Key Takeaways

  • Prioritize trust and a genuine partnership with your VCs over chasing the highest valuation or a 'tier one' name. Paul Erlang, CEO of FOMO, chose partners like Benchmark, USV, and Index based on who he believed would help scale the business best.
  • Proactively anchor price ranges with potential investors early in conversations, even before a term sheet is on the table. Erlang notes that FOMO discussed an interesting price range with investors long before they were actively raising, which helped guide later negotiations.
  • Not all top-tier VCs lack product intuition. Erlang highlighted Fred Wilson at USV as a rare example of a venture capitalist with a strong understanding of product, counter to a common founder critique.
  • The best hires often come from months-long relationship building, not recruiters or quick intros. Erlang shared that FOMO’s most impactful team members were people they cultivated connections with over time.
  • Strategically manage investor interest and your fundraising timeline by employing The 'Wait to Announce Your Last Round' Fundraising Rule.

The 'Wait to Announce Your Last Round' Fundraising Rule

This framework from Paul Erlang offers a tactical approach to managing the often-overwhelming inbound interest from investors after closing a funding round, particularly when you anticipate raising again in the near future.

  • Rule Statement: If you're trying to raise another round, wait to announce your last round. Cuz as soon as you announce a round, you get tons of inbound from other investors and it takes up time to kind of tell them, 'No, we're not raising right now.'

When This Works (and When It Doesn't)

This rule shines when a founder is planning to raise capital again in the near future and wants to manage inbound investor inquiries efficiently, avoiding premature distractions. By delaying the public announcement of a recent round, you maintain control over your narrative and your calendar, letting you focus on building. It’s particularly effective if you're in a strong position, having already closed a round, and aren't reliant on the PR fanfare for immediate traction, hiring, or signaling to customers.

However, this rule might not fit every scenario. If your business depends heavily on public funding announcements to generate significant customer interest, attract specific talent, or signal market validation to partners, delaying might cost more than it saves. Similarly, if your existing investors require an immediate public announcement as part of their terms, you might not have the flexibility. It’s a strategy best deployed when you have leverage and a clear, intentional timeline for your next capital raise.

What to Do With This

Imagine you're a 27-year-old founder who just closed a $1M pre-seed round for your AI-powered analytics tool. Your focus for the next 12 months is solely on hitting product milestones and user growth to set up a strong Series A. Your instinct might be to blast the news on LinkedIn and TechCrunch, signaling your success.

Instead, apply The 'Wait to Announce Your Last Round' Fundraising Rule. Hold off on the public announcement for now. This week, draft a brief, personalized email to key angels and close advisors, thanking them and letting them know you'll hold on broad PR for a while to focus on building. When other VCs, who’ve heard whispers, reach out asking if you're raising, respond with something like: "Thanks for reaching out! We recently closed our pre-seed with a great group of angels, but we're heads down building for the next 6-9 months. We'd love to reconnect then, after we've hit our next growth targets." This approach allows you to acknowledge interest without getting bogged down in premature pitches, keeping your time clear for what truly matters: execution.