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Fundraising Reality: Six Months, Trust Alignment, Size Paradox

If you're going to raise outside capital, get clear on what you're actually signing up for. Fundraising typically takes up to six months regardless of the amount being raised — even after investors say yes, it can take an additional three months to get them to actually write the check and sign paperwork. Surprisingly, it can sometimes be harder to raise $1 million than $100 million, because the difficulty isn't correlated with deal size. Investors often invest in the people and their passion rather than a complete understanding of the business model, especially for innovative new technologies. The most important rule: only take money from people you trust, and make sure your time horizons are aligned — know whether they expect returns in one year or ten years, and understand their attitude during tough times. For smaller companies, former lawyers or investment bankers will help with fundraising for around 5% of what you raise.

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If you're going to raise outside capital, get clear on what you're actually signing up for. Fundraising typically takes up to six months regardless of the amount being raised — even after investors say yes, it can take an additional three months to get them to actually write the check and sign paperwork. Surprisingly, it can sometimes be harder to raise $1 million than $100 million, because the difficulty isn't correlated with deal size. Investors often invest in the people and their passion rather than a complete understanding of the business model, especially for innovative new technologies. The most important rule: only take money from people you trust, and make sure your time horizons are aligned — know whether they expect returns in one year or ten years, and understand their attitude during tough times. For smaller companies, former lawyers or investment bankers will help with fundraising for around 5% of what you raise.

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  • Answer0:38

    Fundraising Takes Six Months Regardless of Amount

    Fundraising typically takes up to six months regardless of the amount being raised. Even after investors say yes, it can take an additional three months to get them to actually write the check and sign paperwork.

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    Only Take Money From People You Trust

    Only take money from people you trust and ensure your time horizons are aligned. Know whether they expect returns in 1 year or 10 years, and understand their attitude during tough times.

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    Investors Bet on Passion Not Full Business Understanding

    Not necessarily. Investors often invest in the people and their passion rather than complete understanding of the business model, especially for innovative or new technologies.

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  • Answer2:33

    Pay 5 Percent for Fundraising Help at Smaller Scale

    For smaller companies not raising tremendous amounts, you can hire former lawyers or investment bankers to help with fundraising for around 5% of whatever you raise.

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    Small Raises Can Be Harder to Close Than Large Ones

    Surprisingly, it can sometimes be harder to raise $1 million than $100 million. The difficulty isn't necessarily correlated with the size of the raise.

    → Canonical answer