Hot fundraising takes

Fundraising is full of conventional wisdom: raise as much as you can, maximize your valuation, get a warm intro, and talk to the most senior investor in the room. But some of that advice can work against you, particularly if it makes the next round harder.

Joshua Posamentier is managing partner at Congruent Ventures. We sat down with him to discuss his unconventional takes on raising money, from avoiding valuation-maxxing to why cold outreach can work better than you’d think. 

Less is more

Chasing the biggest check can be a trap. It can mean more dilution and more compromise, and raising well beyond your next meaningful milestone means you can spend a lot of capital without creating enough additional value to justify a higher price at the next round. Meanwhile, a valuation that’s too high can set you up for an incredibly difficult round next time if you can’t grow into that price.

Raising incrementally as you de-risk the company can help you avoid raising yourself into a corner. Start by working out what you actually need for the next 12–24 months and build in a 25–50% buffer. Then pressure-test that number against what you need to accomplish and what the market is willing to fund.

It’s also worth working backwards from your next round. Build out a mock cap table and ask what the company would need to be worth next time, and what would have to happen between now and then to justify that step-up. If there isn’t a realistic path between the two, the valuation you’re being offered today may be doing more harm than good.

A syndicate beats a single backer

Some of the biggest funds need to deploy a lot of capital, which can make them more willing to take most or all of a round and less sensitive to the valuation they come in at.  But relying on just one investor leaves you exposed if they decide not to follow on in the next round. You also want to be a meaningful enough part of an investor’s portfolio that your success matters to them. If you represent 0.01% of a huge portfolio, it can be harder to command the same attention and support.

Instead, optimize for a syndicate where you’re a more meaningful investment for each fund. This means more dry powder around the table and more people with a stake in getting you to the next round.

Investors shouldn’t set your milestones

Investors will often tell you what they need to see before they’ll invest. The problem is that those expectations can move. You might hit every milestone they asked for, only to find that the market has changed and the bar for the next round has moved with it.

Work out your own ground truth about the milestones that actually create value in the business, whether that’s getting an MVP into people’s hands, generating revenue, or proving meaningful commercial demand. Investor feedback can help inform that view, but don’t build your entire financing plan around someone’s promise that one particular milestone will unlock the next round.

Cold outreach works

The earlier you are, the more effective cold outreach can be. At that stage, you don’t necessarily have an existing network of investors to make introductions for you, so reaching out directly is much less unusual. You can get surprisingly far with a concise, direct message that fits above the fold and clearly outlines the market challenge, the opportunity, and how you’re going to solve it.

 As you mature and get more VCs on your cap table, warm introductions become more important. The strongest is from an investor who is planning to participate in the round themselves, followed by an introduction from one of the target fund’s portfolio founders. A good cold email can even be better than an introduction from an existing investor who isn’t planning to reinvest, since that immediately raises the question of why they aren’t participating themselves.

Raising gets harder when you’re shipping

Before you’re shipping, investors can underwrite the size of the opportunity and what the company could become. Once you have real products and revenue, those numbers give them something concrete to anchor to. That means traction can paradoxically make fundraising harder if the reality today looks less exciting than the future they were imagining.

If your current metrics aren’t explosive, you need to explain why the business looks the way it does today and what will make it look different tomorrow. Bring evidence for that upside where you can: letters of interest, a strong pipeline, or demand you don’t yet have the capacity to serve can help investors underwrite the next stage of growth.

Associates can be better than partners

When you’re doing your outreach, don’t dismiss a meeting because it’s with an associate rather than a partner. Junior investors often have more time to dig into an unfamiliar technology or business model, and if they get excited about what you’re building, they can become an internal advocate for the deal. Convincing someone inside the firm who can then make the case to a decision-maker may be easier than trying to make that case from the outside yourself.

Take that meeting as seriously as you would one with a partner. Even if the associate isn’t ultimately making the decision, the impression you leave with them can determine whether the opportunity goes any further.

Remember that a managing or senior partner’s job isn’t necessarily to spend all day sourcing and evaluating deals. They’re also raising funds, managing LP relationships, and running the firm. You should still connect with a partner before the process gets too far along, but they don’t need to be your first meeting.

Also, don’t try to work around a junior investor by approaching different people inside the same firm. If they’re already evaluating you, going over their head is more likely to hurt than help.

It’s OK to say no

Some investors will keep asking questions without ever meaningfully advancing the process. Learn to recognize when a conversation is moving forward and when you’re simply spending time on it.

If an investor is unresponsive or repeatedly failing to move the process forward, it’s fine to tell them you’re moving on and leave the door open for them to re-engage in earnest later.

The same applies to diligence requests. If an investor asks you to complete substantial additional analysis, questionnaires, or other work, weigh how serious they are, what stage the process is at, and whether you’ve already given them the information they need before dropping everything to produce it again.

Joshua Posamentier is Co-Founder and Managing Partner of Congruent Ventures, a San Francisco-based venture firm with 55 active portfolio companies and managing over $1.1B across several funds. He has rich experience in venture (Prelude Ventures, Intel Capital) and operating roles (Intel, National Semi, TI), and entrepreneurship (CEO of Blipstream). He was an integral member of Intel’s first wireless chip team, built National Semiconductor’s EV, Energy Storage and Smart Grid business units and helped seed several new business lines.

 He oversees Congruent’s investments in Avalanche Energy, Bonsai Robotics, Aux Labs, Bellwether Coffee, Energetic Insurance, Fervo Energy (NASDAQ: FRVO), Fox Robotics (acquired by NASDAQ: SYM, Kodama System, Lydian Labs, Machina Labs, Muon Space, Parallel Systems, Pico MES, PolySpectra, Rendered.AI, Robigo Ag, Sense Photonics (acquired by NASDAQ: OUST), TeleSense (acquired by NSE: UPL), VEIR, Xtelligent, Ludwig Computing, First Street Technology (acquired by NYSE: MSCI), FluxCo,  and Alloy Enterprises (acquired by NYSE: JCI)

Josh has over 50 patents issued or pending, holds a BA in physics from the University California at Berkeley, and a dual degree MBA from the Columbia Business School and Berkeley’s Haas School of Business.‍

Josh is an avid cyclist, skier, sailor, surfer, and published photographer and lives with his family in the SF Bay Area.