Securing investment is a pivotal moment; it represents a significant belief. Belief in you, your team, your product, and your vision. But that belief is just the down payment. What happens next determines whether you build Momentum or begin eroding the trust you’ve just earned.

The first 90 days after funding are not just another phase of a startup’s journey; they are the most consequential. These early days are where plans are tested, teams are aligned (or misaligned), and the tone for execution is set. This is a period of intense focus and action, where every decision can make or break your startup's future.

Why the First 90 Days Matter

Investors invest in a plan. Not just a pitch deck.

The clock starts ticking the moment the funds are deposited into your account. And it’s not about “doing everything”, it’s about doing the right things fast, decisively, and with clarity. This is your chance to show investors, your team, and the market that their confidence was justified.

If you get off to a strong start, you build confidence, secure future funding, and energise your team. However, a misstep, such as missed hires, unclear priorities, or a lack of progress, can quickly snowball into scepticism and hesitation.

1. Re-clarify the Vision and Plan

Once the term sheet is signed and the funds are wired, don’t assume that everyone remains perfectly aligned on the mission. Revisit your original strategy, but not through the lens of the pitch deck. Instead, translate that vision into a living, breathing execution plan.

Start by hosting a kickoff session with your leadership team. Reaffirm the company’s core objectives and how they align with the capital recently raised. Then, break your 12-month plan into three distinct arcs: the next 3 months (validation), 6 months (traction), and 12 months (scale). For each, define what success looks like: customer milestones, revenue targets, product metrics.

Strip out any roadmap features that were included to “look good” in the pitch. Focus on what drives real value.

💡 Tip: Frame your roadmap in terms of customer outcomes, not just features. A good feature shipped is meaningless if it doesn’t move user behaviour or business results.

2. Create a 90-Day Execution Plan.

Now that your roadmap is clean, zoom in. The first 90 days are your chance to build Momentum, reduce risk, and validate your direction. Break down your quarterly OKRs into weekly execution sprints.

This plan isn’t just a to-do list; it’s a forcing function for progress. It keeps your team accountable, helps you spot bottlenecks early, and creates a narrative of traction for both internal and external stakeholders.

❓Ask yourself: What can we show in 14 days that gives our investors confidence and sharpens our direction?

Use these wins as proof points in updates, board meetings, and recruiting conversations.

Capital brings confidence, but it also introduces the risk of waste. Just because a budget was outlined in the pitch doesn’t mean it’s the best plan today. Reevaluate.

Start with a “jobs to be done” audit for your capital. This means assigning every principal dollar amount a clear purpose: Will it help you grow faster? Will it de-risk something? Will it unlock the next round? This audit will help you prioritise and allocate your capital effectively.

Avoid spreading capital thin across too many initiatives. Stack your capital against your highest-leverage bets, those that have the potential to create step-changes in traction.

4. Make Key Hires Fast but Thoughtfully

Hiring post-funding is a paradox: you need to move quickly, but you can’t afford bad hires.

Start with roles that unlock other capabilities, such as technical leaders, senior product managers, or performance marketers. Prioritise people who bring leverage, not just output.

Build a fast, focused hiring sprint. Set clear scorecards, shorten your interview loops, and make onboarding part of your hiring checklist, not an afterthought.

⚠️ Warning: Don’t let speed compromise culture. Every early hire compounds, for better or worse.

5. Over-Communicate With Investors

Investor relations aren’t just a quarterly formality. Post-funding, your communication sets the tone for future support or scrutiny.

Set a monthly investor update rhythm. Use it to share wins, key metrics, hires, user feedback, and challenges. Be honest and specific. Include a clear “ask” if you need help.

Transparency earns trust. Even if growth is slower than expected, a founder who is proactive and data-driven earns far more goodwill than one who goes quiet.

🎯 Bonus: Investors who feel looped in are 10x more likely to make intros, share advice, and support the next round.

6. Get the Team on a Single Dashboard

Alignment starts with visibility. Every team member should know exactly what metrics matter and how the company is performing against them.

Build a shared dashboard with no more than 3–5 KPIs. These should be directly tied to your 90-day and quarterly goals, including user growth, retention, revenue, and feature usage. This shared dashboard fosters transparency and alignment within the team, ensuring everyone is on the same page.

Review this dashboard weekly during a standing team meeting. Use it to reinforce focus, reward progress, and adjust tactics.

7. Talk to Customers Weekly

No roadmap survives first contact with the customer. That’s why your post-funding phase should include a non-negotiable customer discovery loop. This loop involves scheduling weekly calls with prospects, active users, and churned customers. Use these insights to validate your positioning, refine your UX, and shape your roadmap.

Schedule weekly calls with prospects, active users, and churned customers. Use these insights to validate your positioning, refine your UX, and shape your roadmap.

Build in public when possible. Share learnings with your team and investors. Let customers see your velocity.

📣 Reminder: Every time you talk to a customer, you improve your ability to prioritise what matters.

8. Fix Operational Gaps Early

Now’s the time to tighten the bolts before scaling exposes the cracks. Audit your internal systems, including financial reporting, compliance, customer onboarding, analytics, and legal documentation.

Fix broken or manual workflows. Automate repeatable processes. Upgrade tools where needed.

Operational excellence doesn’t just reduce friction; it inspires confidence in investors, future hires, and partners.

9. Celebrate Wins, Loudly

Momentum isn’t just about metrics; it’s about morale. Wins, big or small, deserve spotlighting.

Did your new feature hit 70% adoption? Celebrate. Did a customer leave a glowing review? Please share it. Did a team member go above and beyond? Recognise them publicly.

Make a habit of celebrating progress. This fosters a culture of positivity, reinforces priorities, and maintains high energy when the road gets bumpy.

10. Define What “Winning” Looks Like

Ambiguity kills focus. Define a rallying point —a clear, simple goal that the entire company can unite around.

Instead of “increase retention,” say “hit 50% D30 retention by September.” Instead of “scale GTM,” say “acquire 20 new paying customers by Q2.”

Give your team something they can see, chase, and believe in.

What If You’ve Stumbled Out of the Gate?

Let’s be real: Not every post-funding runway starts with liftoff.

Maybe that key hire you celebrated on LinkedIn just isn’t working out. Perhaps your first central feature fell short, or worse, missed the deadline. Possibly, user growth is flat despite the burn rate. It happens. You’re building a company in the real world, not a slide deck.

But here’s the truth: it’s not the stumble that defines you. It’s the speed and honesty of your response.

1. Own It Fast and Fully

Don’t hide. Don’t spin. The moment you sense things are off, acknowledge it first internally, then externally. Great founders aren’t flawless; they’re self-aware.

Own the gap between what was expected and what’s happening. Lay out clearly what went wrong, what you’ve learned, and what changes you’re making.

💬 Example: “We hired for speed, but skipped culture fit. It slowed us down. We’ve paused additional hires to recalibrate our process. Here’s what we’re doing differently.”

This kind of honesty earns respect. It also keeps your team aligned and your investors engaged as allies, not sceptics.

2. Rebuild the Roadmap, Ruthlessly

Your original roadmap was built under assumptions that may no longer hold. Don’t waste time trying to “catch up” to a plan that no longer fits your current reality.

Strip the roadmap down to the essentials:

• What are the following 1–2 milestones that create validation?

• Which initiatives are high-effort, low-impact?

• What can be paused without damaging Momentum?

Get laser-focused on your next “proof point,” a signal that tells your team and investors we’re back on track.

📍Think: clarity over complexity. Speed to signal over feature completeness.

3. Launch a “Win Fast” Task Force

In moments of lost Momentum, nothing rebuilds morale like a quick, visible win.

Create a cross-functional squad (small and nimble) tasked with shipping something impactful in 7–10 days. It doesn’t have to be massive, just has to prove progress:

• A feature enhancement that removes friction

• A pilot with a new customer segment

• A landing page that converts

🎯 Momentum is emotional. A quick win builds confidence internally and creates a story for your next investor update.

4. Return to First Principles

When the plan stalls, go back to the source: the customer.

Block off time to personally talk to users, especially those who have churned or gone quiet. Ask:

• What’s the most significant pain you’re still solving manually?

• What did you hope our product would help with?

• What would make this indispensable?

Your goal isn’t to pivot out of desperation to re-anchor your roadmap in real, validated pain. This process often uncovers sharper positioning, more precise product focus, or surprising new paths to traction.

🧠 Founders who zoom out before zooming in again often find their most powerful insights.

5. Re-engage Investors with Clarity

What is the best way to recover investor confidence? Own the misstep and narrate your comeback.

Don’t ghost. Instead, send a focused update:

• Acknowledge the challenge.

• Share your diagnosis.

• Show what actions you’ve taken.

• Outline how you’re tracking progress.

• This turns a problem into a story of leadership. Savvy investors don’t expect perfection; they want to back founders who know how to adapt under fire.

🔁 Think of it as a strategic reset, not an apology.

Every startup stumbles. The best ones course-correct in days, not quarters.

If you’ve hit turbulence in the first 90 days, remember: your investors bet on you, not just your pitch. Show them you can navigate adversity, and you’ll earn even deeper trust than if everything had gone “according to plan.”

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This perspective is shared by Adam Ryan, a seasoned founder and investor with a deep track record in early-stage ventures, including some that have reached valuations exceeding $5 billion across Australia and California. With multiple startups launched and exited and hundreds more supported through investment and advisory roles at Watkins Bay and Monash University, Adam brings a unique insight into the world of startups and innovation.

Adam now serves as an Adjunct Professor at Monash University, ranked #9 globally for Economics, focusing on the intersection of innovation, startups, technology, start-up simulations, hyper-growth, Capital, and market disruption. One of his significant contributions is as the founder of the Startup Growth Hacking Resource Centre, a hub for emerging founders who want to scale with precision and purpose. This initiative connects him with the startup community, demonstrating his commitment to fostering innovation.

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A few years ago, I closed a funding round that, on paper, seemed like a dream. The terms were competitive. The lead had a well-known name.

However, in less than nine months, with the wrong CEO and the wrong board makeup, the deal no longer felt like a win; it felt like a mismatch.

We didn’t share the same vision for growing the company. Our board conversations started to feel completely disconnected, with little information flow.

That experience taught me one of the most valuable lessons in my founder journey:

Not all capital is created equal.

Raising money is important. But raising it from people who understand your values, believe in your mission, and are aligned on the journey is what sets companies up for long-term success.

Since then, I’ve become more intentional. I’ve learned to evaluate investors the same way I evaluate co-founders or senior hires. Not just for their name or their capital, but for their mindset, their behaviour under pressure, and their belief in how we build.

Over time, I’ve built a mental checklist of 10 critical dimensions I now use to assess investor fit before I say yes. These aren’t just theories. They stem from boardroom misalignments, poor advisors who lack the company’s best interests at heart, crisis calls, and a few incredible moments of partnership that remind me what great investor relationships can feel like.

If you’re raising now or plan to, I hope this framework is for you.

1. Values Alignment: Your First and Most Critical Filter

Before the term sheet, before the valuation, before the board seat, ask yourself a straightforward question:

Do we believe in the same things?

Values alignment is the invisible foundation of every strong founder-investor relationship. Without it, even the most well-funded startups fracture under pressure. With it, you get a partner who not only backs your strategy but also respects the way you build your business.

Start by getting clear on your own values: Do you prioritise transparency? Are you building with long-term impact in mind, rather than focusing on short-term sprints? Do you centre team well-being, ethical decision-making, or customer trust?

Now ask:

• Does this investor reflect those same values in their behaviour and track record?

• Do they respect how you lead, not just where you’re headed?

• Are they known to act with integrity during both boom times and boardroom crises?

This is about more than shared language about shared principles. For example, if you’re building a mission-driven company, an investor who only talks about market size and IRR (internal rate of return) might miss the deeper “why” behind your work.

You want someone who understands that how you grow matters just as much as how fast you grow.

From Experience: Speak with 2–3 portfolio founders of the investor. Ask them how the investor handled themselves during difficult conversations. That’s where values truly reveal themselves.

2. Cultural Fit: The Unspoken Deal Behind the Deal

Let’s be clear: cultural fit isn’t soft; it’s structural.

It determines how your startup makes decisions, handles tension, navigates ambiguity, and ultimately defines success. Culture is the operating system of your company, and when an investor plugs into it with the wrong mindset, the entire system risks misfiring.

Founders often evaluate culture when hiring, but forget to do the same with investors. That’s a mistake. Your cap table is an integral part of your company culture, particularly for the individuals who secure a seat on the board.

Here’s what to ask yourself:

• Do they communicate with respect, even when they challenge you?

• Do they appear as collaborators or as hands-off, controlling observers until things go wrong?

• Do they value Speed and risk, or depth and deliberation, and does that match how your team operates?

• How do they talk about failure? Blame game or learning moment?

When tough conversations inevitably arise on strategy pivots, hiring misfires, or missed targets, you need to know you can disagree without distrust. That’s cultural fit in action.

Don’t be blinded by prestige or pedigree. Suppose they create tension at every founder meeting, approach leadership with a zero-sum mindset, and prefer backchannels over direct dialogue. In that case, it’s a preview of what they’ll bring to your team dynamic.

Litmus Test: Ask yourself this: “Would I want this person in the room with me during my hardest week as a founder?”

If the answer is no, trust your instinct. The boardroom can either be your war room or your battlefield.

3. Domain Experience: Insight Is the Real Currency

Capital is abundant. Deep understanding is rare.

An investor who truly knows your space brings more than money; they get a second brain. They’ve seen the movie before. They know the plot twists. They understand the customer psychology, the regulatory landmines, the GTM bottlenecks, and the nuances that make or break startups in your vertical.

This matters for two reasons:

1. Strategic Insight

A domain-savvy investor can spot a signal in the noise. They’re not just reviewing your roadmap, they’re pressure-testing it with pattern recognition. They can help you prioritise what actually moves the needle in your market. They’ll save you cycles by helping you avoid dead ends they’ve seen before.

2. Credibility and Network

When they call a potential customer, advisor, or hire, they pick up. Their reputation in the space becomes a tailwind for your business. Whether it’s enterprise SaaS, digital health, fintech, or climate tech, having an investor who can open the right doors with context makes everything faster and smoother.

But this goes deeper than tactical help.

Domain expertise often breeds empathy. They get why your sales cycle is long. They understand the realities of burn rate in deep tech. They won’t panic when your ARR looks lumpy because they’ve seen the seasonal swings in your niche.

Red Flag: Be cautious of tourists-investors chasing trends who lack an understanding of your market dynamics. If they spend half the pitch meeting asking for definitions, that’s not a curiosity gap; it’s a capability gap.

From Experience: Ask them what trends they’re seeing in your space. Their answer will tell you whether they’re leading the wave or trying to surf one they don’t understand.

Choose investors who can challenge you because they understand your world, not in spite of it.

4. Strategic Alignment: Shared Vision, Shared Velocity

Raising capital isn’t just about funding your next chapter; it’s about ensuring the people backing you believe in the story you’re trying to tell.

Strategic alignment is about clarity on how you’re building, why you’re building it that way, and what success looks like over time. The best investors don’t just support your business, they help your approach to creating it.

Some investors are wired for blitz-scaling: rapid growth, land-grab tactics, and short runways between funding rounds. Others champion sustainable growth, characterised by measured hiring, capital efficiency, and strong unit economics from day one.

Neither path is inherently right or wrong. But what is wrong? Trying to pursue one strategy while your investors are pushing for the other.

You need alignment on questions like:

• Do we agree on when to prioritise profitability over growth?

• How aggressively should we approach customer acquisition and headcount?

• What role does brand, community, or product depth play in our GTM motion?

• Is this a 3-year sprint to acquisition, or a 10-year play for market leadership?

Misalignment here doesn’t just lead to tension; it leads to whiplash. Your team will feel it. Your roadmap will drift. And your energy will get sapped by trying to please two competing narratives. This can result in a loss of focus, wasted resources, and ultimately, a slower path to success.

Investor Fit Test: Ask how they’ve guided portfolio companies during moments of strategic inflection, such as a central pivot, pricing model change, or international expansion. Look for specific examples, their approach to risk management, and the outcomes of their guidance. Their answers will reveal how they think about strategic pacing and risk, and whether their approach aligns with your company’s needs and goals.

Reality Check: Some investors may attempt to modify your model to align with their thesis. Be wary. You want a partner who believes in your strategy and amplifies it, not one who tries to rewrite it from the sidelines.

When you align on strategy from the beginning, every board meeting becomes a working session, not a debate about first principles.

5. Exit Alignment: Build With the End (Clearly) in Mind

Every investor has an idea of what success looks like. The question is, does it match yours?

Exit alignment is one of the most overlooked yet high-stakes conversations a founder can have. It’s easy to skip it when term sheets are fresh and optimism is high. But failing to align on exit expectations early can lead to serious friction when stakes are highest at the finish line.

Investors have different return profiles depending on their fund structure, timelines, and incentives:

• A late-stage growth fund may target a 3–5x return over a shorter horizon and prefer companies that are primed for acquisition within a few years.

• A long-hold fund or mission-driven family office might support a slower-growth model with cash flow potential or eventual IPO.

• Some micro-VCs may be content with a solid $50 million exit, while others aim for billion-dollar outcomes.

Suppose your vision is to build a generational company that stays private for a decade. Still, your investors are counting on an exit in four years to return their funds. In that case, the misalignment will be evident in boardroom decisions, pressure on hiring, burn rate, and how aggressively you take or reject acquisition offers.

Ask direct questions:

• What is your expected holding period for investments like mine?

• What would be a successful outcome in your eyes, financially and strategically?

• How have you supported exits in the past? Did you drive the process, or let founders lead?

• How do you think about strategic buyers vs. IPO vs. private equity?

Insight: Don’t just ask these questions once. Revisit them as your business evolves. Exit alignment is a moving target, and strong investor relationships keep recalibrating over time.

Founder’s Note: You are not obligated to pursue their idea of success. But if you’re not aligned on that definition upfront, don’t be surprised when tension arises later.

When you and your investors share the same picture of the finish line, you can actually enjoy the race and navigate detours together without derailing the journey.

6. Leverage and Access: Capital is a Commodity. Access is the Multiplier

In today’s funding environment, capital is table stakes. What truly differentiates great investors is the leverage they provide beyond the wire transfer.

Ask any seasoned founder, and they’ll tell you: the proper intro at the right moment can be worth more than a million dollars. Whether it’s landing a pivotal enterprise customer, securing an all-star executive hire, or getting featured in a top-tier publication, access can change your company’s trajectory.

This is where elite investors earn their equity.

Look for investors who can:

• Open doors to customers – warm introductions to budget holders, not just “hey meet my friend” emails.

• Connect you to specialised talent – from VP-level operators to fractional CFOs, product leaders, and top-tier recruiters.

• Help shape your narrative – connecting you with media, PR experts, podcast hosts, or influencers in your ecosystem.

• Broker strategic partnerships – with other startups in their portfolio, distribution channels, or even potential acquirers.

But leverage isn’t just about who they know, it’s about how actively they use that network for you. Some investors have extensive Rolodexes but adopt a passive, reactive approach. Others are proactive partners who champion you behind closed doors without being asked.

Ask for examples:

• “Can you share examples of doors you’ve opened for other founders recently?”

• “Who in your network would you be excited to introduce us to in the next 6 months?”

Founder Tip: Pay attention to how they treat access during the fundraising process. If they’re already sharing intros and insights before a deal is signed, that’s a strong signal of how they’ll perform post-investment.

Capital is finite. Leverage is exponential. Choose investors who bring real influence, not just capital, and who are willing to spend their social capital on your success.

7. Track Record of Founder Support: Look at Their Behaviour When the Lights Dim

It’s easy to be supportive when everything’s going up and to the right.

But the accurate measure of an investor isn’t how they act when things are smooth, but how they show up when everything’s on fire. Do they stand shoulder-to-shoulder with founders through layoffs, pivots, failed experiments, or down rounds? Or do they go quiet, apply pressure, or look for the nearest exit?

Before you let someone onto your cap table, dig into their actual track record of providing founder support in the real world. Not just what they say during the pitch, but what they do when the headlines are gone.

Ask other founders:

• Were they present during challenging moments, or did they disappear?

• Did they offer clear-headed advice, or inject panic?

• Did they advocate for the team to other investors when things got tight?

• Were they supportive emotionally, not just strategically?

Support looks different at different stages. Sometimes it’s hands-on help with scenario planning. Sometimes it’s a quiet check-in call to say, “You’re doing great in there.” Great investors know when to coach, when to challenge, and when to listen.

Red Flag: Investors who only reference their “wins” and avoid discussing hard chapters with their portfolio companies may be hiding more than they’re sharing. If no founder has a nuanced story of how the investor responded to adversity, it’s a story in itself.

Green Flag: Founders who say, “They were the first call I made when everything was falling apart.”

Support during tough times doesn’t just preserve morale; it preserves momentum. And momentum is the lifeline of every startup.

Remember: You’re not just raising money. You’re choosing who gets to sit in your inner circle when your confidence is shaken and clarity is hard to find. Pick someone who won’t flinch when it’s time to get in the mud with you.

8. Follow-On Investment Ability: The Power of Staying Power

Raising your first round is hard. Raising the next round, especially during uncertain markets or slower-than-expected traction, can be even more challenging.

That’s why follow-on investment ability is one of the most critical, yet underrated, factors to evaluate in an investor. It’s not just about who gets you started; it’s about who has the conviction and capital to stay with you.

The reality is this: startups rarely follow a perfectly linear growth path. You’ll have valleys, not just peaks. Having investors who can and are willing to participate in future rounds can mean the difference between buying time to adjust your model or running out of runway mid-pivot.

Here’s what strong follow-on support can do:

• De-risk future rounds by providing early signals of internal participation, which builds confidence for outside investors.

• Shorten fundraising cycles, allowing founders to spend more time building and less time pitching.

• Identify key inflection points, such as expansion into new markets, hiring a core leadership team, or doubling down on a proven GTM strategy.

• Provide stability during uncertain times, when external capital is scarce or market sentiment turns conservative.

But follow-on ability isn’t just about having the funds, it’s about having the intent. Some investors reserve dry powder but rarely deploy it unless a round is oversubscribed. Others view follow-on support as a core part of their value proposition.

Questions to ask:

• “What percentage of your fund is typically reserved for follow-ons?”

• “What triggers your decision to double down in later rounds?”

• “Have you ever led or anchored a bridge round? Under what circumstances?”

• “How do you support companies that don’t hit immediate traction?”

From Experience: Talk to portfolio founders who didn’t raise huge rounds or massive valuations. Did the investor still show up? That’s where real intent is revealed.

Your investors should be willing to go the distance, not just for your breakout moments, but for the in-between chapters where belief matters more than metrics.

9. Speed and Decisiveness: Momentum Is a Competitive Advantage

Fundraising is already an emotionally and operationally draining process. The last thing a founder needs is an investor who stalls the process with vague signals, excessive hand-wringing, or endless “checking with the partnership” cycles.

Enter the slow nothe investor who strings you along with interest but no conviction. They take multiple meetings, ask for unnecessary diligence upfront, and seem excited… until they ghost you or pass weeks later with “we’ll stay close.”

That kind of behaviour isn’t just frustrating; it’s also harmful. It drags out your timeline, can slow down momentum with other investors, and erodes your ability to lead the round with confidence.

In contrast, great investors are decisive and responsive. They know what they’re looking for, they’re transparent about their internal process, and they move quickly when they see alignment.

Why is this important as a Founder?

• Time is your most limited asset. Every week spent chasing uncertain capital is a week not spent building product, closing deals, or hiring the team you need.

• Investor behaviour during the raise reflects their post-investment style. Fast decision-makers are often better board members, as they are efficient, clear, and action-oriented.

• Speed builds momentum. Early commitments from decisive investors create social proof, which encourages others to take a stand and helps rounds close faster.

Evaluate their decision rhythm:

• “How long do you typically take from the first meeting to a decision?”

• “Who else is involved in sign-off, and what’s the process?”

• “How many deals have you led in the past year, and what was the average timeline?”

Red Flag: If they can’t clearly articulate how decisions get made or if they keep moving the goalposts, they’re likely not conviction-driven. You don’t want that energy on your cap table.

Green Flag: Investors who do their homework, ask thoughtful (not performative) questions, and come back with a clear yes or no within days, not weeks.

Founders operate in a world of urgency. Your capital partners should, too.

10. Reputation in the Ecosystem: Who You Raise From Shapes How You’re Seen

When you take on capital, you’re not just adding money to your balance sheet; you’re adding a name to your story. An investor’s reputation becomes part of your brand narrative. Their reputation walks into every room with you, whether you realise it or not.

That’s why it’s critical to ask: What does this investor’s name signal in the broader ecosystem?

Strong reputations bring signal, credibility, and leverage:

• Other investors take note. A respected investor on your cap table can help you attract high-quality capital in future rounds.

• Operators take your calls. Great talent is more likely to join a startup backed by someone they admire or trust.

• Acquirers and strategic partners listen more closely. Institutional trust opens doors that pitch decks alone can’t.

But reputation cuts both ways.

A poorly regarded investor, one known for founder-unfriendly terms, erratic behaviour, or post-investment disengagement, can cast a long shadow over your company. You might not feel it immediately, but when your next round gets harder than it should or a key hire hesitates, the whispers in the ecosystem matter.

What to dig into:

• How do other founders describe their experience with this investor?

• How do they behave in challenging moments? Are they known for pushing founders too hard or abandoning ship?

• Are they seen as value-add, or valuation-obsessed?

• Do they have healthy relationships with co-investors and board members? Or is there a pattern of friction?

Founder Tip: Don’t just look at their LinkedIn endorsements or media presence. Discuss privately with multiple founders, especially those whose companies didn’t scale quickly. That’s where an honest reputation is earned.

Warning Sign: If a firm has a flashy name but portfolio companies consistently say, “They looked great on paper, but…” listen to that instinct.

Your cap table is social capital. Build it with people whose names add trust, not tension.

Choosing an investor is one of the most critical decisions a founder will make. It’s not just about who wires the money; it’s about who earns a seat at your table, shapes strategic decisions, and stands beside you when things don’t go to plan. The best investors are not just capital providers, they’re conviction partners. They align with your values, your pace, and your long-term vision. They challenge you without undermining you. They offer leverage, not just oversight.

So take your time. Ask the uncomfortable questions early. Speak to portfolio founders. Watch how investors behave when you’re not at your peak. Because once the term sheet is signed, you’re in it together for better or worse. And in the high-stakes world of building a company, the right investor doesn’t just help you grow; they help you grow the right way. Choose wisely. Your future self and your team will thank you.

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This perspective is shared by Adam Ryan, a seasoned founder and investor with a deep track record in early-stage ventures, including some that have reached valuations exceeding $5 billion across Australia and California. With multiple startups launched and exited and hundreds more supported through investment and advisory roles at Watkins Bay and Monash University, Adam brings a unique insight into the world of startups and innovation.

Adam now serves as an Adjunct Professor at Monash University, ranked #9 globally for Economics, focusing on the intersection of innovation, startups, technology, start-up simulations, hyper-growth, Capital, and market disruption. One of his significant contributions is as the founder of the Startup Growth Hacking Resource Centre, a hub for emerging founders who want to scale with precision and purpose. This initiative connects him with the startup community, demonstrating his commitment to fostering innovation.

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I hope you enjoyed this article.

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A few months ago, a founder shared a story with me that I still think about.

"Our AI was outperforming everything else in the market but we still couldn't close the round. The VCs loved the product. Then the legal team got involved."

The deal didn't fall apart due to the technology, market opportunity, or metrics. It stalled because of one simple yet critical question:

"Who owns the data this was trained on?"

That single question changed everything.

In 2025, legal and ethical due diligence isn't just a checkbox—it's a gating function. And for AI startups, it's far more complex than most founders realise. Investors are not just evaluating your product's performance, but also what lies beneath it, such as your data sources, compliance frameworks, and ability to navigate a rapidly evolving regulatory landscape[1][4].

For founders, this shift represents both a challenge and an opportunity. Those who prepare thoroughly can turn diligence into a competitive advantage, inspiring confidence and closing rounds faster. Those who don't? They risk losing trust and dealing in an instant[3][6].

Why Legal Due Diligence in AI Is Different

Let's start with what most founders know: traditional startup due diligence is relatively straightforward. Investors want clean cap tables, properly executed contracts, clear IP assignments, and basic corporate hygiene.

However, AI startups are a different breed entirely. When you build AI systems, you're not just selling code but creating technologies that learn, adapt, and make decisions based on real-world data. These systems interact with people and environments in ways that are often opaque and unpredictable[1][4][8].

This complexity introduces a new layer of risk and a new set of questions from investors:

• Who owns the algorithm? Did your team build it from scratch, or does it rely on open-source components?

• Where did the training data come from? Was it licensed? Scraped? Provided by customers?

• What are the ethical risks? Could your model be biased or discriminatory?

• Are you compliant with privacy laws like GDPR?

• Does your technology fall under national security regulations?

These aren't theoretical concerns; they're real issues that can derail deals if left unaddressed[2][4][6]. But here's the good news: with the right preparation, these challenges are navigable. Let's break down six of the biggest red flags investors look for and how you can address them head-on.

1. Who Owns the AI? (IP Rights & Data Moats)

This is always where due diligence begins and where things often unravel. Intellectual property (IP) ownership is foundational to any tech investment, but it's especially critical in AI startups, where proprietary algorithms and data moats are key drivers of value[1][4].

Investors will want clear answers to questions like:

• Is your algorithm proprietary or open-source?

• Were all contributors employees, contractors, and collaborators—properly assigned IP rights?

• Do you own the outputs generated by your model?

• What rights do you have to the training data?

For example, under UK copyright law, AI-generated content is only protected if an identifiable party is responsible for its creation. Similarly, patent protection requires specific technical contributions that must be well-documented[1][6]. Without clarity on these points, investors may see your IP as vulnerable or, worse, legally indefensible.

Founder Tip:

Have every contractor and contributor sign airtight IP assignment agreements from day one. Maintain detailed version history and architecture documentation for your algorithms. Keep meticulous records of every dataset you use, including its source, licensing details, and any restrictions on its use[1][4].

2. Is the AI GDPR compliant? (Data Usage & Privacy Law)

Data privacy laws, such as GDPR, are among the most common hidden landmines in AI startups, and they're not going away anytime soon. Many founders assume that publicly scraped data is "safe" to use for training models, but under GDPR, even publicly available content can qualify as personal data if it relates to an identifiable individual[2][4].

The risks don't stop there:

• If you've trained models on customer data without explicit consent or suitable anonymisation protocols, you could violate GDPR[2].

• If your product captures sensitive user data, such as biometrics or behavioural analytics, you may be subject to even more stringent legal obligations[4][6].

Founder Tip:

Conduct regular Data Protection Impact Assessments (DPIAs) to identify and mitigate privacy risks early on. Anonymise or pseudonymise datasets wherever possible to reduce exposure. Build opt-in consent mechanisms into your product from day one; it's easier than retrofitting compliance later[2][4].

3. The NSIA Trap: Is Your Tech a National Security Risk?

This one catches many founders off, especially those operating in sensitive sectors like defence or surveillance technologies. Under the UK's National Security and Investment Act (NSIA), certain types of AI fall under "sensitive sectors" that require pre-approval for fundraising or M&A activity[1][3].

If your technology can:

• Detect or track objects or individuals

• Control autonomous physical systems (e.g., drones or vehicles)

• Interface with critical national infrastructure

…you may need government clearance before proceeding with certain transactions[1][3][6].

This process can delay deals—or even block them altogether if not handled proactively.

Founder Tip:

If your technology operates in regulated domains, consult legal experts familiar with NSIA compliance early in your fundraising process. Include documentation in your data room explaining how your product aligns with or avoids regulated uses[1][3].

Useful Checklist

Here’s a practical checklist to help you build trust during due diligence:

✅ Confirm IP assignments for all contributors

✅ Catalogue your data sources and licenses

✅ Document GDPR compliance and user consent

✅ Check if you fall under NSIA or sector-specific regulation

✅ Create an ethics log: bias testing, explainability, safeguards

✅ Audit your open-source stack and clean up risky licenses

✅ Include liability frameworks in your product documentation

Final Thoughts

Here’s the thing no one tells you early on:

Diligence doesn’t kill deals—surprises do.

In AI, your greatest strength may be your technical expertise. However, your greatest risk is what’s hiding underneath it. Therefore, Founders who take legal and ethical diligence seriously don’t just avoid delays.

1. They inspire confidence.

2. They close faster.

3. They earn more trust.

And they send a powerful signal to the market:

We’re not just building fast—we’re building right.

I hope you enjoyed this article.

If this sparked some thinking (or challenged a few assumptions), here’s how you can stay connected and go deeper:

Follow me on LinkedIn for regular insights on startup growth, founder psychology, venture capital trends, real-world tactics and more

Subscribe to the LinkedIn Newsletter to get fresh, founder-first content in your inbox—no fluff, just the strategies and stories that matter.

Check out the Start Up Growth Hacking Resource Centre – it’s packed with articles, podcasts, curated lists, legal templates, fundraising tools, and proven playbooks for founders ready to start, grow, and scale smarter. You can find the link to the Resource Centre page on my profile.

#AIstartups #duediligence #legalcompliance #ethicalAI #GDPR #IPrights #AIregulations #investorreadiness #AIcompliance #nationalsecurity #AIethics #AIinvestment

References and Further Reading

[1] AI: Conducting legal, due diligence – Law services | EY - Australia https://www.ey.com/en_au/insights/law/ai-conducting-legal-due-diligence-law-services

[2] AI Compliance: A Must-Read for Fintechs Using AI - InnReg https://www.innreg.com/blog/ai-compliance-a-must-read-for-fintechs-using-ai

[3] 5 Essential Due Diligence Red Flags That AI Can Help Uncover https://www.linkedin.com/pulse/5-essential-due-diligence-red-flags-ai-can-help-uncover-skylarkai-mz01e

[4] AI Due Diligence: Key Steps, Best Practices & Checklist [GUIDE] https://redblink.com/ai-due-diligence/

[5] [PDF] Compliance Costs of AI Technology Commercialization - arXiv https://arxiv.org/pdf/2301.13454.pdf

[6] Spotting Red Flags in Due Diligence | AI-Powered Risk Detection https://www.aracor.ai/blog/spotting-red-flags-in-due-diligence

[7] [PDF] An Analysis of AI Integration in the Context of Mergers and ... https://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=9155896&fileOId=9155897

[8] AI Due Diligence: What It Is and How It's Changing M&A - Grata https://grata.com/resources/ai-due-diligenc

Valuation is a substantial challenge for AI startup founders, particularly when the technology is evolving rapidly. Capital needs are urgent and significant when training AI systems. To address these challenges, founders and investors often use flexible funding structures, primarily convertible notes and direct equity, to balance speed, flexibility, and control[1][2][4].

Why is this Important for AI Startups

AI startups typically require significant capital before generating revenue, as funds are needed for model training, hiring, infrastructure, and data acquisition[3]. Traditional equity rounds can be slow and risky, particularly when a startup’s valuation is complex and difficult to determine early on. Convertible loan notes (CLNs) and Simple Agreements for Future Equity (SAFEs) are popular because they allow founders to raise capital without immediately setting a valuation or giving up too much equity[3][7].

Convertible Notes: The Fast Track

Convertible notes are short-term loans that convert into equity during a future priced round, such as the next major funding event[1][2][4][5]. Key features include:

Deferred valuation: The company’s value is set in the next round, not at the time of the note[1][2][4].

Discount or valuation cap: Investors receive a lower price per share when converting as a reward for early risk[1][4][5][8].

Maturity date: If no qualifying round occurs, the note may demand repayment or renegotiation. [1][4][5]

Interest: Some notes accrue interest (typically 5–8%), which also converts into equity[1][4][5].

Convertible notes can work well. However, multiple required investment rounds can result in significant dilution.

Direct Equity: Setting the Price Early

Equity rounds involve setting a fixed valuation and issuing shares immediately. This process provides a transparent ownership structure and more substantial investor commitment. Still, it is slower and riskier for pre-traction startups, as it requires more due diligence and legal documentation[6]. Founders often avoid priced rounds before achieving product-market fit or accumulating proprietary data. Still, equity becomes more strategic as the company matures[6].

Why Valuation Is Harder in AI

Raising capital for AI startups is uniquely challenging because:

Investor fatigue: Many similar AI pitches make differentiation difficult[3].

Data as a differentiator: Startups using open models and public APIs are judged more on go-to-market execution than technical novelty[3].

No clear benchmarks: Enterprise AI sales cycles are long, and consumer AI retention is uncertain, making it hard to define “traction”[3].

Founders should focus on demonstrating market demand, early usage, and a defensible data strategy rather than overselling technical capabilities[3].

Protecting Your Runway in the Term Sheet

Long-term risks are embedded in the term sheet regardless of the financing structure. Key clauses to watch include:

1. Conversion triggers: Ensure founder(s)./ control when notes convert, especially in bridge rounds[1][4].

2. Discount stacking: Limit cumulative discounts to avoid excessive dilution[2][4][5].

3. Valuation cap negotiations: A low cap can lead to significant dilution if the company’s value increases rapidly[1][4][5][8].

4. Redemption rights: Avoid clauses that could force repayment or liquidity events[1].

5. Warranties & founder liability: Clearly define what constitutes a forecast versus a binding promise, which can be ambiguous in AI[1].

Final Thoughts

In AI, speed is essential, but so is survivability. Founders who treat financing as a strategic tool—not just a source of capital—are better positioned to build resilient businesses. The choice between convertible notes and equity should align with your company’s momentum, risk profile, and team strengths. Ultimately, your most significant leverage lies not just in your technology but in how you structure your business around it[1][2][4][5][7].

I hope you enjoyed this article.

If this sparked some thinking (or challenged a few assumptions), here’s how you can stay connected and go deeper:

Follow me on LinkedIn for regular insights on startup growth, founder psychology, venture capital trends, real-world tactics and more

Subscribe to the LinkedIn Newsletter to get fresh, founder-first content in your inbox—no fluff, just the strategies and stories that matter.

Check out the Start Up Growth Hacking Resource Centre – it’s packed with articles, podcasts, curated lists, legal templates, fundraising tools, and proven playbooks for founders ready to start, grow, and scale smarter. You can find the link to the Resource Centre page on my profile.

Download Calculator

References and Further Reading

[1] Convertible Notes: Understanding the Debt and Equity Hybrid https://www.biztechlawyers.com/legal-articles/guide-to-convertible-notes

[2] Convertible Notes Explained: Should You Use Them for Funding https://nextround.ai/2024/12/09/convertible-notes-explained-should-you-use-them-for-funding/

[3] Day 9: Alternative Funding Strategies for AI Startups - LinkedIn https://www.linkedin.com/pulse/day-9-alternative-funding-strategies-ai-startups-more-olojede-zcn0f

[4] Convertible Notes: The Complete Guide for Startups - Cake Equity https://www.cakeequity.com/guides/convertible-notes

[5] https://breakingintowallstreet.com/kb/venture-capital/convertible-notes/

[6] Funding Strategies for AI Startups: Tips from the Pros - SkyNet AI https://skynetai.dev/blog/funding-strategies-for-ai-startups--tips-from-the-pros

[7] How Can Convertible Notes Help My Startup? - LegalVision https://legalvision.com.au/startup-lawyer-series-convertible-note-work/

[8] How Do Convertible Notes Work? - HelloData https://www.hellodata.ai/help-articles/how-do-convertible-notes-work

#AIStartups #FundraisingTips #ConvertibleNotes #EquityRounds #StartupFinance #EarlyStageVC #CapTableStrategy #FounderTips #TermSheet101 #AIFinancing #StartupLaw #VentureCapital #SeedFunding #BuildSmart #StartupPlaybook

As a founder, you’ve probably heard investors talk about pre-money and post-money valuations. You might even know your “cap table” needs to be updated after each raise. But do you know precisely how your ownership changes as a result?

Let’s break it down simply — no jargon, no legalese — just clarity.

🧠 What Is Pre-Money vs. Post-Money Valuation?

• Pre-money valuation is how much your company is worth before the new money comes in.

• Post-money valuation is how much your company is worth after adding the new investment.

Here’s the simple formula:

Post-Money Valuation = Pre-Money Valuation + Investment Amount

👉 Example:

If your company has a pre-money valuation of $4 million, and an investor puts in $1 million. In that case, the post-money valuation becomes $5 million.

🔍 So, What Does That Mean for You as a Founder?

When you raise money, you’re issuing new shares to investors. You’re not handing over your own — you’re making more of the pie. But that means your slice gets smaller.

This is call…

Read more

Raising capital feels like a milestone — and it is.
But it’s also the moment where the real math begins.

Access to Free Dilution Calculator Below

Many founders talk about pre-money and post-money valuations. Fewer understand precisely how that impacts their ownership.

Let’s break it down with no jargon, just clarity.

🧠 Pre-Money vs. Post-Money?

Pre-money = company value before investment
Post-money = pre-money + new investment

Example:
$4M pre-money + $1M raise = $5M post-money

🍕 What’s Dilution?

When you raise money, you issue new shares to investors.
You don’t lose your shares, but your percentage ownership shrinks.

Imagine your company as a pizza with 100 slices. You and your co-founder own it all.

An investor wants 20%. You bake more pizza — total slices = 125.

The investor gets 25 slices. You now own 80%, not 100%.

That’s dilution — and it’s not bad if the money fuels real growth.

📉 How to Stay Smart

Dilution becomes a problem only when it’s misunderstood.

Founders should:
✅ Model the cap table b…

Read more

Two years ago, being an AI founder meant being ahead of the curve. Today, you're right in the thick of it and the curve is moving faster than ever. Venture capital (VC) funding for AI startups has surged dramatically, with global investments exceeding $100 billion in 2024, marking an 80% increase from $55.6 billion in 2023[1][7]. But this isn't another speculative hype cycle like crypto or direct-to-consumer (DTC) brands. This time, the stakes are higher, the questions tougher, and the focus sharper.

Across these conversations, one thing has become clear: the next decade will belong to founders who treat AI not as a buzzword but as a transformative tool to solve real, urgent problems. If you're building or planning to raise capital in this space, here's what you need to know about why VCs are doubling down on AI and how you can rise to meet this moment with inspiration and motivation.

AI Is No Longer Experimental: It's Foundational

Not long ago, AI was relegated to R&D departments a curi…

Read more

Evaluation Differences Now and Then

Venture capitalists (VCs) evaluate the potential of AI startups today with a more disciplined and practical approach than a few years ago, as you would expect. This shift echoes lessons learned from earlier investment cycles, growing market dynamics, and the need for sustainable growth.

It got me thinking about this evolution and the differences between 2025 and now. How have they evolved, and what challenges are VCs facing with this fast-changing investment vertical?

1. The Transition from Hype to Practicality: A Key Shift in VC Evaluation

Then: (Pre-2025): VCs were heavily influenced by the hype around cutting-edge technology, often funding startups based on innovative algorithms or technical expertise without requiring clear business applications or ROI. Startups with buzzwords like "machine learning" or "neural networks" could secure funding even if their product-market fit was unclear[1][8].

Now: VCs prioritise startups solving specific, high-value …

Read more

From building a pitch deck to knowing how (and when) to approach investors, the process can be overwhelming, especially for first-time founders. There's no playbook handed to you when you start a company… so we built one.

Inside the Start Up Growth Hacking Resource Centre, you'll find a dedicated Capital Raising section packed with practical, founder-friendly resources to help you navigate every stage of the process.

Over time, here's what I'll be sharing:

• Proven pitch deck templates

• Investor outreach email scripts

• Fundraising strategy checklists

• Data room guides

• Real examples from successful raises

• Insights on SAFE notes, valuations, and term sheets

It's also 100% free, open-sourced, and requires no login, just the kind of support I wish I had when I started.

Why?

Because I genuinely care about helping founders succeed. I've seen fabulous ideas stall out—not because they weren't viable, but because the founders didn't have access to the right guidance. This resource centre is my way of levelli…

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✅ Invest capital

✅ Provide free credits or tools

✅ Open doors to global networks and mentors

These are programs run by major tech companies, VCs, accelerators, and platforms — all designed to help early-stage startups get off the ground and scale faster.

🧠 What’s Inside

The list includes:

• 💰 Funding & accelerators (Y Combinator, Antler, Techstars, Sequoia Arc, etc.)

• ☁️ Cloud credits (AWS, Google Cloud, Microsoft, DigitalOcean)

• 🔧 Product & tool stacks (HubSpot, Notion, Mixpanel, Intercom, Zendesk, Brex)

• 📈 GTM & scale support (Salesforce Accelerate, Oracle for Startups, Plug and Play)

• 🌍 Government & global ecosystem grants (Startup Chile, EIT, Startup India)

Most of these offer $25K—$350K+ in value through equity, credits, or discounts, and many are non-dilutive.

📥 Want the List?

I’ve compiled everything in a clean, sortable spreadsheet with links, program descriptions, and stage filters (…

Read more

That’s why I built the Founder Capital Raising Dilution Calculator. This simple, plug-and-play spreadsheet helps you model how a funding round will affect your equity and cap table.

💡 What it does:

• Calculates pre- and post-money valuations

• Shows how much equity you’re giving up in each round

• Models shareholder dilution clearly (you, co-founders, advisors, investors)

• Lets you test different raise amounts and valuations

🎯 Why it matters:

Too many founders raise capital without realizing how much ownership they’re giving away — until it’s too late. Understanding dilution helps you:

• Negotiate smarter

• Plan multiple rounds ahead

• Retain enough equity to stay in control

Whether raising your first round or planning a bridge, this calculator gives you clarity before you commit.

Download Calculator

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