Last week on Fundraising Demystified, I sat down with David Connors, founder of The Swarm, who used his own tool to raise $8M. No pitch list. No gimmicks. Just a network-mapping platform he built after getting fed up with how broken fundraising is. Plus, how he reverse-engineered Sequoia’s playbook.
Regardless of your vertical or zip code, fewer and fewer startups are making the leap within two years. The data from Carta shows a clear, steady decline since 2021. Translation: It is harder now.
Why? Metrics have shifted, bridges are drying up, and the bar for Series A funding keeps getting raised, often to AI bubble levels. Investors are seeing too many seed-stage companies and waiting for the outliers. "Nice traction" just isn’t enough anymore.
Some founders are avoiding the Series A rat race entirely and going capital-efficient. If that’s you, smart move. If you’re still grinding for that A, respect. This market’s brutal, and survival alone is a win.
The VC Early-Stage Myth: Why “We Invest Early” Rarely Means Pre-Traction
Every founder has heard it: "We invest early." It's plastered all over VC websites, LinkedIn bios, and conference panels. But when you actually pitch them? The first question is almost always: "What's your traction?"
So, let’s call it what it is: bullshit. Most VCs claiming to invest early are really looking for de-risked opportunities. They don’t want to back your idea; they want to back your momentum.
Who’s Guilty?
Plenty of firms position themselves as early-stage investors, but take a closer look at their portfolios, and you’ll see a pattern:
Sequoia says they invest pre-seed, but unless you're a second-time founder or have absurd early traction, good luck getting in.
Andreessen Horowitz loves to write about backing ambitious ideas early, but if you aren’t already generating revenue or showing significant user growth, they’ll tell you to come back later.
Bessemer? Their “early-stage” investments are often into companies that have already de-risked most of their execution.
This isn’t to say these firms never invest early. But if you're a first-time founder with nothing but a pitch deck and a dream? The odds aren’t in your favor.
The Reality Check
Take Alex*, the founder of a B2B SaaS startup. He pitched over 50 "early-stage" VCs. Every single one loved the vision, but they all wanted to see six-figure ARR first. So he bootstrapped, got creative with revenue-based financing, and built enough traction to make VCs chase him. When he finally raised, it was on his terms.
Most VCs won’t take the first bet. But if you make it impossible for them to ignore you, they’ll suddenly be very interested.
Why Do VCs Play This Game?
Venture firms have LPs who expect returns. That means they want investments that look early-stage but have already proven product-market fit, revenue growth, or explosive user adoption.
Put simply: the earlier a VC invests, the higher the risk. And most investors, despite their marketing, aren’t in the business of high risk, just high returns.
What Can You Do as a Founder?
If you're pre-traction, here’s how to play the game strategically:
Reframe traction: if you don’t have revenue, highlight other signals: waitlist numbers, engaged users, strategic partnerships, or product adoption in a niche but valuable segment.
Explore alternative funding : consider revenue-based financing, grants, crowdfunding, or angel investors who actually back ideas, not just de-risked bets.
Target the right VCs: some funds actually invest early, like Hustle Fund, Precursor Ventures, and First Round Capital. They’re the exception, not the rule.
Make yourself a safe bet: if you’re a first-time founder, build credibility. Get a respected advisor, show clear execution milestones, and demonstrate momentum before pitching.
Most VCs talking about "early-stage" investing don’t actually invest in the true early stage. They invest in momentum, not ideas. So instead of wasting time pitching firms that will ask for traction you don’t have, focus on building leverage, crafting the right narrative, and finding investors who actually take early bets. If you haven't already, create a profile on Thunder and find out which investors are betting on early-stage startups.
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