How should founders handle investor pressure and promises during a fundraise?

Harry Stebbings · Sep 8, 2025

The roadshow model — meeting everyone, comparing term sheets, then deciding — is at odds with the idea of investor-founder partnership.

Scope: stated as his romantic preference

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Zach Lloyd · Oct 17, 2025

Running a broad formal fundraising process produces worse outcomes than raising from a few investors you've known a long time.

His prior company pitched ~20 firms in a week, took the best term sheet, and the resulting investor relationship was not a good result

Scope: not every founder has pre-existing investor relationships to draw on

44:35 20VC: The Startup Adding $1M ARR Every Week | Competing Against OpenAI's Codex and Claude Code: Who Wins | Why Gemini is Failing and GPT-5 Is Winning | Do Margins Matter in a World of AI | The Ugly Truth About AI Coding with Zach Lloyd, Warp

Kevin Hartz · Jul 22, 2024

Exploding term sheet deadlines are not credible and it is fair for founders to go out and assess the market and their prospective partner

An investor who wants to invest at 5pm Friday still wants to invest at 5:15 — the investor will always be there; founders need to speak to other investors and learn how others could help

Scope: acknowledges bad behaviour on both sides, including obnoxious shopping under false promises

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Harry Stebbings · May 18, 2026

Founders running a formal term-sheet process with a Friday deadline is an awful way to do business

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Ophelia Brown · Mar 17, 2023

Funds calling a founder to interject after a term sheet is already signed is illegitimate behaviour

It comes so late in the process that it isn't a real evaluation, just an attempt to break a signed commitment

25:55 Funds interjecting with a late competing offer after a term sheet is signed is illegitimate

Alan Chang · Jan 5, 2026

Founders should wait longer before accepting an early term sheet because they tend to underestimate their company's value — but if you've told an investor you'll take their term sheet you should honour it even at worse terms

He raised his first round too cheaply because he didn't realise investors would price the company so highly, but he believes if you say you're going to do something you should do it

43:40 Wait longer on price but honour a commitment once given

Julio Vasconcellos · Sep 23, 2022

The fundraising and valuation 'dance' between founders and investors wastes a lot of time; both sides would be better off being objective and practical about who they want to work with and getting to a deal quickly

It would be far more efficient and more pleasurable for everyone

45:00 The valuation negotiation dance wastes time both sides should be objective and quick

Harry Stebbings · Jul 22, 2024

Exploding term sheets have a terrible reputation but there is a legitimate reason for them — stopping founders from shopping the price around

Founders taking a term sheet at 25 and asking others to beat it at 30 is not a good dynamic

33:28 Exploding deadlines are justified to prevent price shopping

Kevin Hartz · Jul 22, 2024 · hedged

Rather than use an exploding term sheet, you should hope you have found a partner who won't shop it — and if they do shop it, the partnership probably wasn't meant to be

33:44 Trust a partner not to shop rather than force an exploding deadline

Harry Stebbings · Jul 22, 2024

Founders will always shop a term sheet and it is arguably their job to run a process for the highest price — but he does not want to be in a process

33:53 Running a process to maximize price is legitimate though investors dislike it

Kevin Hartz · Jul 22, 2024

Investors cannot lock founders down; commitment has to be voluntary, won with honey rather than vinegar

35:06 Commitment must be voluntary not coerced by deadlines

Trae Stephens · Apr 3, 2024

Founders who hold their capital sources hostage by engineering a hypercompetitive, overpriced round are behaving badly, and Trae found that environment draining rather than energizing

It felt gross and wrong; he nearly left venture capital over it, and as a founder he refused to simply take the highest bidder at Anduril

24:06 Engineering hypercompetitive overpriced rounds to hold investors hostage is bad founder behavior

Josh Browder · May 18, 2026

VCs will say anything — fabricated customer intros, golf-buddy connections — to get founders to sign on the spot, and founders should never sign in the meeting

They reverse-engineer what the founder wants to hear; impressionable young founders sign immediately and the promised introductions never materialize

54:21 Never sign in the meeting investor promises are hollow

Harry Stebbings · Jan 26, 2026 · hedged

In time, demonization of technology leaders is something that will become a worry

53:29 Demonization of technology leaders is a coming risk

Craig Courtemanche · Dec 4, 2023

Founders who get emotionally invested in relationships should run a closed-envelope fundraising process, because some investors will use guilt and emotional manipulation to win access to a deal

He was told by investors that he was 'taking food out of my kids' mouths' by not giving them access; a structured closed process like Atlassian's would have removed that dynamic, and he chose Brian and Will partly because they were straightforward and ran a good process

22:20 Closed envelope processes protect emotionally invested founders from investor manipulation

Harry Stebbings · Sep 8, 2025

It is increasingly common for founders to run a multi-week roadshow and term sheet comparison rather than accept a fast offer.

31:48 Roadshow style multi week processes are becoming common

Mati Staniszewski · Sep 8, 2025

Most founders running a fundraise haven't clarified what they are actually optimizing for — valuation, dilution, brand, network, or a specific partner — and clarifying that question quickly reveals whether the process is genuine or just price-shopping.

From advising founders building on ElevenLabs who are raising from his own investors, the answer is highly distributed and asking the question exposes the real motivation.

32:10 Clarifying your optimization target reveals if the process is genuine

Mati Staniszewski · Sep 8, 2025

Running some form of process is justified because investors typically issue term sheets before demonstrating any partnership, and a first-time founder has no other way to judge whether the terms or the partner are good.

You need relative comparison, which can come from conversations with other founders, benchmarking against comparable companies, or a process.

33:31 Process is justified for first time founders lacking comparison points

Harry Stebbings · Sep 8, 2025

Being the first investor to issue a term sheet is the worst position — you get used as a stalking horse, receive no credit, and get outbid by everyone who follows.

Founders take the offer to other funds without naming you and use it to raise the price.

34:51 First mover term sheet becomes a stalking horse

Mati Staniszewski · Sep 8, 2025

Founders who use a first term sheet mainly to bump other offers are optimizing wrongly unless the price difference is an order of magnitude.

Investors and partners deliver far more value than the money itself, so a ±20% difference in terms is the wrong thing to optimize for; a 5x gap would be different.

35:05 Bumping offers only justified by an order of magnitude price gap

Emil Michael · Oct 24, 2022

Founders should stop trying to manufacture FOMO and deadline pressure in fundraising because investors are now happy to miss out and will penalize the company for it

Last year was FOMO, this year is JOMO — joy of missing out; investors are relieved not to have to look at a company and say no, so pressure tactics get you disfavored

24:21 Manufacturing fomo and deadlines backfires when investors are happy to miss out

Scott Farquhar · Oct 9, 2023

A one-shot, closed-envelope bidding process is the best way to get a good fundraising outcome

The standard process — indicative offers, VCs talking amongst themselves, then a second chance to raise their number — allows collusion and involves too little game theory

13:56 Closed envelope bidding eliminates collusion and produces best outcome

Scott Farquhar · Oct 9, 2023

VCs are genuinely partners, and an auction-style process does not sacrifice relationship-building if the trust is built in the years of conversations beforehand

VCs had been knocking on Atlassian's door for years, so he already knew the partners at all five bidding firms well through multiple breakfasts and dinners

15:51 Trust built in years of prior relationship makes a competitive auction compatible with genuine partnership