A decade ago, most startup pitches ended with a calculation justifying the amount they sought to raise.
In other words, the raise was an output of the financial model.
But for the most sought after companies, the raise amount is disjointed from the capital needs of the business – instead it’s driven by the fundraising auction.
Great fundraisers are the teams that build the most auction pressure.
This auction dynamic, combined with venture capital’s explosive growth over the last decade, has transformed fundraising strategy. The goal is no longer to raise what you need, but to optimize for the lowest cost of capital.
Cost of capital is the expense of a business to find dollars it needs to pursue its plan. Legal expense, dilution in the case of equity, interest in the case of debt. The reality is even though cost of capital is taught in economics classes, I’ve never heard it uttered in a board meeting.
Companies with a lower cost of capital have a strategic advantage. Assume all companies in a space have the same cost-of-customer acquisition. The company with the lowest cost of capital should be able to acquire more of them.1
This is doubly true in the world of more efficient startups, where small teams can achieve legendary growth rates. Fundraises aren’t driven by needs; but by the supply/demand dynamics.
In today’s market, masterful capital raising isn’t just a skill – it’s a decisive competitive advantage.

1This ignores the compounding nature of market leaders who win bigger customers, which reinforces social proof, and accelerates the capture of market share.
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