180 VCs, 40 meetings, 0 term sheets - test v3 no links

By Venture Insider. I led fundraising and U.S. market entry at an Asian deep-tech startup. This is written under a pen name to protect the companies and investors involved.

Let me start with the numbers, because the numbers are the only part of this story I'm certain about.

We contacted 180 U.S. venture firms. About 90 replied. 40 agreed to a first meeting. Three of those went to a second meeting. Zero produced a term sheet.

When I first laid those numbers out in a spreadsheet, I stared at the screen for a while. A 50 percent reply rate on cold outreach is not bad. It's good. Forty meetings is not a small number. We were not being blocked at the door. The doors opened, forty times.

Thirty-seven of those meetings ended in the same place: the first meeting. That's the detail that took me longest to understand. If we had lost thirty-seven times for thirty-seven different reasons, I could have fixed them one at a time. We lost thirty-seven times at the same spot.

The question we couldn't answer

I was the CMO, not the founder. I was good at building the company's story, and I prepared for those meetings the way a marketer prepares: the deck, the narrative, the market size, the technology, the customers we had.

The first question in most rooms was some version of "Why should we invest?" We had an answer for that, sort of. It was a company introduction. What the investor wanted was an investment thesis. Those two things look similar and are not. A company introduction ends with "this is who we are." An investment thesis ends with "and this is how your money comes back larger."

Then came the question that actually ended the meetings:

"If we invest, at what multiple do you think we exit?"

I said "10x." I had no calculation behind it. I couldn't have told you which acquirer would pay what, on which revenue, at which multiple, in which year. Neither, I later realized, could anyone else in our company. We had never done that math because nobody had ever asked us to.

The investor wasn't asking about our ambition. He was asking whether his fund's model closed. We had no idea what his fund's model looked like.

I thought it was forty different failures

After every meeting I wrote down why it hadn't worked. Weak market explanation. Weak financials. No U.S. entity. Unclear exit. Valuation gap. Insufficient diligence material. My first conclusion, reading those notes, was that U.S. VCs are all over the map and we had to prepare differently for each one.

That was wrong, or rather it was half right. The real pattern was that every level deeper revealed the next problem. Most firms stopped at exit logic. The one that got past that raised our corporate structure. The one that got past that sent a due-diligence request. The one that got past that couldn't agree a valuation. Four walls, in a fixed order, and we only ever saw the next one after we'd hit the previous.

Wall — What we thought the problem was — The question actually being asked

1. Exit — Is the pitch weak? — By what path, and at what multiple, does the investor's money come back?

2. Structure — Do we just need a U.S. entity? — Is this a structure the investor can actually invest in and exit from?

3. Due diligence — Isn't a good story enough? — Can we prove what we say with documents and numbers?

4. Valuation — How high a price can we get? — Is this a price both existing shareholders and the new investor can accept?

The flip we didn't do

Wall two deserves its own paragraph, because it's where most advice for non-U.S. founders goes wrong.

One firm told us, more or less, "it's hard to invest unless you're a Delaware C-Corp." So we did what you'd expect: we spent two months studying a flip. Legal, tax, IP transfer, shareholder consent, the effect on our existing investors, the effect on our government R&D grants. The direct cost came out at roughly $200,000. The cost of reversing it, if it turned out to be wrong, was higher.

Then we asked the firm the only question that mattered: "If we flip, is the investment confirmed?"

The answer was that they would review it actively.

A condition is not a commitment. We didn't flip. I still think that was right, and I also think we'd have gotten there a lot faster if we'd asked that question before the two months, not after.

The diligence request

One firm went further than the others. After a good meeting, an email arrived with the subject line "Additional Information Request." I expected a few financials. The attachment ran to pages: monthly revenue, revenue by customer, every material contract, cap table, option ledger, IP filings, employment agreements, board minutes, related-party transactions, tax.

Here is what diligence actually tests, which nobody had told me: not how much material you can produce, but whether the same company emerges from different documents. Ours mostly did. Not entirely. Different as-of dates. Slightly different definitions of "customer" between sales and finance. One clause in an old contract that nobody remembered signing. None of it was fatal. All of it cost trust, and trust is what the next stage runs on.

The valuation that didn't close

That same firm got to numbers. And then we found the wall we couldn't move.

We had domestic investors who had come in at a certain valuation. Going meaningfully below that price to bring in a U.S. fund meant telling the people who had backed us first that the company was now worth less than when they invested. The VC, for their part, couldn't go above the number their fund's return model required. We had a floor. They had a ceiling. The two never met.

I don't think either side was wrong. I think we had negotiated our previous round without ever asking what the round after it would need to look like.

If I went back

This is the conclusion I'd offer to any founder outside the U.S. preparing to raise there, and it's the opposite of what I did.

The first time, I started with a VC list. Build the list, get the intros, send the emails, take the meetings. We were genuinely good at that part. What we had not done was any of the work that the meetings were going to test.

The order I would use now:

Customer → Numbers → Exit path → Structure → Proof → Valuation → VC

Find one U.S. customer who actually pays. Turn that customer into unit economics. Push the economics forward to an exit that a specific acquirer would plausibly pay for. Choose the corporate structure that exit requires, not the one a VC mentioned. Run diligence on yourself before anyone else does. Set a valuation range with a floor your existing shareholders can live with and a ceiling the next round can support. And only then, at the very end, open the VC list. By that point it should be twenty names, not 180.

VCs used to be step one. Now they're last.

I wrote the whole thing up, including the checkpoint questions for each of the seven steps, 72 in total, because I would have paid a great deal for that list before my first meeting instead of assembling it after my fortieth. If you're in that position, Chapter 1 is free and the book is $19:

Not legal, tax, or investment advice. One operator's record.