When I founded my first company, I was ignorant of mostly everything. I had an idea and conviction that I’d work hard and figure it out.

I did.

But the path wasn’t as linear or clear as I’d originally thought. And it was all way harder, than I ever could’ve imagined.

When I set out to raise my 1st seed round, I’d been told it’d take “X time” and “Y meetings” to get it closed. The timing and total meeting estimate was put together after meeting with several successful entrepreneurs, who helped give me advice.

I put together a pitch deck and began sending out cold emails.

By the time I closed a $750,000 seed round, I’d been pitching for well over a year. I’d been turned down by more than 75 different VC firms, from coast-to-coast. And I sprinkled in hundreds of “pass” or “no thanks” emails from angel investors along the way, with the wonderful book-end of being turned down by every accelerator I’d applied to.

All in all, nearly total failure…but all you need is one VC fund to believe in you and your startup. Just one.

From there, I’ve grown two companies to over $5M per month in revenue. And raised a total of $100M in VC.

That first $750,000 was raised through sheer determination, with my understanding of how to structure a successful fundraise for your startup, coming a little later.

Magic or Math

When all of the theater is removed and you boil it down to the basics, raising VC for your startup is about math.

It’s not magic. And it’s certainly not impossible to do. I graduated from a college no one has heard of, with a GPA that wouldn’t impress anyone, never worked at a popular tech company, was born into a family of blue-collar workers, and had never even been to SF or NYC until my late twenties.

None of that mattered, once I learned that to successfully raise VC funding for your startup, understanding the math was more important than many know.

The VC Math

 Here's the breakdown:

 Venture capital is a power law game.

• Funds see pitch decks from thousands and thousands of startups

• Only a small fraction (often <1%) get funded.

• Even among those chosen few, most will fail or return only a small amount of capital.

• The entire fund's return often hinges on just 1 or 2 breakout companies.

Those home runs (think: Uber, Stripe, Canva) return the entire fund and then some. The remaining 10–20 investments might return 1x–3x at best. The other 70+? Total write-offs.

The VC equation:

1–2 unicorns × massive return > losses from the rest
This is why founders need to build a story that can realistically 10x–100x. Anything less usually doesn’t “move the needle.”

 How VC Funds Are Structured

 Every fund is made up of two primary groups:

• Limited Partners (LPs): These are investors like pension funds, family offices, university endowments, and wealthy individuals.

• General Partners (GPs): The people running the fund. They raise money from LPs, source startups, and make investment decisions.

When a GP raises a fund, they define:

• Fund size: How much total capital they’ll manage.

• Stage focus: Pre-seed, seed, Series A, etc.

• Sector thesis: Generalist, fintech, healthtech, climate, etc.

Example:
A $50M seed-stage healthtech fund might write checks of $500K–$2M per company and invest in ~25 startups over a 3–4 year period.

 The VC Compensation Model: 2 and 20

VC firms make money in two main ways:

1. Management Fees (2%)

• Typically 2% of the fund size annually.

• Covers salaries, rent, travel, due diligence, etc.

• Paid regardless of performance.

2. Carried Interest (20%)

• The GP’s share of profits (after the fund returns capital to LPs).

• Aligns GP incentives with long-term fund performance.

• Often structured as 20% of profits above a hurdle rate (e.g. 8%).

Example:
If a $50M fund returns $150M, the $100M in profit would lead to a $20M carry pool (20% of profits) split among the GPs.

 Why Fund Size Matters (to You)

 Not all VCs can or will write checks for every stage.

• A $1B fund likely won’t back your $500K pre-seed round. It’s not worth their time or risk relative to fund size.

• Smaller funds (sub-$100M) are more incentivized to go early, take more risk, and work closely with you.

Check-size rule of thumb:
Funds rarely want any single check to be more than 4-5% of their total fund, many times even lower.

 How to Prep Your Fundraising Strategy

 Treat fundraising like a B2B sales process. You’re selling equity, not just pitching dreams.

Step 1: Build a Target List

• Match fund stage and sector to your startup.

• Research the date of last fund close. New funds are actively deploying.

• Check how many investments they’ve made recently. This helps estimate remaining dry powder(capital left to invest).

Step 2: Personalize Your Outreach

• Look for blog posts, Twitter threads, or interviews by the GPs or principals.

• Research their portfolio and past investments. Identify overlap or potential partners.

• Know whether your outreach email is a general inbox or directly to a team member.

• Use what you learn to tailor your intro. Show you did your homework.

Step 3: Know the Team Structure

• Partners typically make final decisions.

• Principals and associates do early vetting and often champion deals internally.
  Treat them with full respect. They’re often your foot in the door.

If you understand the math of the mechanics of both the VC industry and how your startups fits within it, you gain an edge. The founders who truly take the time and learn how the VC industry works will be better and more successful fundraisers.

That leads to more well capitalized startups. And more successful founders.

I’m debating on whether to turn this into a series, along with a much deeper dive. Please share feedback on whether that’d be helpful and what types of questions you’d like to have answered.