Hey,
In this issue, I look at some of the mistakes I've seen founders make in the DD process that have killed deals.
Also;
📸 - Social Snapshot- secret ingredients to success?
📊 - Corporate Venture Capital Trends in 2024
🎙️ - AI or die with Jon Tucker
🆓 - Negotiate your term sheets like a pro
Welcome to issue 110.
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The Right Room, the Right People, the Right Time.
Fundraising is about more than just connections, it’s about timing and positioning.
We ensure you’re speaking to the right investors at the right moment.
Take the guesswork out of outreach.
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Social Snapshot
💭 What it takes to make it by Matt Gray on X.
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Jon Tucker Of HelpFlow On AI For Business Efficiency And Evaluating AI Performance - EP 74
In last week's Fundraising Demystified podcast, I spoke with Jon Tucker, founder of HelpFlow, who bootstrapped his company to 200+ employees and is now using AI to outcompete, automate, and scale faster than ever. Tune in to learn about how AI enables business efficiency and scalability for founders, and more!
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Data Corner
CVC Trends in 2024
Corporate VC funding bounced back in 2024, up 20% YoY to $65.9B, with US startups, especially AI, leading the charge. AI companies pulled in a record share of both CVC deals and total funding.
Check out the full report by CB Insights here.
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Raising Capital for your startup?
Thunder's mission is to guide founders toward the right path to reach their North Star, be it through securing equity or debt financing or navigating the path to a successful exit.
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Mistakes in Due Diligence That Kill Deals
Fundraising isn’t just about pitching well; it’s about surviving due diligence. Plenty of founders assume that once an investor is interested, the hard part is over. Wrong. It's just beginning. Due diligence is where good deals go to die, and it’s usually because founders don’t see what's coming.
Here are some of the most common due diligence mistakes that kill deals I've seen, and how to avoid them.
Financials that don’t add up
Investors will dig deep into your financials, and if your numbers are inconsistent, vague, or unrealistic, expect problems. Many founders fudge projections or fail to reconcile past financials with future forecasts. If your burn rate is different in three places, or if your revenue growth looks more like wishful thinking than math, you’re toast.
How to fix it:
- Keep airtight books and reconcile numbers across all documents.
- Know your unit economics inside out.
- Have clear, defensible assumptions behind your financial model. You can check out some tools that I shared in the previous issue here.
A cap table nightmare
Nothing sends investors running faster than a messy cap table. Too many early investors? Convertible notes with conflicting terms? A surprise 20% equity chunk owned by your college roommate who hasn’t touched the business in years? These are all red flags.
How to fix it:
- Keep your cap table clean and up to date.
- Avoid giving away too much early equity.
- If necessary, restructure before fundraising.
Legal and compliance red flags
Investors aren’t just looking at your potential, they’re looking at your liabilities. Lawsuits, IP disputes, or missing compliance documents can tank a deal overnight. Founders often overlook regulatory issues until due diligence exposes them.
How to fix it:
- Ensure you have proper incorporation, IP protections, and employment agreements in place.
- If you’re in a regulated industry (FinTech, HealthTech, etc.), get your compliance in order before raising money.
- Don’t wait for an investor to find a legal issue—get a lawyer to audit your business first.
Unverified or inconsistent metrics
Founders love to throw around big numbers, huge TAMs, explosive growth rates, insane retention—but if investors can’t verify them, you’re in trouble. Nothing kills trust faster than a founder who claims 90% retention only for data to show 60%.
How to fix it:
- Use clear, reliable data sources and make sure all claims can be backed up. More on how you can properly size your market here.
- Be transparent about how you measure key metrics.
- Don’t exaggerate. Investors can smell BS.
Customer or revenue concentration risks
If 60% of your revenue comes from one or two customers, you have a problem. Investors hate to see businesses that can collapse overnight if a single customer walks. Founders often underestimate how risky this looks.
How to fix it:
- Diversify your customer base before raising money.
- If concentration is unavoidable, have a clear mitigation plan.
- Show a pipeline of new customer acquisition.
Team and hiring issues
An investor is betting on the team as much as the product. If your leadership team lacks key hires, your founder dynamics look shaky, or you have high turnover, that’s a red flag. Investors won’t fund a team that doesn’t look like it can execute.
How to fix it:
- Fill key gaps before fundraising (or at least have a plan to do so).
- Get alignment among co-founders before raising capital.
- Ensure employment agreements and equity allocations are clear.
No clear use of funds
One of the most common mistakes: not having a clear, structured plan for how you’ll use the capital. If you say “growth” or “hiring” without specifics, investors won’t trust you to allocate capital efficiently.
How to fix it:
- Create a detailed use-of-funds breakdown.
- Tie the funding request to concrete milestones (e.g., launching a product, hitting ARR targets, expanding into a new market).
- Be prepared to defend your spending priorities.
Misalignment on deal terms
Some deals fall apart because founders and investors aren’t on the same page about terms. A founder might push for an inflated valuation, or an investor might want too much control. If you wait until late in the process to hash this out, expect friction.
How to fix it:
- Understand what’s reasonable for your stage and market.
- Get term sheet expectations aligned early.
- Be clear on non-negotiables before entering due diligence.
Due diligence isn’t just a hurdle, it’s an IQ test for your business (and yes maybe this doesn't work because they're biased but hey). If you’re sloppy, inconsistent, or unprepared, investors will walk. The best founders go into fundraising knowing their business inside and out, with clean financials, a strong cap table, and no surprises.
Happy fundraising!
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Free Fundraising Resources
As you set goals for the new year, here's my guide to planning out your fundraising over 12 months:
🗓️ Your 12-month fundraising plan- Download it here
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