founders paras chopra, chapter by chapter
39. Raise Funding by Showing You Can Raise Again
VCs need outlier returns, so the pitch must support a path to much larger future value.
Different capital providers buy different risk and return profiles. Banks want dependable repayment; venture funds accept many failures only because a few investments may return the fund. A safe, modestly profitable company can therefore be unattractive to a VC, while a loss-making company with credible, enormous growth can fit the model.
Choose capital only after understanding its incentive. A VC pitch must explain market size, rapid value creation, and a credible route through later rounds toward acquisition or public markets. If that path would distort the company you want to build, use a form of financing whose desired outcome matches yours.
Original sketch and model by Paras Chopra. Read the source chapter.