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

Harry Stebbings · published 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

33:23 20VC: ElevenLabs Hits $200M ARR: The Untold Story of Europe's Fastest Growing AI Startup | The Real Cost of AI from Talent to Data Centres | How US VCs are in a Different League to Europeans | The Future of Foundation Models with Mati Staniszewski

Zach Lloyd · published 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 · published 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

34:03 20VC: How I Lost Airbnb at Seed Because of an Exploding Term Sheet | Investing Lessons from Roelof Botha & Peter Thiel | Why VC is Less Collaborative Than Ever and Great Companies Are Being Destroyed by Too Much Cash with Kevin Hartz @ A*

Harry Stebbings · published May 18, 2026

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

55:12 20VC: Turning Peter Thiel's $100K into $10M Angel Portfolio | The One Man Accelerator at The Four Seasons | Why VCs Can Be Sharks and What Founders Need to Know | Why Stocks and Cash are BS and You Should Invest in Land with Josh Browder

Paul Graham · published Aug 2008

Founders who can't smoothly imply competing interest should not attempt the maneuver at all, since clumsy manipulation attempts annoy VCs more than anything.

source A Fundraising Survival Guide

Paul Graham · published Aug 2013 · hedged

Implying that other investors are about to commit is arguably permissible as a countermove to investors' herd behavior, but most founders should not attempt it.

It's the single most common lie told to investors, and you'd have to be a very good liar to tell a profession its most familiar lie.

Scope: applies to most founders; those really good at acting formidable can carry it off

source How to Convince Investors

Paul Graham · published Sep 2013

Because investors habitually seem more positive than they are, founders should judge progress by investors' actions and their position on the investor's process track, not by their words.

Every investor has a track from first conversation to wiring money, and you should know what it consists of and where you are on it.

source How to Raise Money

Paul Graham · published Sep 2013

Investors deliberately feign more interest than they have to preserve optionality, so founders should assume any interest is fake until they get a definite commitment.

Investors affect interest to preserve optionality, so even a very interested-seeming investor probably won't invest.

source How to Raise Money

Ophelia Brown · published 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 · published 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 · published 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 · published 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 · published 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 · published 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 · published 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 · published 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 · published 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 · published 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 · published 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 · published 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 · published 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 · published 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 · published 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 · published 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 · published 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 · published 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 · published 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

Paul Graham · published Aug 2013

When asked who else is investing after being rejected, the best response is to address it head-on: explain candidly why investors turned you down and why they were mistaken.

Experienced investors know the best ideas are the scariest and know about the VCs who rejected Google; candor makes you seem more confident, presents that aspect better, and defuses a gotcha the current investor would otherwise discover and become attached to.

source Explain candidly why past investors were wrong rather than lying about interest

Paul Graham · published Sep 2013

Investors' behavior appears opaque to founders partly because investors' motivations are obscure and partly because investors deliberately mislead them; investors' misleading ways combine destructively with the wishful thinking of inexperienced founders.

At YC they constantly warn founders and investors are more circumspect with YC startups, yet explosions still happen when the two components combine.

source Investor opacity stems from deliberate misleading combined with founder wishful thinking

Paul Graham · published Sep 2013

Inexperienced founders cannot trust their intuitions during fundraising and should survive by imposing external rules on themselves.

Rules exist because powerful forces push founders in the opposite direction; you wouldn't need a rule otherwise.

source Inexperienced founders should impose external rules rather than trust intuition during fundraising

Paul Graham · published Sep 2013

Founders should always ask what happens next at the end of an investor meeting, and should assume the worst if an investor is vague or resists answering.

Investors who are seriously interested are usually happy to discuss what must happen before wiring money because they're already running through it mentally.

source Always ask what happens next and assume the worst if investors are vague

Paul Graham · published Sep 2013

A fundraising commitment doesn't count until the money is actually in the bank, so founders should collect committed money immediately and manage the wiring process themselves.

Startup investing is a market exceptionally prone to buyer's remorse and full of excuses to indulge it; even a day's delay can bring news that changes an investor's mind.

source Commitment doesnt count until money is wired so founders must collect immediately

Paul Graham · published Sep 2013

A surprise lowball offer should be treated as a backup and left unanswered for a while, despite the general moral obligation to respond promptly to good-faith offers.

Lowballing is a dick move that should be met with the corresponding countermove; the obligation to respond reasonably applies to offers made in good faith.

source Surprise lowball offers should be set aside as a backup not answered immediately

Paul Graham · published Sep 2013

An offer deadline shorter than three working days signals a sketchy investor and can usually be called as a bluff.

The best investors explode offers less because they're confident you'll pick them, while lower-tier investors use short fuses because they believe no one with other options would choose them; three days suffices if you've talked to investors in parallel.

source Deadlines shorter than three days signal a sketchy lower tier investor

Paul Graham · published Sep 2013

The worst fundraising blowups happen when unpromising-seeming startups deal with mediocre investors, because good investors won't lead startups on and promising startups don't need mediocre ones.

Good investors' reputations are too valuable for them to lead startups on; promising startups can get enough money from good investors, so only unpromising ones must resort to mediocre investors, who are most damaging when they flake because such startups are more desperate.

source Worst blowups occur when unpromising startups end up with mediocre investors

Paul Graham · published Sep 2013

An investor's claim that they can only invest contingent on others because you'd otherwise be 'undercapitalized' is almost always bogus.

They can't estimate your minimum capital needs that precisely.

source Claims of contingent investment due to undercapitalization are usually bogus

Paul Graham · published Sep 2013

Founders have a moral obligation to respond promptly when an investor makes a clean offer with no deadline.

Founders should respond in kind when investors behave upstandingly.

source Founders owe prompt response to clean no deadline investor offers

Paul Graham · published Sep 2013 · hedged

Founders can slow their fundraising somewhat for a prospective series A investor with a great reputation who is clearly working fast toward a termsheet, especially with a third party like YC involved.

A great reputation plus visible speed, and a third party to prevent misunderstandings, reduce the risk — but caution is still warranted.

source Slow fundraising for a reputable fast moving investor especially with a trusted third party

Paul Graham · published Nov 2005

It is unfair for investors to delay closing in order to gather more data, since the low stock price already compensates them for the risk.

Waiting yields ~1.7% more data per day on a two-month-old company, but the investor's compensation for that risk is already in the price.

source Delaying closing to gather more data is unfair since the low stock price already compensates investors for risk

Paul Graham · published Nov 2005

Competition among investors or acquirers is the founder's only real leverage, so you must keep pursuing alternatives until the check arrives.

A rival bidder makes an investor both fear losing the deal and infer that you're worth investing in; the same dynamic drives acquisitions.

source Competition among investors or acquirers is the founders only real leverage so keep pursuing alternatives until money arrives

Paul Graham · published Aug 2013

Founders should not exaggerate competing interest to pressure investors, but telling the truth about being far along with another investor is safe and not manipulation.

Investors are very sensitive, if anything oversensitive, to this tactic; but you're genuinely in a bind if you can't safely reject an uncertain offer.

source Truthfully disclosing genuine competing interest is safe unlike exaggerating it