Build: An Unorthodox Guide to Making Things Worth Making

by Tony Fadell

Here are a few more tips to keep in mind as you’re going through the process: Don’t play games. Just as you don’t want an investor who plays games with you, they will lose interest in you if you’re not up front and honest with them. Listen to people’s feedback on your pitch and your plan, change it when it makes sense, but hold on to your vision and your “why” and don’t rearrange yourself based on the whims of every investor you talk to. Be clear with investors on how much money you need and exactly how you’re going to spend it. Your job will be to create value for investors and ensure you’re hitting major milestones to raise the valuation of the business. That way the next time you raise money you won’t dilute existing investors, employees, or yourself. Entrepreneurs think their valuation should always increase, even when they don’t hit the milestones they set out for themselves. But investors are running a business—if you don’t deliver, you don’t get a valuation increase and your own stock position dwindles. You may also need to dilute more because you’ll need to give extra stock to employees to retain them through the hard times. Don’t assume you’ll get a valuation like other companies around you. Every investment stands on its own. Investors don’t like to see when founders or executives are “fully vested”—they want to make sure you have skin in the game. You may have to “re-vest” some of the shares you have already to demonstrate your commitment to new investors. Remem...