If you’re building a startup and planning to raise funds, you’ve likely spent hours trying to figure out what investors really look for. You’ve scoured pitch deck templates, listened to podcast interviews, maybe even stalked a few VCs on LinkedIn.
But here’s the uncomfortable truth:
There are things VCs know — and rarely say out loud.
Not because they’re hiding something malicious. But because in the fast-paced, high-stakes world of startup investing, some truths are considered “understood.”
If you’re not on the inside, you’ll never know.
I’ve mentored over 100 founders through fundraising rounds. And I’ve sat across enough term sheets to tell you — what you don’t know can absolutely hurt your startup.
Let’s fix that.
1. A “No” Isn’t Always About You — But It Can Be About Your Market
VCs often pass on startups not because the founder isn’t capable — but because the market doesn’t fit their thesis.
They’re not going to fund a brilliant healthtech idea if their fund focuses on fintech.
They won’t invest in a low-margin model, no matter how scalable the tech.
Here’s what they won’t say:
“We liked you — just not enough to make an exception.”
What you should do instead:
Study their current portfolio. Understand their stage, geography, and sector preferences. Treat investor research like customer research — because, frankly, that’s what it is.
2. Traction Isn’t Just Numbers. It’s Momentum With Meaning.
Founders often lead with vanity metrics:
“We’ve crossed 50K app downloads.”
“We have 1,000 followers on Instagram.”
“We’re growing 15% month-on-month.”
VCs want to know:
→ Are those downloads converting to paying users?
→ Is retention increasing or falling?
→ What does your CAC vs. LTV really look like?
Here’s what they won’t tell you:
“Your traction slide made us doubt your business, not believe in it.”
What you should do instead:
Only show traction that points to repeatability and growth.
Less “look what we did” — more “look what we can continue doing.”
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3. They’re Not Betting on You Alone — They’re Betting on Your Exit
You think they’re investing in your idea.
They’re investing in a future return.
VCs have limited partners (LPs) who expect returns in 7–10 years. That means:
→ They need to believe you can raise future rounds
→ Or get acquired
→ Or IPO
No exit potential? No deal.
What they won’t say:
“Great idea — but we don’t see how this ends in $100M+.”
What to do:
Show them you understand the game. Include realistic exit scenarios. Mention comparable acquisitions. Speak their language.
4. Terms Can Be Friendly — Until They Aren’t
That convertible note with a high valuation cap?
That liquidation preference you didn’t fully understand?
That one line in the SHA you skipped?
These small things can become massive later — especially during exits or down rounds.
What they won’t say:
“We’ve structured this in our favor. You didn’t ask, so we didn’t explain.”
What to do:
Don’t just negotiate valuation — negotiate terms.
Bring in legal help. Understand the cost of dilution.
And never sign what you don’t fully grasp.
5. If You’re Not Clear, They Assume You’re Not Ready
When a founder fumbles the “How much are you raising?” question, most VCs don’t give feedback. They just pass.
They expect you to know:
- Your ask
- Your use of funds
- Your burn rate
- Your break-even timeline
What they won’t tell you:
“We passed because your numbers felt fuzzy — and that’s a risk.”
What to do:
Prepare like you’re pitching tomorrow, even if you’re not.
Build your financial model, your deck, and your one-liner before you think you need them.
Final Thoughts: Learn What They Won’t Teach
Being investor-ready isn’t about having all the answers — but it is about knowing the right questions.
The game is winnable, if you know how it’s played.
That’s why I created the Startup Fundraising Course — based on everything I’ve seen founders get wrong (and right) over 100+ funding journeys.
It walks you through pitch decks, valuation, term sheets, investor psychology — and how to stack the odds in your favor.
Check it out if you’re raising — or plan to, soon.
https://thegreycells.com/startup-fund-raising
Looking for Strategic Mentorship?
I’ve mentored dozens of startups, helping them avoid costly mistakes, scale sustainably, and navigate complex challenges.
If you’re ready to leverage strategic mentorship as a competitive advantage, book a free 30-minute consultation:
👉 https://links.thegreycells.com/BookAppointment
Success isn’t just about hard work. It’s about who’s guiding you.
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!