Over the years, I’ve written a lot about investors and fundraising. I’ve approached it from different angles—pitching, valuation, governance, dilution, board dynamics. I’ve also had the privilege of working closely with founders as they navigate real fundraising processes, not in theory but in the middle of the uncertainty, pressure, and emotional noise that inevitably comes with trying to raise capital.
What has become clear to me over time is that many of the difficulties founders experience with investors don’t stem from bad intent, bad advice, or even bad outcomes. They stem from something more basic: founders and investors often enter the fundraising process with fundamentally different mental models of what is actually happening.
Founders are usually told—implicitly or explicitly—that fundraising is a form of selling. That if they can just refine the pitch and, tighten up the message, and tell the story more convincingly, and more often, the process will work. Sometimes it does. More often, it doesn’t. And when it doesn’t, founders can be left questioning their judgment, their business, or themselves.
This series is an attempt to step back from tactics and look more closely at the underlying structure of the founder–investor relationship: what each side is really offering, what each side is trying to optimize for, how asymmetries creep (or are introduced) into the process that can tilt the playing field against unwary founders long before a term sheet ever appears.
My goal isn’t to give founders another checklist or a new set of tricks for raising money. It’s to help them think more clearly about what fundraising actually is—and what it isn’t—so that when they do raise capital, they do so deliberately, with their eyes open, and with a better chance of building relationships benefit them in the long term.
One of the most persistent mistakes founders make when raising capital is assuming that fundraising works like selling to customers. The surface similarities are obvious: meetings, pitches, persuasion, follow-ups. But the underlying logic is inverted. And that inversion explains a surprising amount of the frustration, power imbalance, and disappointment founders experience during and even following the completion of the round.
When you sell to customers, you build a relationship in order to generate transactions. The relationship is instrumental. It exists to support ongoing exchange. If it stops working, both sides usually have ways to disengage with limited long-term damage.
When you raise capital, you execute a transaction in order to create a relationship. The transaction is only the first step. The relationship is the thing that persists—often for years, sometimes for the life of the company.
That distinction seems subtle. It isn’t.
Founders generally understand the first model instinctively. They’ve been trained on it. Sales funnels, pipelines, trust-building, account management. They know that closing the first deal is only the beginning of the real work.
Many founders carry that same mental model into fundraising. That’s where problems begin.
They treat fundraising as a performance rather than a selection process. They optimize the pitch before they’ve thought carefully about the audience. They assume that interest implies alignment. And when raising money proves difficult—as it almost always does—they conclude that something must be wrong with their story.
Sometimes it is. More often, not so.
That’s because if fundraising is about forming a long-term relationship, then who you talk to matters far more than how you talk. Yet founders routinely invert that priority. They spend weeks refining slides, polishing language, rehearsing demos—then present all of it to as many investors as possible – as they are encouraged to do by practically everyone who gives them advice
They do so without ever considering whether they match the investor’s preferred profile for, stage of growth, size of funding round, size of investment, risk tolerance, expected returns, maturity of the fund, or any other factor that affects the expectations of the investors they are pitching.
No amount of narrative finesse can get past such fundamental mismatches. Investors may hear you out politely but if you are not meeting “in their model” they will not place their funds with you. And it is not because you are not persuasive. You are just trying to persuade the wrong people. You’re asking question they are structurally unable to answer positively.
This is why so much common fundraising advice is misleading. It treats fundraising as a communications problem when it is, at its core, a fit problem. A great pitch delivered to the wrong audience doesn’t become persuasive. It becomes exhausting.
There is also a human cost to this mistake. Pitching the wrong investors repeatedly is demoralizing. It erodes confidence and creates the impression that “nobody gets it” or that the company itself must be flawed. By contrast, pitching the right investors and receiving a thoughtful, well-reasoned no is often clarifying. It sharpens judgment rather than undermining it.
That difference matters more than founders expect.
Importantly, the inversion also explains why fundraising negotiations often feel strangely unbalanced, especially to first-time founders.
When you sell to a customer, the roles are clear. You are negotiating for the best deal for your company. They are negotiating for the best deal for theirs. That tension is understood, accepted, and considered fair. Nobody feels awkward acknowledging it.
Fundraising can feel very different.
If founders aren’t careful, they slide into a posture of entreaty. They behave as if they are asking for a favor rather than negotiating a partnership. The investor sets the tempo, frames the terms, controls the process, ask all or most of the questions, and—subtly or not—defines what is “reasonable.”
This asymmetry is not inevitable. But it is common.
It emerges when founders internalize the idea that capital is scarce, that investors are doing them a service, or that attention itself is something to be grateful for. The result is a negotiation where one side is optimizing and the other is hoping.
That posture would be odd in a customer negotiation. It is far more dangerous here, because the outcome is not a one-off transaction. It is a multi-year working relationship with real governance consequences.
Once again, the inversion matters. If the transaction creates the relationship, then the negotiation should not be something to endure. It is something to participate in actively.
Founders who forget, or don’t know, this often discover the imbalance later, when the relationship has hardened and exit options are limited. At that point, it is no longer a negotiation. It is a structural fact.
Often what fuels this asymmetry is a misunderstanding about what each side is actually bringing to the table.
Investors offer capital. To founders, that capital feels scarce—sometimes desperately so. But capital is not passive. It has obligations attached to it. Investors have money that must be placed, within a fund life, under specific constraints, in a way that satisfies their limited partners.
An investor who fails to deploy capital well does not remain an investor for long.
Founders, meanwhile, are offering something that is often rarer than money: a credible opportunity to turn that capital into returns. Not a deck. Not a pitch. An actual opportunity—shaped by timing, market structure, team capability, and execution risk.
When founders forget that negotiations begin to tilt.
They begin to behave as if the investor is doing them a favor, rather than recognizing that both sides are solving a problem for the other. The investor needs exposure to companies that fit their thesis, their timing, and their risk envelope. The founder needs capital and, ideally, a partner who understands the terrain ahead.
That mutual need is where the leverage should lie.
But leverage only exists if founders recognize it while they still have it. If they rush the process, broadcast indiscriminately, believe that investors know something they do not about the value of their company and interpret rejection as a referendum on their worth, they give up that leverage before negotiations even begin.
This is another reason audience selection matters so much. The right investors don’t just try to understand your company. They realize that they need something like it in their portfolio. When that condition is true, the dynamic changes. The conversation becomes balanced. Sometimes even collaborative.
When it isn’t, founders feel the imbalance immediately. The process stretches. Investors invent all sorts of reasons for yet another delay. Terms, if they are ever delivered, become one-sided. “Market standard” quietly comes to mean “take it or leave it.”
Finally, There is one more subtle effect of confusing fundraising with sales.
Founders are usually at their most adaptable, optimistic, and responsive during a raise. Investors, too, are often on their best behavior. Everyone is polite. Everyone is supportive. Everyone is focused on possibility.
This is courtship.
But courtship behavior is not operating behavior. It is not how decisions get made when growth stalls, when a follow-on round is uncertain, or when trade-offs become real.
Many founder–investor conflicts don’t arise because anyone “changed.” They arise because nobody named the nature of the relationship early enough—or paid attention to what the courtship dynamics were obscuring.
Seen this way, a funding round is not a win condition. It is a decision point. You are choosing who will sit across the table from you when optimism gives way to consequence.
Which leads to an uncomfortable but useful reframing for founders heading into a raise: If this is going to be a long-term relationship, why am I spending more time perfecting my pitch than deciding who I want that relationship with?
That question does not eliminate the need for a clear story. But it does put the work in the right order. And it changes what success in a fundraising process actually looks like.
In the next column, I’ll look at the misunderstandings that make this inversion so hard to act on in practice—how founders and investors use the same words to mean different things, how round labels obscure rather than clarify risk, and how well-intentioned advice often reinforces the very asymmetries founders are trying to avoid.
For now, the takeaway is simpler: fundraising is not sales. And treating it that way doesn’t just make raising money harder. It shapes the relationships you live with long after the money is gone.