What I learned about fundraising as a consumer tech founder

Everyone will tell you that fundraising is tough. Fundraising as a pre-traction consumer tech founder is even tougher. Many venture capitalists shy away from consumer businesses altogether. Why? Because they’re perceived as high-risk investments with high failure rates, winner-takes-all dynamics, and steep distribution challenges. Unlike B2B companies, which can hit impressive annual recurring revenue numbers (ARR) with a handful of contracts, consumer companies need tens of thousands of users to achieve similar results. Add to that the fickle nature of consumer behavior that can lead to massive growth followed by steep drop-offs (I’m looking at you, Clubhouse and YikYak), it’s not surprising that investors hesitate.

I recently went through fundraising for the first time, and it was certainly no picnic. For context, I’m building HYBRD (pronounced high-brid), which is a consumer fitness application, and raised a pre-seed to get our business off the ground. We are fortunate to have a lot of things going for us: we have strong founder-market fit, we’re backed by Y Combinator, and we have as much traction as you could hope for for a company that wrote its first line of code less than three months ago.

That said, I am not a fundraising expert. I have done this once, and I’m sure I did many things wrong. This post simply reflects observations from the process. Many of these may seem obvious, especially if you’ve fundraised before, but some elements were surprising to me and may be to other first-time founders as well.

Lessons in Consumer Fundraising

1. Fundraising pre-traction is particularly challenging
   We have all heard of pre-product companies raising obscene amounts of money to build their initial product and go-to-market strategy. While many of these stories can be chalked up as zero-interest-rate phenomena, some of these scenarios still occur even today, though they are exceedingly rare. If you’re reading this, it’s important to recognize that such outcomes likely won’t apply to you. Fundraising as a first-time consumer founder is vastly different from the experience of a seasoned founder with multiple successful exits and a strong investor network.

Raising capital without traction is challenging for any startup, but for consumer companies, it’s particularly difficult. With B2B companies, getting a few customers or even a handful of letters of intent (LOIs) can be enough “proof of demand” to convince VCs that people are willing to pay for what you’re building and help them see the upside. On the consumer side, because the average price point is so much lower, it takes hundreds if not thousands of users to have the equivalent impact. This is not meant to underplay the difficulty of getting B2B customers, it’s just a different game.

2. It will take a LOT of investor calls.
   Everyone warns you that fundraising is a numbers game, but it didn’t really sink in for me until I was waist-deep in pitch calls. I didn’t get my first “yes” until I had taken more than 40 calls, and by the time I actually hit my fundraising target, I had taken more than 125 intro calls.

Each pitch is an opportunity to refine your story. You’ll quickly learn what resonates with investors and where your narrative falls flat. Take detailed notes after each call. What questions stumped you? What parts of your pitch seemed to spark interest? Incorporate those insights into your deck and your delivery. Add appendix slides for common questions that investors ask. Consider having teammates listen in off-camera in the beginning, enabling you to to focus directly on the current call while a colleague takes notes that provide more detailed and nuanced feedback for you.

3. Fundraising is exhausting.
   Fundraising was some of the most exhausting work I have ever done in my career. It’s like being in back-to-back interviews all day every day for weeks at a time. You have to be “on,” energetic, and charismatic in all of these calls/meetings while having the same conversation over and over. It drains your social battery like I’ve never experienced.

Rejection is a constant part of the process; It’s inevitable and something I can handle, though it weighs heavily on some. What frustrated me the most wasn’t the rejection itself but the sense of spinning my wheels: working tirelessly for days on end without seeing any measurable progress. The key to pushing through is persistence staying the course, even when the immediate results feel nonexistent.

4. Your go-to-market plan must be strong.
   One of the biggest challenges in growing a consumer company is cracking profitable distribution. VCs know this and want to know you have a plan beyond simply paying to acquire users with ads. I was asked about my go-to-market plan on almost every investor call.

I’ll save go-to-market strategy for another post but the thing to think about here is what is your immediate wedge, how you’ll capture it, and how will you scale from there. Depending on how far along you are you may also receive questions about your LTV and CAC or what you expect them to be. Even if you haven’t spent any money on ads yet you should do market research and prepare for these questions so that you have answers.

5. You need to articulate how it gets big.
   Venture capitalists operate on the power law, where a handful of outsized returns make up for all the bets that don’t pan out. Naturally, this pushes them toward products with enormous total addressable markets (TAMs). For a pre-traction consumer startup, your risk profile is already high, so coupling that with a modest TAM often means the math just doesn’t work for many investors.

To overcome this, you need a rock-solid narrative showing how your product could become a multi-billion dollar company. Without this, you’ll struggle to get VCs on board. In my own experience with HYBRD, I knew that fitness apps typically haven’t produced the kind of sky-high returns that VCs dream about. For example, look at Strava; while successful (around $275M/year), they haven’t turned into a Facebook or Uber. So I had to ask myself, “If HYBRD became a $10B company, what would that path look like?” and then build that into the vision and the pitch.

6. VCs are investing in the team’s ability to execute.
   When there is no product traction, the investor is betting on the founders. They need to believe that your vision is valuable and that you have the ability to execute and do what it takes to build a valuable business. Early stage VCs don’t invest in ideas, they invest in teams.

7. Investors will think about whether they would use your product.
   Building in the consumer space means that most people can understand what you’re building. This is both a blessing and a curse. The positive side is that it makes it easier to outline what you’re building and why it matters since you don’t have to explain an industry that they may not be experts in. The downside is that because what you’re building is for consumers, there is an inherent bias where they think about the opportunity through the lens of whether they can picture themselves or the people in their lives using it, even if they are not your target market. This often brings more personal experiences and biases into their decision-making process compared to evaluating a B2B product, where they might take a more detached, surface-level approach.

Sometimes this works in your favor. You might find someone who’s willing to take a chance simply because they personally think the product is cool. But other times, their decision will hinge on personal preferences and experiences. For example, as a fitness product, not everyone we talked to saw the value in what we’re building. However, the ones who got it really got it. The challenge is ensuring that the narrative stays focused on the big picture and not derailed by subjective opinions that may not align with the target market.

Conclusion
Raising capital as a consumer tech founder certainly isn’t easy, but it’s also not impossible. These observations are based on my experience. Your experience might be different. At the end of the day, fundraising is a means to the end to the end of building products that people want and find valuable.

I hope you found this post helpful. Stay focused, and good luck out there!