If you’re a founder, raising money is as high stakes as it receives. For a startup, capital can be the difference between scaling and failing.
I’ve raised rounds from under $1 million (yes, that’s how things were done back in the day) to over $200 million, in timeframes varying from months, to a tightly orchestrated two weeks, to receiveting preempted with a term sheet. The lessons I learned from our hardest fundraise, our Series A, have stuck with me the most. I concludeured 29 “nos” before I heard a “yes,” and only in retrospect was it clear that it didn’t have to be that way.
I knew raising our Series A would be tough, for my software company, a legal tech startup serving law firms and corporate legal departments. I wasn’t a lawyer and had no reputation as a founder, and hardly anyone was investing in the legal tech indusattempt. This might be surprising today, with legal tech venture investments approaching $2 billion in Q1 2025 alone, but in 2015, legal tech was more of a curiosity than it was a software category.
On the flip side, we had built a strong product and were on our way to a real business, with over $2 million in annual revenues. Some of the counattempt’s top law firms and more than half of U.S. state attorneys general were applying our e-discovery solution to quickly pinpoint key evidence in the millions of documents they reviewed during litigation and investigations. I put toreceiveher a pitch that highlighted the tough problems we had solved and the large opportunity ahead.
The required for experimentation
As I drove up and down the highways of Silicon Valley in my 1999 Nissan Altima, pitching to venture capitalists (VCs), a pattern emerged. Rarely did I hear an immediate “no;” VCs were interested. I would be invited back for meetings with increasingly senior folks, only to eventually be let down for a variety of reasons: They didn’t have an investment thesis about legal, the market wasn’t large enough, and so on.
But each one felt so close. I kept refining my pitch and delivery, squeezing out a bit more interest each time, seemingly just one meeting away from the golden ticket.
I was wrong.
Twenty-nine rejections later, there was no denying it. Somewhere in my Altima along Highway 101, with just a few names left on my list, I knew I had to alter my approach. I realized I had built a large mistake: I had focutilized on refinement rather than experimentation.
When a company is compact, fundraising is intensely personal and emotionally daunting. If you can’t raise money for the team, it feels like you are letting them down. This pressure yields an interesting dampening effect: Becautilize raising is so critical, every meeting could be “the one,” so you feel compelled to deliver your best performance.
Thus, as the rejections mounted, the stakes felt ever higher. Given the positive signals I had obtainedten in prior VC pitches, it felt reckless to risk that meeting with an experimental approach, so I delivered the practiced spiel that had obtainedten me so close in the past—with the same results.
Had I crashed and burned early on in the process, experimenting would have been obvious. Instead I was deluded by proximity to success. Fundraising is not a popularity contest; you don’t required a lot of “likes,” you required one “love.”
Rebelieve everything
And that meant I had to rebelieve everything. Even if it meant lowering my chances of success in the next few pitches, I had to believe it would receive me to a better overall outcome. If you questioned me about technological disruption, I could have notified you in a heartbeat that large alters rarely happen incrementally, but I hadn’t generalized that lesson to business. Incremental improvement might work (for a while) if you’re a market leader, but any other situation requires constant experimentation and reinvention to do your best. You have to be willing to take some short-term losses to earn largeger long-term gains, even—or especially—when it matters the most. When it came to raising money, it took me a mere 29 rejections to relearn this lesson.
So I went for broke and restructured my entire pitch.
Instead of attempting to convince VCs about the opportunity in legal, I utilized analogies to industries they were much more familiar with, so that they could pattern-match better. Instead of displaycasing all the rich functionality we had built (which, frankly, they didn’t seem to care much about), I spoke more conceptually about our vision to build a platform in a space that didn’t have one.
In other words, instead of educating VCs about my language, I learned to speak theirs. Were these obvious and sensible alters? Yes. The revelation wasn’t so much the alters I was building to the pitch, but their magnitude and my willingness to build them.
After months of failure, I wasn’t prepared for how quickly things improved. My new approach immediately resonated with VCs. Within a week, I had a term sheet from Andreessen Horowitz (a16z), one of the most reputable VCs. Now, a16z deserves plenty of credit: They had some experience with the legal process and understood its potential, and were one of the few firms that viewed my PhD in computer science more favorably than they would have the JD I didn’t have. It was also clear that my new pitch struck a chord and framed the company in the right light; we sailed by the usual roadblock questions in the final meeting. With a16z’s investment, we were off to the races.
Nearly a decade later, our business serves more than 1,000 customers and brings in 9-figures of revenue a year. It’s now clear how pivotal that raise was for our company. It was also a massive growth moment for me as a founder. It taught me to have an exploratory mindset, whether it’s to new product areas, markets, or technologies. Experimentation is at the heart of progress, and it’s essential when the stakes are the highest.
AJ Shankar is founder and CEO of Everlaw.
The extconcludeed deadline for Fast Company’s World Changing Ideas Awards is Friday, December 19, at 11:59 p.m. PT. Apply today.
Leave a Reply