I once lost $2 million.
It wasn’t on a bad investment or a crypto gamble. It was my own money, vaporized, because I was completely clueless about raising a seed round. I had a great product, a solid team, and what I thought was a bulletproof plan. I was wrong. It took me 14 failed pitches, countless sleepless nights, and that one gut-wrenching failure to finally understand how the game is really played.
Don't make my mistakes. The world of seed funding has changed, and the advice that worked five years ago is now a recipe for disaster. If you're heading out to raise money in 2026, you need to understand the new rules. This is the framework I wish I had.
Your Story Is Everything (And Your Deck Is Almost Nothing)
My first few pitches were a disaster. I’d walk in with a 40-page deck filled with complex charts and five-year projections. I’d spend an hour walking through every single feature, every technical detail. The investors would nod politely, say “this is interesting,” and I’d never hear from them again.
Why? Because I was selling a product. Investors don’t fund products; they fund stories and the people behind them. They want to know why you’re the one to solve this problem, why it matters, and why it’s going to be huge. My story was buried under a mountain of useless data.
After the 7th or 8th rejection, I threw my deck out. I walked into the next meeting with a single piece of paper. On it, I had three things:
- The Problem: A one-sentence description of the pain point we were solving.
- The Vision: A picture of the future, painted in vivid detail, if we succeeded.
- My Unfair Advantage: Why my team and I were the only people on earth who could make this happen.
That meeting ended with a term sheet. It wasn’t a fluke. I’ve used this approach ever since, both as a founder and now as an angel investor in over 200 companies like Anthropic and Scale AI. A compelling narrative beats a detailed spreadsheet every single time. Your job isn't to present data; it's to make the investor believe.
So what makes a great story? It's not about being a charismatic speaker. It's about authenticity and conviction. It's about connecting the dots for the investor in a way that feels both inevitable and exciting. I remember seeing the pitch for a company that wanted to use AI to automate legal paperwork. The founder didn't start with the tech. He started with a story about his father, a small business owner who almost lost everything because of a contractual dispute. The founder's voice cracked as he talked about the stress and the fear his family went through. In that moment, everyone in the room understood the 'why'. The problem was real, it was personal, and this founder was on a mission to solve it. That's a story that gets funded.
Forget TAM, Focus on Your First 100 Lovers
Every founder loves to flash a slide that says their Total Addressable Market (TAM) is $50 billion. It’s a meaningless number. Investors have seen it a thousand times. It tells them nothing about your ability to actually capture any of that market.
In 2026, the only thing that matters is traction with a tiny, specific group of people. I don’t want to see a plan to conquer the world. I want to see evidence that you’ve found 100 customers who are absolutely obsessed with your product. People who would be devastated if it disappeared tomorrow.
This is about proving you’ve found a real pain point. When I was building RemoteTeam, we didn’t try to build an HR platform for every company. We focused exclusively on small, fully remote tech startups with 10-50 employees. We learned their problems inside and out. We built features they begged us for. By the time Gusto acquired us, we owned that niche. The big market came later.
What does this look like in a pitch?
- Show, don't tell: Instead of market size, show them testimonials. Show them usage data that proves people are living inside your product.
- Talk about your users: Who are they? What are their names? Tell their stories.
- NPS is your new god metric: A high Net Promoter Score from a small user base is infinitely more valuable than a million sign-ups with zero engagement.
Finding these first 100 lovers is the hardest part. It's a grind. It means doing things that don't scale. It means manual onboarding, personal emails, and late-night support calls. For one of my portfolio companies, the founder personally called every single one of his first 500 users. He spent hours on the phone with them, not selling, but listening. He learned their workflows, their frustrations, and their dreams. That's how he built a product they couldn't live without. That's the kind of founder I want to back.
The New Math of Seed Deals
The days of raising millions on a napkin idea are over. Investors are smarter, the market is tighter, and the expectations are higher. You need to be realistic about your valuation and the terms of the deal.
Convertible Notes: A Founder's Friend?
Convertible notes are still a popular vehicle for seed rounds, and for good reason. They delay the difficult conversation about valuation and can get cash in the bank quickly. But they come with traps. A low valuation cap can give away a huge chunk of your company for a small amount of cash. A high discount rate can do the same.
My rule of thumb? If you’re using a convertible note, you should have a clear idea of what your Series A valuation will be. The note is a bridge to that round, not a blank check. I’ve seen founders get absolutely crushed by unfavorable note conversions. Model it out. Understand the dilution. Don't sign anything you don't fully comprehend. I recommend sitting down with a lawyer or an experienced advisor and running through every possible scenario. What happens if you raise your next round at a lower valuation? What happens if it takes longer than you expect? These are not edge cases; they are real possibilities you need to be prepared for.
Revenue-Based Financing: The Rise of Non-Dilutive Capital
One of the biggest shifts I’ve seen is the growth of revenue-based financing (RBF). If you have a business with predictable revenue—even if it’s small—RBF can be a powerful tool. You get capital to grow without giving up any equity. You pay it back as a percentage of your monthly revenue.
This isn't for every business. It works best for SaaS, e-commerce, or other models with recurring income. But if you fit the profile, you should absolutely explore it. It allows you to keep control of your company and delay raising an equity round until you can command a much higher valuation. The key is to understand the total cost of capital. RBF can be more expensive than venture debt, but it's also more flexible. Do the math and figure out what's right for your business.
The SAFE vs. the Priced Round
Another key decision is whether to raise on a SAFE (Simple Agreement for Future Equity) or to do a priced round. SAFEs are popular because they are simple and fast. But they also defer the valuation discussion, which can lead to problems down the road. A priced round sets a clear valuation for your company, which can provide more certainty for both you and your investors. However, it's also more complex and expensive to execute.
My take? If you're raising a small pre-seed or seed round (under $1M) and you have a clear path to a larger Series A, a SAFE can be a good option. But if you're raising a larger seed round, or if you want to establish a strong governance structure from the beginning, a priced round is often the better choice. It forces you to have the tough conversations early and sets a solid foundation for future fundraising.
Building the Right Relationships
My final, and most important, piece of advice is this: fundraising is about relationships, not transactions. You are not just taking money from these people. You are inviting them into your company, into your life, for the next 5-10 years. Choose wisely.
Don’t just pitch anyone with a checkbook. Build a list of investors who have experience in your industry, who share your vision, and who you genuinely respect. Get warm introductions. Spend time getting to know them before you ask for money.
This is a long game. I've known some of my best investors for years. We had coffee, we talked about the industry, I sent them updates on my progress. By the time I was ready to raise, they already knew me, they trusted me, and they were excited to be a part of my journey. That's the power of building relationships. It's not about schmoozing; it's about finding people who believe in you and who will be there to support you through the inevitable ups and downs of startup life.
I failed 14 times because I treated fundraising like a numbers game. I thought if I just pitched enough people, someone would eventually say yes. I was wrong. The right investor isn’t just a source of capital; they are a partner who will help you navigate the brutal, chaotic, and ultimately rewarding journey of building a company.
It’s a tough world out there. But with the right story, the right focus, and the right partners, you can beat the odds. Now go build something great.
Frequently Asked Questions
What's the most common pushback you get on this?
People often push back by citing exceptions or edge cases. And they're usually right that exceptions exist. But building a strategy around exceptions rather than patterns is a losing game for most founders.
Do all experts agree with this view?
No, and that's fine. The best ideas in business are often contrarian. I share my perspective based on my experience and data, but I encourage you to seek out opposing viewpoints and form your own conclusions.
What experience informs this perspective?
This perspective comes from over a decade of building companies in Silicon Valley, two successful exits (RemoteTeam to Gusto, MovieLaLa to Gfycat), and investing in 200+ startups including Anthropic, OpenAI, and Scale AI. I write about what I've lived.