How Many Investors to Contact
Talk to many funds at once, keep the pace even, and count a round as closed only when the money is in the account. Plus the math behind the list.
More funds than feels comfortable, and all of them in the same weeks. A round with one fund in play is a bet.
Why one fund is a bet
Once, a round had already taken a long time and the talks with many funds were wearing me out. I let the other conversations go and focused on one VC. The chemistry was there and every signal said they were ready. The investment committee said yes. We negotiated the investment agreement to the last comment. Then the fund stopped answering.
The fund had one dominant LP, an entrepreneur behind about 70% of its money. A fund does not keep all its capital in the bank. LPs commit to pay in when the fund calls for it. This LP ran into trouble in his own business and could not pay his part, so the fund could not invest in us.
I lost a month and a half and had to start the round again while the company ran out of cash. We negotiated payment delays with suppliers and the team, and I lent the company my own money to keep it liquid. My mistake was to believe too strongly that this one fund would invest.
Another time several funds wanted to invest in one of my companies. Most moved fast. Two dragged out the negotiations and the due diligence. I was sure they would invest in the end, but I split the round and closed the first part with the funds that were ready. A month later, with only formalities left, one of the slow funds pulled out and the other followed.
A round is closed when the documents are signed and the money is in the account. Not earlier.
Why many funds give you a better position
In the book’s example a founder raises one million złoty and goes to 50 funds. Ten of them want to invest the full million. Now there is ten million on the table for a one-million round.
With that you can:
- Negotiate the valuation and the terms of the agreement.
- Choose the fund you want to work with.
- Take more than planned, if the dilution is worth having a second fund on board.
- Split the ticket between two funds. Each one carries less risk, and both can invest again in the next round.
The math
Work backwards from the round.
- Investors needed = round size ÷ typical ticket.
- Meetings needed = investors needed ÷ share of meetings that end in an investment.
- Funds to contact = meetings needed ÷ share of contacted funds that agree to meet.
An example. You raise €1M from two funds at €500K each. In the book’s example 1 in 5 funds was interested. Assume that 1 in 5 interested funds invests. Two investors need 10 meetings, and 10 meetings need 50 funds on the list.
Your ratios will be different. Treat the first numbers as a planning assumption, measure after the first group of emails, and recalculate. The Pipeline Math tool does this for you.
Keep the pace even
Send the first emails to the best-fitting funds within two or three weeks. End every meeting with a next step and a date. After each call, send a short written note on what each side agreed to deliver.
Do not drop the other conversations because one is going well. That is exactly the moment to keep them going.
Track it
You cannot keep 50 conversations in your head. Use one spreadsheet with the status, the date of the last contact and the next step for every fund. The free pipeline template is built for this, and you can fill it from the investor list.
Source: adapted from the section on why not to rely on one fund in the Polish original Anioł w Piekle (2021).
Book path for this guide
Angel in Hell
A book about raising startup funding: when investors help, when they limit founder freedom, and how to prepare for VC conversations.