How to Approach Seed-Stage Fundraising with Eric Paley of Founder Collective

Founders, what’s the best way to make a positive impression on potential investors at the early stages of company growth? 

There are many ways to answer this question, but often the best advice comes from those who have been through the company-building journey themselves or from venture capital investors actively seeking high-potential companies. 

To gain insights from both perspectives, I spoke with Eric Paley, one of the managing partners at Founder Collective, a seed-stage venture capital fund. Paley is not only a seasoned entrepreneur but also an investor with a keen eye for promising startups. He founded Brontes Technologies, which was acquired for 3M in 2006. 

Founder Collective’s investment philosophy centers around the belief that early-stage companies benefit most from investors who are deeply involved and aligned with their long-term vision. Given Paley’s passion for fostering a collaborative and supportive environment for entrepreneurs, he is well-positioned to offer valuable seed fundraising advice. 

I got the chance to sit down with Eric Paley for a short discussion to find out what he looks for in a prospective founder, and how companies can navigate the seed fundraising landscape. 

Advice from a VC: 3 tips for the seed fundraising process 

If you’re a founder running a venture-scale startup, you’re likely building relationships with VCs, angels, and corporates. As a business partner manager at Fidelity Private Shares, my goal is to help support the startup ecosystem and help founders identify and connect with the right investors. Conversations with people like Paley are a great start to creating a more open, welcoming startup community. 

Here are some highlights from my conversation with Paley: 

Don’t run from your biggest business hurdles. Embrace them. 

At the seed stage, investors can’t always rely on robust metrics to evaluate companies. That’s why VCs like Paley often focus on the founder: their character, attributes, and past experiences. 

Paley prefers early investment conversations to go beyond the superficial. He values hearing success stories, but he’s equally interested in the challenges that have shaped the company’s early days.  

“We’re really trying to have a conversation where the founder is pretty vulnerable in terms of talking about the journey they’ve been on, why they believe so deeply [in their vision], and what they’ve been doing to validate that with their customer,” Paley said. 

Rather than shying away from obstacles, Paley and the Founder Collective appreciate founders who embrace these hurdles. 

“We say that the greatest founders want to talk about the hardest parts,” Paley said. 

“The idea is an exceptionally substantive founder – which is what we’re looking for – is going to be unbelievably deep on their own business. They’re going to be diving really deep into the hardest parts of building that business.” 

Raising capital requires patience. Use this to your advantage. 

The seed fundraising landscape – and the whole VC ecosystem – is still being recalibrated from the unsustainable peaks of 2021 and 2022. During those years, many private companies raised money with relative ease, often at valuations they couldn’t always live up to. 

“People were raising capital before they had even done the work to go really deep and be extremely committed to their business,” Paley said.  

The current investment climate has been less friendly to founders looking to raise funds. However, Paley sees this as a potential positive. 

A slower pace for seed fundraising allows founders more time to dive deep into their company. There’s more opportunity to identify challenges and strategize on how to overcome them. Companies might even decide to pivot their strategies or products during this crucial exploratory phase, which could prove valuable in the long run. 

“You might even radically change what you’re doing, and that’s totally fine,” Paley said. 

“It’s much, much harder to make a huge change after you’ve raised capital because people want you to go-go-go,” he said. 

Take this opportunity to understand your customers, their pain points, and how your offering can provide value in that context. 

Uncertain fundraising climates often breed more efficient companies 

Capital efficiency is a common topic in my conversations with investors and entrepreneurs. The uncertain fundraising climate is forcing company leaders to focus on growing strategically. 

Paley suggests founders need to “build the muscle” required to scale their company over the long haul.  

“People have gotten away from this idea that it’s all about raising money – the game of raising money round after round…and instead have gotten much more focused on efficient entrepreneurship,” Paley said. 

Securing capital isn’t as easy as it once was. This means that the companies that survive – and thrive – will be those that put emphasis on pragmatic, strategic growth. 

“I think we’re going to build better businesses because people are more focused on how to efficiently build them and how to build that muscle early,” Paley said. 

Fidelity Private Shares: Here with you from seed fundraising to IPO and beyond. 

Once you dazzle an investor with your pragmatic approach and emphasis on capital efficiency, it’s time to seize the opportunity.  

The Fidelity Private Shares equity management platform helps founders stay fundraise-ready. Our platform allows founders and operators to secure documents in an automated data room, dynamically maintain their cap tables, and handle all their startup equity management operations and financings in a single collaborative hub. 

But we offer more than just a software platform. The Fidelity Private Shares startup community helps connect and support the next generation of startup builders, operators, and investors. You’ll gain access to founder workshops, office hours with live Q&A, investor and founder mixers, and more! 

We’re eager to support your journey from seed fundraising to IPO and beyond – join our community on LinkedIn and schedule a demo to learn more about our equity management platform. 

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