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After spending several years at and raising multiple rounds as a startup founder, I can tell you that VC is very much an insider鈥檚 game. Here are my tips to give you an edge.

Learn the process

Because of the inside nature of VC, you need to know what you鈥檙e doing before ever making contact. I鈥檝e talked to many first-time founders as they鈥檝e started their fundraising process, and I am continually surprised by the information asymmetry between these entrepreneurs and VCs.

A VC friend of mine described this gap, saying, 鈥淚 think the industry is intentionally designed this way as a test for founders. VCs want to see if entrepreneurs can be resourceful enough to figure out how the game is played.鈥�

To overcome the knowledge deficit, call on founders you respect who have already raised similar rounds. You鈥檒l find founders have different philosophies on everything from how much to raise to what type of partner to choose. Talk to enough folks to be able to form your own opinion.

Weigh the pros and cons

Think about the type of capital partner you want. Start by considering firms that fit your current stage. Early-stage investors tend to have smaller funds, so the checks they write will represent a sizable bet for their total fund.

These firms are more motivated to get the company to the next stage. They鈥檙e rolling up their sleeves, working their connections, and making introductions to customers, partners, talent and more on your behalf. They understand hustle and grit.

For a multistage fund, that same first or early check is a drop in the bucket. Often, it might not even require full approval by the partnership, which is telling. VCs at these firms are buying a call option to invest in the next round.

They have less skin in the game and are less likely to go to bat for you. It鈥檚 also worth noting that many multistage firms are now investing earlier and earlier in the hopes that one of these early-stage bets will break out, and they鈥檒l have a shot at leading the next round (where they can buy up on ownership). But statistically, there鈥檚 only about a 25 percent chance that they鈥檒l do so (which obviously varies a lot by fund). They鈥檒l have the most information of any potential investor, and if they don鈥檛 invest, it signals to other potential investors that they didn鈥檛 think your company was a top performer.

This isn鈥檛 always the case, and there are certainly exceptions (multistage investors will argue against this vehemently), but it鈥檚 a real consideration.

Still, multistage funds are not always a bad choice for your first/early rounds. They structurally have the ability to preempt your next round, which if they do, saves you a fundraising cycle and allows you to double down with a partner you already know and love.

Match wisely

Let鈥檚 be real: All partners are not equal within a firm.

As such, you need to know where any potential investor stands. Are they a power player or a rising star? Can they pound the table internally and rally their partners to support you? Will the VC be able to confidently stand by your side and not succumb to pressures from their partnership?

Sometimes you might be better off having the leader from a Tier 2 VC firm lead your round than a junior person at a Tier 1.

You鈥檒l want to consider whether the person you want to work with is likely to stay at his or her current firm. There is no way to fully know this, but there are clues.

If they鈥檙e a rising star, they may move to another firm, or if they鈥檝e already made their career, they may be ready to move on to other interests.

If this happens, you become what is called an 鈥渙rphaned鈥� company. Another partner or junior associate might take your original backer鈥檚 place, but this isn鈥檛 the person who originally believed in you.

If you sense a potential partner is on his or her way out, you may want to look elsewhere.

Run a tight timeline

Set a clear timeline for when the fundraising process will end鈥攁nd stick to it. If you don鈥檛 set an end date, investors may continue to spend time with you, but there will be no reason for them to advance a deal.

They can wait and see what demand looks like for your equity (hanging around the hoop). Again, for them it鈥檚 just about buying more optionality.

You need to create a distinct moment when VCs have to decide if they鈥檙e in or out. To help this along, think about the cadence within your timeline of engaging VCs that are likely to lead.

Securing leads is essential to tipping the round. The others will follow.

Structure your term sheet and close the deal

It鈥檚 not just about who you get around the table, but how you structure your round.

Novice founders are sometimes tempted to include several firms as co-leads. While it may feel like more people and brands would be a good thing, it鈥檚 usually not. What ends up happening is each investor has less skin in the game so they are less likely to spend cycles helping you.

Rounds without a clear lead are 鈥減arty rounds.鈥� It can be easier to raise such a round鈥攃onsisting of a lot of small checks鈥攂ecause the diligence hurdles and the personal commitment are lower, but none of them are really invested in you.

It鈥檚 better to have a clear lead (or two, max), and then round out your raise with smaller firms and angels who typically follow with smaller checks.

Lastly, it鈥檚 important to remember: VC funding is just the means to the end of building your business, nothing more.

鈥淲inning鈥� here is finding the best capital partners鈥攚ith the least time and distraction to you鈥攕o you can get back to working on your real goal: creating and scaling value for your customers.

is CEO and co-founder of , a and alumni, and technology investor and adviser formerly at and .

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