Are you thinking of raising your next round? You may already be too late!

Money makes the startup world go ‘round. But money tends to run out fast. One of the common problems startups face is just that: running out of money. In the back of every founder’s mind, there is a countdown to running out of money. In investor speak, this is called “the runway”, that is, the cash balance in the bank divided by the startup’s monthly burn rate. The runway tells you exactly how much time is left before you need to close shop.

The real cost of raising money – your time

The rule of thumb is that raising a new round of capital takes an average of six months. This might be ok when it’s the first round of capital because the founders may still have salaries from other jobs during the road-show and spend is usually very low.

However, this time-frame is very problematic when it’s the second or third round of capital. Why? For several reasons:

  1. The startup’s resources are diverted to the road-show. This slows the operations of the startup, which in turn hurts its chances of successfully fundraising. A real catch-22. You fail to raise due to the lack of progress during fundraising.
  2. Demands from investors are more stringent. It was ok not to understand what investors want and need when you just started out, but for your second round, you are expected to show KPIs that are relevant for investor decision-making, i.e. “talk the talk”, have a clear indication of where you stand vis-à-vis product-market-fit, and present professionally. When you focus on day-to-day startup operations, often preparing this information clearly and succinctly is ignored until the last minute which adds two-three months to the investment process.
  3. The instability seeps into the company culture. Hiring talented people is easiest when the startup has money in the bank to pay salaries for at least one and a half years. As time passes, people who work for the startup are risking that the fundraising will fail or be late, which means getting let go, or suffering a salary reduction, or not getting paid on time. When people start fearing for the future, panic grips the organization and becomes part of its culture.
  4. Reality trumps “the plan”. Milestones and financing plans make a lot of sense when they are created. A typical timeline posits 18 months of capital runway post first financing. Twelve months are used to reach the next funding milestone, and six months are used to raise the next round of capital. This works if everything goes smoothly and on time. Things never go smoothly or on time. A common adage of investors is that reaching the milestone takes twice the time and three times the money.

Want to avoid running out of money? Work differently. Start sooner (that means now!). Seek outside assistance.

Starting sooner

Many fundraising activities can already be done immediately after raising the last round of capital.  This means that operations are working in parallel to the next round of fundraising from day one. Examples of fundraising preparation include strategy, business planning, documentation, milestones, validation, team building, pre-marketing, and investor relations.

By continuously doing these activities from day one in parallel to operations, you gain four major benefits:

  1. You save time
  2. You dive deeper into each item slowly improving over time
  3. You are ready to fundraise at a moment’s notice
  4. All decisions are focused on what is really important – closing the next round

Seek outside assistance

Another way to avoid wasting time and resources (and eventually running out of money) is simply to hire professionals who specialize in investment banking to be dedicated to this work from day one. In this way, the resources of the core team can focus on the product, and the financers can focus on the money.

A funding-dedicated team can prepare for investors as above, and also start a dialog with investors, ones with whom they already have an ongoing relationship, about the startup. The investment bankers and startup founders then learn what the investors’ objections are, how they view the market, and if they have similar companies in their portfolio. All this information is valuable as it saves time, enables focusing on the relevant investors, and improves the pitch.

So what are you waiting for?

Why Israelis Suck at Lean Canvas


Lean Canvas is popular. It’s used to create a good strategy by breaking the business down into topics and challenging assumptions. The more time and effort one puts in it, the more value is created, and the main derived benefit is expertise in your business. Israelis are results-oriented, not process-oriented, therefore it is no surprise that Israelis suck at Lean Canvas. When an Israeli entrepreneur sees a Lean Canvas he tries to complete the page ASAP with little or no regard for depth. This hurts the entrepreneur in the long run and prevents generating any real business understanding. Bottom line, Israelis: leave the Lean Canvas alone and go back to writing full business plans.

What is a Lean Canvas?

The Lean Canvas is a popular term that everyone is using.
When you Google it, you see a single page that maps out many key elements of the business.

When you read about it, you learn that it’s a tool for the Lean Canvas process which is supposed to be a fantastic business tool.

What is its purpose?

The purpose is to create, and fine-tune, an investable strategy for the business.

At first, the Lean Canvas process seems easy – it’s just one page that needs to be completed, but that’s not how it works.

How does it work?

One is supposed to identify all the business assumptions, question them, and then validate or change them. Once done, everything is put back together in a way that makes more sense.

Business assumptions exist in all topics: need identification, solution usage case, target market, customer definition, business modeling, pricing schemes, distribution channels, and marketing.

Each subject is broken down into its many moving parts.

Is it hard?

The deeper the process, the more valuable it is. When done right, this single page represents hundreds of hours of thinking, analyzing, and validating.

When a lot of background work goes into the canvas, then the page only represents a fraction of what you know. The knowledge behind the canvas is immense.

When this is done seriously and systematically, this process will lead to many benefits.

So yeah… it’s hard.

What are the benefits?

  • A management team with members that are true domain experts in their business
  • Noticeable expertise in interactions with investors who know the space
  • Better decisions in running the business
  • A clearer understanding of options and choices along the journey

The Israeli entrepreneur’s undoing is being results-oriented

Israeli entrepreneurs are some of the best in the world. There have been so many startup success stories made-in-Israel that it has enhanced Israel’s national pride.

If you would put the Israeli entrepreneur’s DNA under a microscope you would find a results-orientated chromosome rather than a process-oriented chromosome. Don’t believe me? Try managing Israeli’s and then lets talk. Israelis thrive under high-pressure deadlines, not under what they consider to be bureaucratic processes.

Israelis are amazing at coming up with effective ad-hoc solutions to problems.
Israelis are not built for systematic process-oriented tasks.

So why is Lean Canvas a disaster for Israelis?

The Lean Canvas process is well… a process. When an Israeli sees the Lean Canvas, he doesn’t connect to the process; instead, he tries to complete the page as quickly as possible.

The goal of the Lean Canvas process is to create depth and understanding; it’s not a race to fill out a page.

Being results-oriented and not process-oriented is what makes Israeli’s suck at Lean Canvas.

What should Israeli entrepreneurs do?

One thing:

Israeli entrepreneurs need to write a 25+ page quality business plan.


This will force a lean-canvas-like process by focusing on the result and ignoring the process.

A by-product of the long-form document will be the strategic depth that makes one investable.

The Two Worst Business Plan Mistakes and How to Fix Them

The common thinking today (so I am told) is that startups don’t need a business plan. That is misleading. While the formats (and attention spans) may have changed from long to short, chances are the first interaction with any investor will involve emailing some variation of your business plan.

Weeding out bad business plans is the investor’s first line of defense for weeding out bad businesses. Continue reading “The Two Worst Business Plan Mistakes and How to Fix Them”

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