Fundraising Mistakes Start Before the Pitch Deck
Most founders treat venture capital as a relationship game – charm the right people, tell a strong story, and the money follows. Sasha Orloff, founder and CEO of Puzzle, has seen the other side of that assumption play out badly enough times to know it’s wrong. Having raised over $1 billion, Orloff sat down with host Isabelle Johannessen on Build Mode to walk through what actually determines whether a founder walks out with a term sheet or an apology.
The core problem, according to Orloff, is that founders show up to investor meetings without a clear command of their own financial reality. That gap – between what founders believe about their business and what the numbers actually say – is often what kills a raise before it starts.
Three Ways Founders Undermine Their Own Leverage
Orloff identifies messy data as one of the most damaging things a founder can bring into a fundraising conversation. When a VC asks about unit economics, burn rate, or revenue retention and the founder has to hedge, estimate, or contradict themselves mid-sentence, the signal it sends is not that the business is early – it’s that the founder isn’t watching the business carefully. Investors are not just buying a product or a market; they’re buying into the judgment of the person running the operation.
Misunderstood metrics create a different but equally costly problem. A founder who conflates gross revenue with net revenue, or who cites a customer acquisition cost figure that doesn’t account for payback period, isn’t just making a math error. They’re showing an investor that the financial foundation of the company is being built on assumptions that haven’t been stress-tested. Orloff’s position is that knowing your numbers isn’t a finance function – it’s a leadership function.
Timing, though, may be the most straightforward failure point Orloff describes. Founders who wait until cash reserves are critically low before starting a fundraising process enter every conversation with reduced leverage. VCs can read a runway situation. When a founder needs a deal closed in 30 days to make payroll, that urgency shifts pricing power, term negotiations, and even which investors are willing to engage. Starting too late doesn’t just slow the process – it changes the outcome.
Why Financial Literacy Has Become a Founder Expectation
The standards VCs apply have tightened considerably as the funding environment has contracted from the highs of 2021 and 2022. During that period, story and momentum could carry a raise. Now, investors spending more time on diligence are spending more time inside a company’s financials – and founders who haven’t maintained clean, interpretable records find that scrutiny punishing.
Orloff built Puzzle specifically around this problem. The company offers financial tools designed for startups, aimed at giving founders the kind of real-time visibility into their books that allows them to answer hard questions without a two-week scramble to find the data. The product is, in that sense, a direct response to the pattern Orloff observed: founders who were operationally strong but financially blind.
What “Understanding the Financial Reality” Actually Means
Orloff’s framing on Build Mode is precise on this point. Understanding financial reality doesn’t mean a founder needs to run their own accounting or build their own models from scratch. It means they need to know, at any given moment, what their cash position is, what their burn looks like over the next 12 to 18 months, and how their key metrics would hold up under a question from someone who spends every day reading cap tables and income statements.
That level of readiness takes time to build, which is part of why Orloff’s advice about timing extends beyond just when to start outreach. Preparing to fundraise, in his framing, means getting the financial house in order months before a single investor meeting is scheduled. The documentation, the data hygiene, the internal consistency of the numbers – those things can’t be assembled in a week.
Valuation is where the consequences of financial unpreparedness become most visible. Founders who can’t defend their assumptions under questioning tend to accept terms they wouldn’t have accepted if they had entered the process from a position of confidence and clarity. A lower valuation or unfavorable protective provisions in a term sheet can affect the cap table for years – through multiple future rounds, dilution events, and eventual liquidity scenarios.
Orloff’s full conversation with Johannessen is available on the Build Mode series, which covers the operational and strategic challenges that founders face as they try to build companies that can sustain investor scrutiny – and eventually, profitability. For founders currently deciding when to start their next raise, the more pointed question Orloff implicitly raises is whether they could, right now, answer a VC’s first follow-up question without looking anything up.
