I find the most successful fundraises are ones where founders treat capital as a weapon, not as oxygen.

If capital is like Oxygen, the conversation focuses on what might go wrong. Will your numbers and assumptions hold up? Will new risks blow up your model or the quality of your service? What unforeseen challenges might make you miss your numbers and run out of money sooner, requiring more oxygen down the road. What’s around the corner that will be a threat?

If capital is a weapon, the conversation tends to focus on what might go right.  What will be the benefits around the corner with increasing returns to scale? What kind of game changing people will you attract, that will raise the level of all future hires?  What kinds of unbreachable moats will you be able to build?  What kinds of new partnerships or new capabilities will be achieved?  What’s around the corner, and how can you play that to your advantage?

By the way, it’s not that those who treat capital like oxygen don’t talk about upside and results.  But I notice the focus tends to be more on numbers and scale.  “We’ll get to $xx in revenue” or “We’ll be profitable”.  When capital is a weapon, the milestones tend to be different.

Capital as a weapon can backfire.  If you read my last few posts, you will see that I’m totally wary of that.  Some companies I know use capital as a weapon, and I think of them as enormous cannons sitting on top of a house of cards.  Some funds I notice fund companies like this systematically.  It’s kind of scary, but if a solid foundation is actually built for these companies, it will pay off.

Regardless, when you go out to raise capital, you should ask yourself if you can credibly talk about how the capital will be a weapon that will help you win, and keep winning. If you can’t, that will be a problem when you talk to investors.