StartX founder session
October 19, 2026
Session notes and tools

The Investor Mindset

What a venture fund is actually underwriting when it reads your deck, and how to fundraise the way you sell. From Collin Wallace's session with the StartX cohort.

Speaker: Collin Wallace, venture partner and former founder54 minutesNotes by Labhesh Patel
A $200M fund. Twenty bets.
12go to zero
6return 50¢ to $1 per dollar
2return almost everything

Each of those two has to become a $3.6B company. Every pitch is judged against that.

The one idea to keep
You're running two businesses. One builds the product. The other sells equity, and its customers are investors. Segment them the way you segment customers.
Collin's closing slide, paraphrased: "They're just like any other customer. They're only buying shares. They're not buying your product."
Six takeaways
1

Know the fund's math

A fund needs a 3x return, so each bet has to plausibly return the whole fund. At $200M that means a $3B to $4B outcome. Look like that, or pick a smaller fund.

Run the numbers →
2

Qualify before you pitch

Ask about check size, fund size, and where they are in the fund cycle. The partner's career stage and the LPs behind them decide a lot before you speak.

Check your fit →
3

Pair numbers with story

A story without numbers is a dream. Numbers without a story mean nothing. The same $3K of monthly revenue can sound like failure or like proof.

See both stories →
4

Value is risk removed

Valuations rise because the odds of success rise, not because the market grew. Aim your proof points at the single biggest risk in your business.

The value equation →
5

Don't convert non-believers

If they don't believe the market is big, they're not your investor. Generic passes are usually soft. Don't reshape your company to fit one fund.

Decode a pass →
6

Warm beats cold

One partner sees 110 to 120 pitches a week, so who sent yours matters. A warm intro also shows you can work your network, which is how you'll hire and sell.

Map your network →
01
VC economics

The math every pitch is judged against

"This is a thing I did not know very much about when I was a founder, and if I had, it would have changed a lot of how I pitched."

Collin walked through a mid-sized fund in round numbers. A $200M fund has to give its LPs back $600M net of fees, a 3x, to stay in business. The firm takes a 2% management fee plus 20% of the returns, so the portfolio really has to produce about $720M.

The fund buys about 20% of each company and expects that to dilute to 10% by exit. To earn $720M from 10% stakes, the portfolio has to be worth $7.2B. Twelve of twenty companies return nothing and six return 50 cents to a dollar, so nearly all of that comes from two companies.

Fund math calculator

Interactive
Owed to LPs, netfund × net multiple
Gross the portfolio must produceplus about 20% for carry and fees
Ownership left at exitentry stake after dilution
Total exit value neededgross ÷ ownership at exit
Each winner must be worth

Collin's round-number model, which ignores the small returns from the six middling companies. Hard tech and energy usually dilute more than 50%, which raises the bar further.

What it means

"Be that, or look like that."

The most common reason a deal dies before a partner meeting: on the surface, it doesn't look like it can reach $3B to $4B.

It scales

Fund size moves the bar

A $1B fund needs outcomes about five times larger. To a $50M fund, a $1B sale is a huge win. Pick the fund whose win looks like yours.

In revenue terms

About $100M a year, still growing

Collin's shorthand for a $3.6B company: roughly $100M in annual revenue and still growing 20 to 30% a year.

02
Investor segmentation

Know who you're selling to

Three facts tell you how aggressive or conservative an investor will be. Ask for them early, the way you'd qualify a sales lead.

1

What's your average check size?

Tells you how much ownership they need and whether your round fits them.

2

How big is the fund?

Sets the size of outcome that counts as a win, which sets how big you need to look.

3

Where are you in the fund's life?

Early funds can wait for slow returns. A fund five years in can't take a ten-year bet.

The fund clock

LPs expect the first 1x back in about eight years and the second by year ten. Everything after comes whenever it comes. Collin's own fund closed in January and is about 20% deployed, so fast or slow deals both work. "If you were raising from us in November of last year, it would have been a very different conversation." A great company can get a no just because it doesn't fit the clock.

Return the first 1x to LPs
Second 1x
The rest
Y01234567891011+
New fund, about 20% deployed. Room for long timelines and slow returns.
Five years in. A deal that takes 10 to 12 years to return is a no, however good.

The partner's career stage

You pitch a person, not a firm. Where that person is in their career shapes what they can say yes to.

Years 0 to 5

Proving their eye

Has to find contrarian bets and be right. "If it's consensus, it's not compelling for your partners."

Lead with your non-obvious insight.

Years 5 to 12

Keeping the seat

Wants deals everyone can see working, with other known names around them. Conservative.

Lead with clear milestones, traction, and who else is in.

Year 12 and on

Investing on affinity

Has made their money. Backs what interests them and founders they enjoy.

Lead with the relationship and what excites them.

The LPs behind the fund

A fund behaves like its LPs. A pension has fixed payouts every year and needs predictable timing. A family office or foundation cares about the size of the return, not the date. Some LPs rule out whole categories: Collin's fund has religious-institution LPs who won't back gambling, alcohol, or other vices. Another founder was turned down because the LPs had been burned in an industry the investor wrongly assumed he served. A lot of no's have nothing to do with how good the business is.

Is this my investor? A quick fit check

Interactive

A rule of thumb built from the session's numbers: each winner needs to be worth about 18 times the fund (3x net, about 20% carry, 10% ownership at exit, two winners). Firms differ, so use it to sort your list, not to decide for you.

03
The pitch

Numbers need a story. Stories need numbers.

A great pitch has both. How much each one weighs changes as the company grows.

Strong story
Weak story
Real numbers

Fundable

"A really great opportunity to fundraise. People are going to be receptive."

Data without meaning

Metrics with no context. The investor fills in the story, and usually not in your favor.

No numbers

A dream

"Very entertaining," but nothing backs it up. Works only at the very first round.

A pass

Nothing to believe and nothing to check.

Same two data points, two stories

Time Metric data point A data point B flat while raising, then up and to the right peaked, now sliding

The $3,000 a month example

✕ The weak version

"We've been building the product and we've crossed $3,000 in monthly recurring revenue."

What the investor hears: this team could earn half a million a year consulting. $3K a month isn't meaningful.

✓ The strong version

"We haven't optimized for revenue or gone after our key markets yet, and design partners and pilots already pay us $3,000 a month because they don't want it to go away."

Same number, now read as proof that customers value it.

First raise

Mostly hopes and dreams

"We're really smart, we did great things before, give us money to chase this." Weight on story, because the metrics aren't significant yet.

Every round after

Metrics-based

"What did you do with the money you got, and give me the case for more."

Late stage

Almost all data

Financials lead. The story still matters, but it isn't the most compelling part.

04
Valuation

Value is risk removed

"When we value a company, we're basically doing an expected value calculation."

The value equation

Interactive
Opportunity
×
Chance you win
=
What you're worth today

Collin's example: a $10B opportunity with a 1% chance is a $100M business. In the short run, valuations rise because the second number goes up, not the first.

Your job between rounds is to take the biggest risks off the table: show you can execute, that unit economics work, that customer acquisition costs come down, that you can hire and keep great people. Sometimes that means proving people will pay, but not always.

In AI the main risk has moved. It used to be "can they build it?" Now it's usually "is there a business model, and will people pay enough?" Collin's example: Character AI had huge demand and the tech worked, but the business model didn't hold up.

"Two proof points would be way more valuable to me than 25 LOIs that show customers want to buy a thing they'd obviously buy if it works."Collin, on a chip startup whose real risk is whether the chip can be built at all

What each round is for

Pre-seed

Value exists

People care and will engage: design partners, early users, kind words, even if they pay little.

Prove: they want it
Seed

Value becomes dollars

You can get paid, in a controlled setting: one market, one region, one segment.

Prove: they pay
Series A

Scale it

Value and payment are proven. Now raise to do much more of it.

Prove: it repeats
Series B

Scale more, or add a product

Keep scaling, or start the next product once the first runs out of room.

Prove: it compounds

"I don't expect you to raise pre-seed and come out the other side making $10 million a year." Explain what this round's money will prove, in these terms. Round sizes vary wildly (Collin recently saw a $600M "pre-seed"), so the milestones are a better guide than the dollar amounts.

05
Rejection and alignment

How to hear a no

"I think you can waste a tremendous amount of time trying to convince people who don't believe what you believe."

The three questions behind every investment

1

Is the industry big enough?

Can it produce returns that matter to this fund?

2

Is this the team to win it?

Can these people create that value?

3

Can this company get there?

The right capital structure, relationships, and culture to cross the finish line.

If an investor is stuck on question one, move on. A founder in the room had a partner value their company at $50M at scale, even though incumbents in the space are worth over $10B. Collin's answer: "That sounds like they're not your investor." Spend your time with people who already believe the market is big and are only asking whether you're the team.

Soft pass decoder

Once they've decided no, telling you the real reason does nothing for them. They're limiting downside and keeping the door open in case you take off. One soft pass means little. The same soft pass from many investors means something in the business is scaring them: the risk doesn't seem worth the return compared with their other options.

What they say
What it often means
"It's off thesis for us."
Sometimes true, since LP mandates are real. If you hear it often, it's a polite exit.
"It's a little too early for us."
Look at their portfolio. You'll find a deal earlier than this that someone fought for.
"It's a little too late for us."
Same test. They've gone later when they had conviction.
"We'd like to see more traction."
They've funded companies with no revenue. Traction isn't the real gap; the risk-to-return is.
"We haven't built conviction in the space yet."
They don't believe the market (question one). Don't spend months converting them.
"Too big for our fund" and "too small for us," both at once
When every bucket says no for opposite reasons, look past the size. Comparables can drag a whole sector: when a category's public leaders trade at weak multiples, every deal in it gets harder.
Don't contort

Find your investors instead of becoming theirs

They hold 25 to 30 bets and need two to work. You have one company. Their reasons to push you differ from yours. Change your plan only if an honest conversation shows you a bigger opportunity you actually believe in.

It's a marriage

"You're in bed with this person for 10 or 15 years"

Pitching what a fund wants to hear is catfishing your future partner. "That's just a pretty miserable decade."

VCs are a commodity

You're the scarce part

There are about 9,000 VCs and capital is fungible. "The scarce resource here is my team, my insight, my context, my journey." Remember it, and don't be a jerk about it.

No kingmakers

Great VCs hit 1.5 to 2 in 20

"The idea that we are king and queen makers is just a fantasy." A brand-name check doesn't make you succeed.

Planning to sell early? Pick the fund that wins with you.

A $100M or $500M acquisition is great for you and uses up one of a large fund's twenty shots. To a big fund, a founder aiming for an early sale is an easy no, "even if it's a great business." If that's your plan, look for smaller funds built so that outcome counts as a win, and don't lead with the exit when talking to investors whose math doesn't fit it.

06
Sourcing and momentum

Getting in the room, and getting a yes

"You'll find you're closer to a lot of these people than you might realize."

110to120

Pitches one partner at a mid-sized firm sees each week, from accelerators, universities, and portfolio founders.

~9,000

VCs out there. If one doesn't believe in your market, there are plenty more.

1.5in20

A good VC's hit rate. An exceptional one is just over 2.

Why warm intros win

Cold outreach and inbound forms do work sometimes. Collin pointed to Stanford professor Ilya Strebulaev's research showing cold emails convert at a low but real rate. A quiet inbox means the channel is weak, not your company. Two things work against it: forms let firms collect decks for free, and the volume pushes partners to sort by who sent it. "There's a set of folks where if they send you something, it makes the top of my list."

The deeper reason: the warm intro is a test you're already taking. Raising money solves a cash problem and immediately gives you a people problem: hiring, selling, getting customers to vouch for you. How well you work your network to reach an investor is a preview of how well you'll do all of that.

Your one-degree investor network

Interactive

Add former colleagues and classmates and the number grows fast. At pre-seed, "investor" also means the person deciding between a new car for their kid, a horse, and $50K into a possible cancer breakthrough. "There's a million potential investors in California alone."

150

investors one introduction away

Neutral dots are founders, orange dots are investors (up to 240 shown).

Best sourcing move

Ask founders who already took the money

Find founders who share your values and have raised from the investor you want. Ask for an intro, then talk fund size and check size. "We're all part of the same club."

Checking values

Look at who they keep around

A fund's values often aren't visible from outside. If the people around an investor share your values, the investor probably does too. "Not 100%, but pretty high fidelity."

Why investors move: the price step

Pre-seedSeedSeries ASeries B price jumps Between rounds, what investors know keeps rising while the price stays put. The next round resets it.
Price of your equityWhat investors know (risk removed)

Investors wait, because waiting buys information. What gets them off the fence is the fear that the price will jump before they're in. "We have multiple term sheets," "we close on this date," and "others are interested" all say the same thing: wait too long and you miss this price.

Every school has its funds

Some investors back an alma mater, a former employer, or a type of expert, and little else. If you fit their filter, start there. Names mentioned in the session (check them yourself before reaching out):

StanfordPear, which aims to be in as many Stanford companies as it can, plus the GSB alumni backer groups.
HarvardUnderscore was the example given.
Across schoolsAlumni Ventures has pockets at many universities.
07
Founder questions

From the Q&A

The cohort's questions, with names and company figures left out.

Does the math change for deep tech, hardware, and energy?

The underlying math is the same, but it's harder to meet. The 20%-to-10% dilution assumption usually breaks: these companies need more money and more time, and each round dilutes early investors further.

Look for funds built for it, whose LPs are comfortable with long timelines (more like a family office than a pension). Go in saying plainly that it will take longer and cost more, and still show how the math works.

What's the timeframe for these returns?

The first 1x back by about year eight, the second by year ten, then whenever possible. That's why you ask where an investor is in their fund. A slow-returning deal can be a yes from a new fund and a no from one five years in.

A partner valued us at $50M at scale, though incumbents are worth $10B+. How do I get past that?

You don't. "That sounds like they're not your investor." It's fair to doubt your team. Doubting the market means a sorting problem at the top of your funnel. Write down the objection, then move on and don't treat it as a verdict on the business.

Collin's own experience as a founder: he once spent months arguing with investors over whether phones on different carriers could talk to each other. They turned out to be wrong, and the arguments were still time he didn't get back.

What growth rate should a deep tech pre-seed aim for: triple-double, or quadruple-triple?

Ask 9,000 VCs and you'll get many answers. Some only want triple-double or faster. Collin's firm judges "a lot like applying to college," looking at the whole picture: great metrics with an average team can work, and so can a great team with no revenue yet that is clearly reducing its key risks.

Underneath, it's the expected-value calculation. Show progress on the risk that matters most in your business.

Some investors need a working, deployed product. Others don't. Which is it?

Both, because they're different customers. Collin's comparison: if half your buyers wanted minivans and half wanted sports cars, you wouldn't be confused, you'd segment them. Do investor discovery: find which parts of your story and metrics land with which kind of investor (domain-expert funds, school-affiliated funds, sub-$50M funds, corporate VCs), then fill your funnel with that kind. "You'll close very quickly and very easily."

Should I change my raise and valuation for each investor?

No. "If Tesla only wants you to raise a hundred million and you think you need ten, they're just not your investors." A famous name on your cap table doesn't make you succeed. The exception is when an honest conversation shows you a bigger opportunity that can put more capital to work and you actually believe it. Otherwise you're catfishing a ten-year partner.

Seven enterprise engagements, five LOIs, four paid pilots. Is that a good pre-seed?

Probably, at first glance. The better question is where your biggest risk is, and whether your proof points address it. For a chip company the risk is whether it can be built and manufactured, not whether anyone would buy a chip that's 100 times better. One or two proof points on the real risk beat 25 LOIs on the obvious one.

On our seed, some funds say we're too big and others say we're too small. What's the right cap?

Collin suspected the cap wasn't the real issue. Those are soft passes, and when every bucket passes for opposite reasons, something else is worrying investors. In this case he pointed to the category: public comparables trading at weak multiples make every deal in the space harder. He offered to dig into it one-on-one.

What about founders aiming for an acquisition, especially in energy and hardware?

Don't make it your pitch to investors whose math doesn't fit. A $3.6B company is roughly $100M a year in revenue still growing 20 to 30%. A sale at $100M to $500M is great for you and uses up one of their twenty shots. If early exits are the plan, look for smaller funds built so those outcomes count as wins.

I've filled in dozens of fund intake forms and heard nothing. Is it me?

No, it's the channel. Cold works at a low rate, forms cost the firm nothing to collect, and partners sort over 100 inbound pitches a week by who referred them. Put your time into your network: at around 30 founders who each know about 5 investors, the cohort alone is one introduction from roughly 150.

Could software read a deck and point you to the right investors to approach warmly?

Labhesh raised this in the room: a tool, even an MCP server, that reads your deck and finds the right investors and the warm path to them, aware of fund cycle and check size. Another founder noted at least two tools already try something like this.

Collin agreed the process "has been a very manual process for a long time," with a caution: many of the attributes that matter aren't visible from outside, such as LP mandates, fund timing, and values. Signal from other founders is still the best filter.

08
Put it to work

Your fundraising checklist

Everything above, turned into steps. Your checkmarks stay in this browser.

0 of 10 done
Copy this into your first-call notes
  1. What's your typical first check, and how much ownership do you aim for?
  2. How big is the current fund, and when did it close?
  3. How much of it is deployed, and how many new investments are you still making?
  4. What does a winning outcome look like for this fund?
  5. Which founders in your portfolio would you suggest I talk to?