8 Pre seed fundraising mistakes to avoid in your startup
This is a guest post by Leta Lista, who helps early stage startup founders become VC funded.
Hey everyone.
It’s my job to talk to early-stage investors daily, and these are my notes on what they list as pre-seed and seed red flags:
1. Founder talks about the product, not the business
That’s how you know you’re talking to a first-time founder:
- 20 mins on the product
- 2 mins on unit economics
Second-time founder: business potential and growth.
Repeated founders: GTM.
2. Not VC scalable
Local businesses, traditional service business model, etc - can be awesome, but not worth the trouble.
If your TAM is <$10B - VCs will not invest in you. Bootstrap instead (or raise from friends & family).
3. No full-time commitment
This should be obvious, but investors are rarely looking to support side hustles. Unless you’re getting strong traction (customers and revenue) while grinding at nights and weekends after a daytime job - part-time is a red flag.
This applies to your entire team. VC funding almost always requires everyone to make the project their single job.
4. Co-founders haven’t worked together before
“I worry less about competitors and more about founders driving different directions”
Unclear decision rights, different risk tolerance and/or expectations, no common vision for the end goal. No co-founder is better than a mismatching co-founder.
5. Fundraising done by someone who isn’t a founder
That’s my personal pain of discovery calls - founders are asking how many investors I’ll introduce them to, and what the guarantees are they’ll invest.
Being able to raise is a proxy of sales: investors want to see you doing exactly that.
6. Fake traction / any other data
“Fake it till you make it” is good till you’re getting to due diligence. That’s when your “adjusted EBITDA”, bots instead of real users, and real ARR vs annualized ARR come to the daylight. Don’t be like that, you can do better.
7. Org chart as if you’re a Series B company already
Too many people, too complicated connections, some kinds of divisions, etc.
When you’re early, investors expect to see just a messy WhatsApp group.
8. If the founder says “huge TAM” before “who my customer is”
First - tell them who loses sleep over the issue you’re solving.
Second - how many people like that exist.
That’s how big the pie (market) is.
One more
“Founder who has no strong opinions. If you don’t disagree with industry norms, why will you win?”
Don’t confuse this with “it’s not a true innovation” or “the market is already saturated”.
Early on, it’s about the founders - their ethics, velocity, and mental models. That’s exactly what I optimize for.
Early stage founder? Work with Leta: https://keepbld.com