5 startup fundraising tips by Flexport founder, Ryan Petersen

Ryan Petersen is the founder and CEO of ​Flexport​, the American freight and logistics unicorn, and a venture partner at ​Founders Fund​. He also co-founded ​ImportGenius.com​, the largest provider of data for global trade.

Here, we share some of his tips to help startups raise capital:

1. Fundraising valuations are probabilities: When investors think of investing in your startup, they think there’s a chance you could someday be worth billions. They average those possibilities to decide on a number. It’s important to remember that valuation is someone else’s opinion of your potential, not a guarantee. You must tell your team this every time you raise money to avoid distractions.
2. Storytelling and vision: Create a compelling vision to attract investors. Having a great idea and the ability to attract investors to that idea is more important. Your vision should not be about a product, it should be about solving real and impactful problems.
3. Fundraising is your last resort: You may be tempted to raise capital during high interest from investors or when your company seems to be trending, but take caution against doing so out of overconfidence. Approach fundraising cautiously, as it is a risky and stressful business. Only pursue it if your company must survive.
4. Aim for fewer investor participants: Contrary to popular belief, more bidders don’t always equate to better results. Aim for fewer participants in the fundraising process. This approach fosters a sense of exclusivity and reduces the risk of collaboration among VCs.
5. Playing to VC Psychology: Investors are often drawn to deals they perceive as unique and proprietary. Cultivate this perception by limiting exposure to other VCs. When a VC feels they’ve discovered an untapped opportunity, they are more likely to engage enthusiastically and offer favorable terms.

* References/recommended deep dive: Watch ​Starting Flexport​ and ​Interview at “First Time Founders”​.