5 fundraising tips by Mark Suster (Upfront Ventures)

Mark Suster is the managing partner at ​Upfront Ventures​, one of the largest venture capital funds in LA, and a successful founder and entrepreneur.

Here are five of his tips for startup founders on raising capital:

1. Be careful about raising too much capital: Raising too much capital too quickly will have you feeling pressured to spend it, and to go fast. It will also make it harder to pivot or change course if you need to.
2. Do not rely on FFF: Raising from friends and family creates awkwardness and tension if the company fails, and many people involved may not understand the inherent risks. It is better to raise your first investments from technical people, and ideally, those who have had a successful exit, as they are more likely to understand the startup process and provide valuable mentorship.
3. Due diligence goes both ways: The key to success in raising capital is ensuring a strong personal connection with investors, as working with them is like entering a long-term relationship. That is especially true for VCs. You should make sure you know who you are taking in as an investor and do your research.
4. Meet a VC long before you ask for an investment: Try to get meetings with VCs, long before your actual raise. Ask for their thoughts and tell them you want to know them early so they're among the first people you call when you raise. Then, keep them updated with the progress you make. Stay on their radar.
5. Get an anchor investor first: Most investors are followers, and very few investors are able to take the lead and invest first. To get the first investor in, ask them to join as an advisor. Another option is to offer a significantly lower valuation for your first investor, to lower their risk.

* References/recommended deep dive: watch his talk​ here​, and his interview on ​This Week in Startups​.