As a startup founder, one of the hardest truths you’ll face is that startups don’t fail — they just run out of money. And the process of raising an investment round is rarely as quick and simple as you might think.
If you’re new to fundraising, you might expect it to take a month or two — NOOOOOOO, but the reality is that even under ideal conditions, it’s going to take at least 3 months. Unless you already have a list of investor friends that would invest into you at a heartbeat.
More realistically, you’re looking at 6 to 18 months from start to finish. And this is during the same time, youa re building it, forging new partherships with other people, and also going to tradeshows, networking, and doing all of this. And that’s assuming your startup is even ready for investment — many aren’t.
Step 1: Finding a Lead Investor (Expect 3 Months)
When you start reaching out to potential investors, you’ll likely get positive responses — people saying they’re interested, taking your pitch, and giving you hope. But once the excitement settles, you’ll find that nobody’s willing to commit without a lead investor. The lead investor is crucial because they set the terms of the deal, perform due diligence, and essentially validate your startup for other investors.
Finding this lead investor can be the hardest part of your raise. Unlike friends and family rounds, where people invest because they believe in you, professional investors want to see a solid opportunity. They’re looking at everything: valuation, market potential, and your business fundamentals. The lead investor will typically contribute the largest check, negotiate the term sheet, and take a seat on your board. This process alone can take a couple of months of outreach, pitching, and negotiation.
Step 2: Lead Investor Diligence (Expect 4 Months)
You’ve found a lead investor, great! You’re almost there, right? Wrong. Now the real work begins. The lead investor will need to perform due diligence on your business. This involves reviewing all your documents, interviewing customers, analyzing your market, and potentially bringing in outside experts to vet your technology, patents, or financial models.
Once the term sheet is signed, the legal process begins, which could be fast if you’re using something simple like a SAFE agreement. But if you’re raising on preferred shares, expect the legal work to take a month or more. And let’s not forget that things inevitably come up — whether it’s a missing document, an unavailable customer, or a lawyer on vacation. Even if you need the funding urgently, others won’t treat it as a high priority. The diligence phase will almost always stretch to 3 months.
Step 3: Filling Out the Round (Expect 3–4 More Months)
With your lead investor secured, you’re now looking to fill the rest of your round. This is where you might think things get easier. After all, you’ve got interested parties who said they’d invest once you had a lead. But here’s the catch: many of those initial promises will fall through. Some investors will disappear, others will have moved on, or maybe they’ve committed their funds elsewhere. Out of the 10 investors you thought were lined up, only 2 or 3 might still be interested.
You’ll likely find yourself back at the drawing board, prospecting for new investors to fill the rest of your raise. But now you have a lead investor and more traction, which puts you in a better position than before. You’ll want to consider pitching to angel groups and microVCs, while keeping up momentum with your product or customer acquisition. From there, you should plan on another 3 months of work to close out the round.
Speeding Up the Process
Fundraising can take time, but there are ways to speed up the process. Here are a few tips:
• Always be prospecting: Start building relationships with potential investors at least a year before you need to raise. Keep them updated regularly with your progress.
• Work on follow-on investors early: Don’t wait until after the lead investor is done with their diligence. Keep conversations going with other investors in parallel.
• Prepare your deal room: Have all your financial models, legal documents, and due diligence materials ready ahead of time to prevent delays.
• Avoid August and December: Investors typically go quiet during these months, so avoid timing your raise around them.
Final Tips for Founders
Raising money is a marathon, not a sprint. The process can be frustrating and slow, but it’s vital that you manage your expectations and cash flow to ensure you don’t run out of runway while waiting for funding. Here are a few additional tips:
• Stay patient: Diligence takes time, and rushing or showing desperation can turn investors away.
• Keep milestones realistic: Investors need to see solid progress and achievable goals.
• Balance persistence with patience: Follow up, but don’t push too hard, or you risk coming across as desperate.
• Don’t look desperate: No one wants to invest in a company that looks like it’s running out of money.
Ultimately, raising a round is about much more than sending out decks and waiting for wires to come through. It’s a long, deliberate process that requires preparation, patience, and constant communication with your investors. Plan for the long haul, and always have more runway than you think you’ll need.
Originally published on Medium