What Do VCs Really Look For? Insights from a Founder Who’s Raised Over $1 Billion
Investors want founders who understand the financial reality of their business. Messy data, misunderstood metrics, or waiting until you’re nearly out of cash to start fundraising can cost you leverage, valuation, and even a term sheet. In this episode of Build Mode, host Isabelle Johannessen sits down with Sasha Orloff, founder and CEO of Puzzle and a Startup Battlefield alum, to share lessons from building companies that have collectively raised more than $1 billion.
Sasha breaks down what investors look for during fundraising, which financial metrics founders should know by heart, and why VCs don’t expect your startup to be perfect—they expect you to understand its reality. He also shares how he nearly lost a term sheet because his data room wasn’t ready, how fundraising diligence evolves as a startup grows, and why getting your financial house in order can help you raise with more confidence and leverage.
Key Takeaways
- What raising over $1 billion taught Sasha: Fundraising is as much about credibility and preparation as it is about vision.
- Why financial literacy matters: Investors value founders who can clearly articulate their company’s financial reality—strengths, weaknesses, and everything in between.
- Metrics every founder should know before pitching: Know your revenue growth, gross margins, runway, sales efficiency, and profitability ratios inside out.
- How investor expectations shift by stage: From pre-seed and seed through Series A, B, and beyond, diligence gets deeper, and the bar for financial rigor rises.
- Revenue growth vs. quality of revenue: Fast growth is great, but sustainable, high-quality revenue is what truly moves valuations.
- The danger of running low on cash: Waiting until you’re nearly out of funds can weaken your negotiating position—start fundraising early.
- A near-miss term sheet: Sasha recalls how an incomplete data room almost cost him a deal. Preparation is non-negotiable.
- Financial organization boosts confidence: Clean books and compliance signals to investors that you can handle their capital responsibly.
- Due diligence checklist: Have your financials, legal documents, and operational metrics ready before you even start pitching.
- Honesty beats perfection: VCs don’t expect a flawless startup; they respect founders who acknowledge challenges and show a plan to address them.
- From frustration to innovation: Sasha’s own fundraising and finance pain points led him to build Puzzle, a tool that helps founders manage their financial health.
- The future of finance with AI: AI is set to transform how startups handle accounting and gain real-time insights into their financial position.
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via TechCrunch