Desmond Lim runs Workstream, HR and payroll software for hourly businesses, and he leads with the number most fundraising posts leave out: 126 investors turned down his first round. The raise that followed, 12 term sheets in nine days for $48M, is the one Business Insider wrote up in 2021. He posted this asking which fundraising question to answer first, then spent the day answering what came back, so what follows is his post and the exchanges under it. Most of what a founder here hears about raising arrives second hand; this is the person who did it answering, with his own stage benchmarks attached.
Desmond Lim
126 investors turned me down during my first fundraise 😤
A few years later, we received 12 term sheets in 9 days fr Founders Fund, Kleiner, Lightspeed & more, raising $48 M.
3 things I learned:
- Do not pitch investors the same way you pitch customers. Big mistake.
- Raise when you can, not when you need
- When fundraising, give it 100%. When you’re not, give it 0%.
I’ve now raised $120M and will share the worst & best learnings over next few posts!
What fundraising question should I answer first?
Questions founders asked, and the answers
dusan@dupanos
really good read. what changed in the pitch between the 126 nos and the term sheets
Desmond Lim
^^ other than 3 pointers above
- focused on product building
- doubled down on growth
David_Y (We’re hiring）@David_MetaWorld
120M is huge! When do u think is the best time to talk with top VCs like Founders fund?
Desmond Lim
Thanks @David_MetaWorld - best timing is when you don’t need the funding. When you have immense traction, strong PMF and just need more fuel to add to growth
heyPeter🐰@dreambig_peter
What traction needed for raising?
What investors want vs customers?
What is “can” in “raise when you can”
Alchemy founder told me when he raises, he books 20 calls a day, for straight few days. How do get those meetings in the very beginning?
Desmond Lim
1) Based on your round. For pre-seed / seed, sometimes $0 revenue > revenue
Generally it’s less about overall topline #, but more based on growth rate
2) Investors vs customers = investors care about market, team, product
Customers want a product that solves their pain
Steve S@stevesalstrand
What kind of traction in B2B SaaS do you feel investors care about more? Some I talk to want to see MRR while others want to see pilots/adoption
Desmond Lim
Based on the stage
seed - used to be $0 - $0.5M ARR
series A - used to be $0.5M to $2M ARR
series B - used to be $1M - $10M ARR
But growth, traction, usage and markets can change all of these, @figma raised their series B with zero revenue, same for @OpenAI & more!
israelchukwuma__@SonofDKing_
What makes investor invest in pre revenue start up? How do you find these investors?
Desmond Lim
Thanks for question!
- before revenue, it’s all about team, founders, market!
- have an incredibly strong team
- focus on a big market
- have a strong cofounder
Product matters a lot too of course!
Deep Insight Labs@DeepInsightLabs
1) I’ve heard this advice to compress the meetings with investors. Is it that easy to arrange these meetings though? What preparations and how long did it take to set it up in your case?
2) Does raising from angels first help with subsequent raising from VCs?
Desmond Lim
2) yes it does, raising from angels do help to build up momentum
1) get warm intros from 2) angels & other advisors, founders that you know of
Run it like a sales process
Broaden funnel from very top then drill it downwards from there on
israelchukwuma__@SonofDKing_
I need to meet angels. How do I do it?
Desmond Lim
Start from your family friends and customers, people who know you!
sos@sosonchain
hearing 126 nos and still pushing is incredible mental strength!
how did you stay focused and inspired after each rejection?
Desmond Lim
- focus on each pitch as a learning lesson
- iterate your pitch each time
- understand you only need 1 yes
Dawn Yang@dawn_sharding
A surprising twist from the founder: the 126 investors who rejected you actually added points to your life's score, haha.
Desmond Lim
Yes! If you take each rejection as a learning lesson you will actually grow from it!
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The best exits don't start when the banker enters the room. They start twelve to eighteen months earlier, in the quiet work of tightening margins, cleaning cap tables, and rehearsing the narrative until it's the one buyers repeat back to you.
By the time due diligence begins, the outcome is largely priced in. What looks like negotiation is often just discovery, the buyer verifying what your positioning already told them.
At Stir Advisors we treat sell-side mandates as an operating programme, not a brochure process. [...]
Most rounds are lost in the meeting before the meeting, the informal partner call that decides whether your deal even reaches the Monday partnership.
Term sheets are downstream artifacts. If the narrative, comps, and champion are wired correctly, terms tend to normalise. If they aren't, no clever mechanic recovers the round.
Whether equity, debt, or structured capital, dilution and cost of capital are the last things to negotiate, not the first things to fear. Clarity of use of proceeds and path to liquidity always outrank valuation theatre.
