

Before you are seed-stage ready, your life should feel like all of a sudden your story starts to click; like a Rubik's cube that's been mocking you for months finally surrendering to your desperate fingers. You're starting to see those pre-seed checks roll in like they're auditioning for a financial strip show, each one removing another layer of your existential dread. There you are, swimming in the primordial soup of angel money like a startup amoeba with delusions of grandeur and a surprisingly aggressive LinkedIn presence. Soon after, you will feel like you have mastered the problem you are here to kill; your market makes sense to everyone who hears you talk about it; and you no longer see any founder risks lurking in the shadows like that uncle nobody talks about at family reunions.

So you start piling up those SAFEs like a squirrel hoarding nuts for nuclear winter, or like someone who discovered a glitch in a video game and is exploiting it before the developers patch it. Total amount raised? Creeping up on that various-million territory. Those weeks or months of pitching felt like trying to explain the plot of Inception to a golden retriever who's also somehow your landlord. But now, you have cracked the code, right? Right?

Well, hold onto your ergonomic standing desk that you bought to feel productive but mostly use as an expensive shelf! Because if you're not really careful, money's about to pull a Houdini faster than you can say "burn rate." Be WARNED about the physics of this game: you are flying an airplane with a hole in the gas tank, piloted by your optimism, co-piloted by your anxiety, and the flight attendants are just various versions of yourself from different timelines all screaming contradictory advice.

You need to be able to focus, so yes, finally pay yourself just enough to make your darling Bank of America stop sending you those passive-aggressive overdraft love letters that read like poetry written by a collection agency that minored in guilt-tripping. And get very tactical about what you need to execute; this is not the time for abstract philosophizing, this is the time for doing things that matter with the precision of a surgeon who's also defusing a bomb that's also somehow your cap table.

If your wallet can afford it, and if you absolutely must, hire for very, very critical gaps. But please don't. Just... don't go wild. Every person you add to your startup smoothie is like adding another ingredient; sounds great until you're drinking a kale-pineapple-blockchain-AI-machine-learning-synergy monstrosity that tastes like broken dreams and regret, garnished with a sprig of "what were we thinking." Before you know it, your nimble little startup is moving with all the grace and speed of a three-toed sloth who just discovered edibles. Trust me, you want to avoid being slow at all costs; in this game, slow is just another word for "future cautionary tale at startup meetups."

In the previous glossary we introduced our stooge couple: Runway and Burn Rate. They are your best friends, your worst enemies, and also somehow your therapists. If you are not careful, and with the minimum number of people you need before Product Market Fit, your company's checking account will become a cosmic black hole devouring resources faster than a Silicon Valley juice cleanse destroys both wallets and digestive systems. Time warps like a Salvador Dalí painting that's melting not for artistic reasons but because it's having a panic attack, and the next thing you know, your product is as visible as a mime at a silent disco wearing camouflage.

Meanwhile, you're lying awake at 3 AM, staring at the ceiling like it owes you money and an explanation, mentally rehearsing how to ask your best friend; who abandoned a cushy corporate job to join your circus because she believed in your fever dream; if she misses free snacks and dental insurance. You're practicing different tones, different approaches, wondering if there's a way to say "our runway looks like a haiku" that doesn't end with her crying into her equity certificates.

As such, listen up, you beautiful caterpillar of chaos: transitioning from pre-seed to seed stage is NOT about how good you are at getting seed money; that talks more about your poetry skills and your ability to make VCs feel feelings. It is about your metamorphosis from PowerPoint slides to a tangible solution or MVP, where you can validate that people really want a solution for the problem you are solving. And here's the kicker: you're doing this while simultaneously building the solution and burning cash, which is like being in a reality show where the prize is more borrowed time and the challenge is to not have a nervous breakdown on camera.

Because, every time you accept money, you are inviting people to your unicorn ride; they've bought tickets, they've brought snacks, they're wearing the novelty hats. Eventually, everyone who drank your Kool-Aid of disruption, they're all going to emerge from their meditation pods and demand to see some cold, hard results. And you, yes YOU, you magnificent delusional optimist with your spreadsheets of hope and your pitch deck of dreams, you MUST be the one leading that results-demanding parade like a drum major who's also somehow conducting an orchestra while juggling.

Remember, amigo: you started this dream and you should be chasing it like an overenthusiastic golden retriever at a dog park who has just discovered that everything is a potential friend; sniffing opportunities, chasing leads, running in circles that somehow move forward, until someone decides to play catch with you and your vision becomes reality. Execution has become your new religion, and your god is a spreadsheet that updates in real-time.

So while you're celebrating those pre-seed wins (as you probably should, modestly, very modestly, like a Nobel Prize winner who's also somehow embarrassed about it), remember that the clock is ticking. Your job now is also to make sure your product is used. Execute. Validate. Iterate. Repeat.

And the brutal truth: the best product in the world is worth exactly zero if nobody uses it. You could build the digital equivalent of sliced bread, you could create something so revolutionary that future historians will write dissertations about your genius, but if you can't get it in front of people who actually need to make sandwiches, you're just creating very expensive nothing; a monument to potential that never actualized, a museum exhibit titled "What Could Have Been: A Tragedy in JavaScript."

The End of the Beginning

And here we are, you magnificent chaos agent, you beautiful disaster walking on two legs toward either glory or a really interesting story to tell at parties. At some point, you would have made it through the pre-seed gauntlet; you've graduated from the kiddie pool of startup funding where the water was warm and everyone got a participation trophy just for showing up with a dream and a laptop.

But before you start doing victory laps around your WeWork office like you just won the Super Bowl by successfully microwaving a burrito without it exploding, let me drop this truth wrapped in a fortune cookie of absurdity: the first part of this book ends here.

PART 2 WILL BE ALL ABOUT SEED STAGE.

But your journey does not end here. You are right at the moment where things get really, really weird; where the rules change and the stakes multiply and suddenly everyone's speaking a language that sounds like English but feels like ancient Sumerian translated through a broken Google algorithm.

Because what comes next; the actual seed round, yes, the priced round, where term sheets read like ancient scrolls written by lawyers who've clearly been mainlining espresso since the Reagan administration and speak in tongues of preferred stock and liquidation preferences; the art of closing a seed round while your bank account does its best impression of a desert mirage that keeps receding as you approach; that's a whole different circus. That's the circus where the clowns have law degrees and the trapeze is made of convertible notes.

So stay tuned, padawans. The sequel is coming, and it's going to make this look like a gentle warm-up, a light stretch before the real workout, a tutorial level before the boss fight. Because by the time you're ready for seed stage, you'll have earned the right to read about how to navigate a funding round that makes your pre-seed experience look like a pleasant afternoon tea with a very understanding grandmother who also happens to believe in you unconditionally and keeps refilling your cup.