Here are two contrasting startup stories I've seen firsthand.
With one company, a founder and his super inspirational, creative, and established buddy hatch a plan to build a very strong content brand that serves as a platform for a lot of diverse revenue streams--events, ecommerce, advertising. You could think of it as a spin on Thrillist. With the author staying close as an advisor, they build a real, cashflow positive business and start to think about where they could go with some outside capital.
One of the big opportunities for them is audience development--driving event attendees to the content, events to the readers, and doing some low-hanging fruit upgrades to their social strategy. They find a kick ass, experienced content person to advise them for six months and help them build out a team around this.
The fundraising will be for that content team, additional developers, and salespeople to leverage the unique brand they've built. Nice, tight story that makes sense. I certainly would have wanted to be an angel investor in Thrillist at the time.
The second startup came to me from a founder of a company that I only found out later wasn't fulltime. The first pitch I got was from someone who didn't intend on staying with the business as an employee. It's actually the first time that's ever happened to me, so I honestly never thought to ask. Everyone I've ever gotten pitched from can't wait to quit their other jobs to work on what's being pitched. When I found out, I was super disappointed--not because this person was even the right person for the business--but because I liked the first person I met, and then had to mentally extract him from the story arc of this business.
That wasn't the only stumble in the business. The team told investors they were hiring a C-level employee, and, upon diligence, it turned out that the person didn't want the job. Not only that, but they actually took that potential hire to a fundraising meeting with a VC--a VC that was interviewing this candidate for another position the next day.
On top of all this, there's never been a really tight story about goals and resources around the funding--exactly what the next five hires will be, etc.
Here's the interesting thing:
It's the same company.
Neither one is a false account, but in the latter situation, the team pitched at an awkward moment and were super transparent about how the sausage was being made.
Every startup has been in flux at one point or another as to founder roles, key hires, and plans. Not everyone who has ever been around at the start of the company is the right person to move forward. These things are nothing new.
What you have to be careful of is how the story appears to investors. Are you hitting the fundraising trail at the right moment where you've got your plan together, team in place, and know where you're going?
Even if you pitch super early--it's totally fine to tell an investor you have some key open questions, and then come back when you've got them solved. That's often how relationships are being built.
It's that awkward middle phase--where you're trying out a bunch of stuff, seeing what sticks, that you want to be careful about story arc. Sometimes you meet an amazing person who has no intention of ever being fulltime on anything. You don't want to tell investors you're trying to get this person and then have to tell them you failed. Hiring a consultant who always intends to be a consultant isn't a failure. Maybe you thought you could snag them, but still, this person could be great for a short stint and a real plus for the company. How is that story being told? How is the story of how the founders are figuring out their roles being told?
I'm a big fan of transparency, but if you're going to go far and wide on a pitch, organizing your story is key. It's a bit like inviting friends to your apartment for the first time. We all know that our places can be in various states of disarray at times--but that doesn't mean that if you know you have guests, you shouldn't throw your dirty socks in the hamper and wipe off the counter.
I still feel like it's never too early to talk to an investor to get feedback, but before you do, think about how your company came together. Think about story arc. What's the truthful, transparent account of what's going on that shows our best times ahead of us. Otherwise, you're just starting a game of Jenga and asking an investor to take out the bottom piece.
I'm still very much in talks with this company, helping working through the story now that I know what's up--but I'll admit to experiencing some mental pain experiencing the story in mid-flux and development.