Transcript
Welcome back to Startup Mantras — I’m Dr. Anu Khanchandani, startup mentor and founder of The Grey Cells.
Today’s episode is called “Funding Fails I’ve Witnessed — So You Don’t Have To.”
And I mean that literally — because over the years, I’ve watched brilliant founders make the same painful mistakes again and again. Not because they’re not smart. But because no one told them what to watch out for.
So today, I’m telling you.
Let’s dive in.
[Section 1 – The Over-Equity Trap]
Let’s start with Rishi — a solo SaaS founder with a beautifully built MVP. He raised ₹1 crore in angel funding just six months into development.
But here’s the problem: he gave away 35% of his company for that round.
Why?
Because he didn’t know how to value his startup properly — and he thought “more money” meant he’d go faster.
What happened next?
- He got to revenue… but not scale.
- When he tried to raise again, VCs didn’t like the cap table.
- And he eventually had to buy back equity — at a loss.
This is common. Founders overpay in equity for under-researched cheques.
[Section 2 – The Convertible Note Catastrophe]
Then there’s Meena, who agreed to a convertible note with a very vague valuation cap.
Her investors seemed generous — they gave her 18 months of breathing room.
But when she raised her priced round, that cap diluted her by almost 40%.
Why? Because no one had explained how the conversion mechanics really work.
Founders think they’ll figure it out later. But later always comes — and it’s expensive.
[Section 3 – The Wrong Investor Fit]
Finally, there’s a quieter kind of fail — one that doesn’t make the headlines.
A founder I mentored took money from a well-connected investor… who had zero interest in her category.
The result?
- No strategic guidance
- No introductions
- But a loud voice in every board meeting
And when the startup hit a rough patch, that same investor pushed her to pivot — to something that completely misaligned with her vision.
Funding is not just about money. It’s about alignment, trust, and long-term understanding.
[Closing – What You Can Do Differently]
So what do you do with all this?
Start with one principle: don’t rush just because someone’s ready to write a cheque.
Know your valuation.
Know your terms.
Know your options.
And most importantly — know what not to accept.
If you’re planning to raise funding this year, I’ve broken down all these lessons — and more — in my new course on Startup Fundraising.
It’s built from real founder stories and real investor conversations.
Because funding shouldn’t feel like a gamble.
If you want to pitch smart and raise right — you’ll find everything you need inside.
The link is https://thegreycells.com/startup-fund-raising/
Until next time,
This is Dr. Anu, and you’re listening to Startup Mantras.
With over two decades of experience in the software technology arena, having worked in multinational and SME companies in India, USA and Singapore in the capacity of programmer to CTO – I felt now was a good time to give back to the world what I have learnt in this journey. Even if it ends up benefitting a few of my readers by giving them insight or solving a technical issue, I think I will have achieved my mission!