The Mystery of Fundraising Iniquity

Paradise for some, Alighieri's inferno for others.

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“I have loved justice, and hated iniquity; therefore I die in exile.” - Pope Gregory VII

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Questions that I am oft asked throughout my daily happenings around venture capital generally go like this: “How does one raise a round / fund with x pedigree and y idea?” or “How can anyone raise a meaningful amount of capital given the current economic climate?” While seemingly innocuous at the surface, these thoughts graze against a far more insidious, yet honest, line of questioning which looks a lot more like:“Why are other people who look like me, sound like me, and have lived similar lives to me able to fundraise ‘easily’ while I am not?”

For those asking this question, I am here to tell you that fundraising for any idea, no matter who you are, is an extremely painful experience (especially in current times). In the unlucky circumstance that you are a veteran fundraiser or someone who has chosen fundraising as a line of work, you know that this eventually gets easier, but only slightly, and it is likely your soul is left criss-crossed with emotional disfiguring reminiscent of the scarification of a West African tribe. Sometimes these marks are beautiful, often times they hurt, invariably they leave you different. Regardless of what anyone might say, everyone who has gone through any version of this process has come out a more calloused, impenitent individual as a result. I promise, this feeling is not just limited to you, but to all of us, especially those you look up to most.

The intersection of beauty and pain (scarification) seen on the face of a young West African girl.

The reasoning for these hardened feelings is that ideas and ambitions are akin to intellectual children. They are formed deeply within ourselves and incubated internally until ready to delicately share with the outside world. Whats more, the ambitions associated with these ideas are deeply tied into our own psyche and emotions, and the response that the world gives to them contributes greatly to our frame-working of the fairness in our own lives.

Life is most fair to those who make it fair for themselves — and cripplingly unfair to those who believe that they are owed equanimity.

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Anecdotally Speaking

I, regrettably, have spent a large part of my adult life fundraising for variety of different projects. In fact, my first experience in the venture capital space was raising a series of Special Purpose Vehicles (SPVs) in the mid to late 2010’s. Anyone who lives by the SPV, and dies by the SPV will tell you: this is an arduous and very destabilizing way to earn a living, even back then, when the vibes were much more palatable. Over time, going from place to place, person to person, putting yourself out there on the line behind the shield of your own ideas begins to feel a lot more like prostitution than ‘high finance’. And then, when you finally reach your goal, you immediately have to focus your attention on your next target and begin the process all over again with very little fanfare or celebration. I’d advocate for those who do not do well with rejection, and prefer to rest on the laurels of their achievements to avoid this type of work at all costs.

Much like prostitution (I’d imagine), while these types of experiences do not necessarily get much easier, you certainly begin to develop an understanding for what to expect from your counter-parties. At this point, whether talking to a family office, an institution, or (especially) a venture capitalist, I have a strong level of confidence that I could directionally predict >80% of the questioning in most fundraising meetings. This is not to boast, but rather elucidate to those who are relatively new to this process that successful fundraising is far more formula than fecundity, and the function for success is merely time under pressure. Moreover, I am a firm believer that that this level of pattern recognition is the only thing that keeps many of us soldiering on the Sisyphean journey of returning to the well.

As was beautifully articulated in The Art of War:

“Engage people with what they expect; it is what they are able to discern and confirms their projections. It settles them into predictable patterns of response, occupying their minds while you wait for the extraordinary moment” - Sun Tzu

As with any marginally decent fundraiser, my journeys to the proverbial well have spanned nearly the entirety of my time in early stage technology. More recently, in August of 2022 (amazing timing, I know) I began the process of raising $15 million for my early stage fund - Exits Capital, which as of January 1st 2023 is mostly finished. In addition, in early December 2022 (again, unbelievable timing, I know) I undertook a $1.5 million Seed Round for a stealth company that I am currently building, which as of January 1st 2023 is once more, mostly finished. There is nothing braggadocios about any of these anecdotes. Rather, I want to illustrate to you, dear reader, that my scarification is just as fresh as yours, and my eternal boulder to bear is slowly rolling back down the hill to the base, where the universe has always said it belongs.

After cheating death twice, Hades forced Sisyphus, King of Ephyra to roll a heavy boulder up a hill for all eternity — only for the boulder to perpetually fall back to the bottom as he neared the top.

Considering Factors

When considering a raising money for any idea, I believe that it is important to remember that fundraising, like cooking, is a craft, not an art. As the venerable inspiration for all of my writing once posited:

"Cooking is a craft, I like to think, and a good cook is a craftsman -- not an artist. There's nothing wrong with that: The great cathedrals of Europe were built by craftsmen -- though not designed by them. Practicing your craft in expert fashion is noble, honorable, and satisfying." - Anthony Bourdain (R.I.P)

When attempting to refine expertise in the craft of fundraising, I believe there are a few elemental aspects of the practice that once understood, provide a strong bedrock from which to build. Those who are the best at raising money not only deeply accept these factors, but weaponize them to their advantage constantly -

1. Integrity of Belief - Very few people have accomplished world-changing brilliance by accident. If you have nothing else, relentless discipline and perspicacity towards one’s ideas (and the goals associated with these ideas) is an incredible place to begin the process of actualizing them. A truly unwavering belief in an idea is a stench that is difficult to ignore, particularly to those external to oneself. It permeates the air and hangs heavy, especially when observed against the landscape of the catatonics. It’s why people like Elon Musk and Jeff Bezos have been so successful over time: integrity of self-belief to the point that others think you’ve been touched by madness is often the basis for consequential shifts to reality. Nevertheless, it is easier than ever in the modern era to sell a dream erected on a foundation of half-truths or even worse, half-confidences. While this may seem appealing as it is far easier than its counterpart, I promise you the juice is not worth the squeeze. Strong ideas without a level of personal conviction that exists on the brink of insanity is like a Formula One car without gears — conceptually meaningful, but fundamentally limited.

2. Reputation - Although fickle to understand in the best of times, the reputation (read: social evaluation) that you bring to the table alongside your idea is the sail that will push your metaphorical ship deep out to sea. Most ideas looking for capital are little more than aphorisms of the mind - wisps of brilliance or ineptitude looking for a gravitational pull out of orbit. Despite the fact that this is far from a perfect Rorschach, it is the amalgamation of who you are and what you’ve accomplished that will moor your ideas to a more practical reality. However, like most aspects of the fundraising journey, reputations are malleable and can be positioned accordingly against your audience. A worthwhile exercise to contemplate when evaluating a raise is to go person by person and institution by institution with the framework of: “What do I believe about myself that might not come across reputationally, and what can I do to shift these perspective closer to my own reality?” It is in this meditative state that the partisanship of self should be deeply evaluated. Because even if there is large ravine between what is assumed externally and what is known internally, the onus is on the you, the fundraiser, to bridge this gap.

3. Nepotism - Many people hold nepotism with a negative connotation because they have seen deleterious effects in their own lives as a result of the nepotism of others. In spite of that, what if I were to tell you that nepotism, at its fundamental core, is a key driver in the success of most ideas, regardless of how grand or modest they might be? Many of the greatest accomplishments in modern capitalism find their genesis in some level of tribalism between relatives, associates, or friends. Ideas often reach their most powerful crescendo off the back of innate support from a crew of deep believers. Whether this is the friends and family that fill out your pre-seed round, or the ex-coworker who now invests on behalf of your dream partner, one must acknowledge that intentions improve exponentially when supported - especially by those with deep seeded faith predicated on intrinsic sectarianism. Lean into your tribe, as the process of building the world into a better place is not a path one should walk alone.

To End

It is undoubtedly a scary time to share your ideas with the world. Everything that you’ve likely heard about the broader macroeconomic picture is seemingly more true by the day, which does not make the already onerous task of starting something new (or raising for something old) any easier. However, there is something to be said for those who are painfully aware of these facts, and yet choose to push forward regardless. In fact 2009, which represented the tail end of the 'Great Recession’, saw the creation of many of the popular technology businesses that are synonymous with our daily lives today, such as WhatsApp, AirBnB, Venmo, Coinbase, and many others. It is in these moments where true character of the soul is tested and refined within the foundry of adversity.

Regardless of your ambition, the path forward relies on your own ability to make the best of what you have, and granularly understanding the levers that will allow you to acquire more. In doing so dear reader, especially in this specific moment in time, you will become an asset to yourself beyond your wildest imagination. If you are successful now, amidst the days of famine, the level of prosperity you will reach in times of excess will awe you in the most inconceivable ways. The time is now and the choice is yours — choose wisely.

Rest at the end not the middle.

— EXITS