Paul Graham: How To Make Investors Want You
With the right funding, you can stop worrying about running out of cash and focus on building.
You can offer competitive salaries and equity and build a strong company vision to attract the best people.
You get more PR opportunities, leading to organic inbound interest from potential customers and hires.
In short, a lot of good stuff happens. However, many founders are not able to do that.
The Common Problem
They contact investors but don’t get a response, or worse, they get rejected.
No momentum, no interest, and no term sheets.
They get conversations, but no one wants to be the first to commit, and without a lead, others hesitate.
Some get offers, but at terms that strip your ownership and control.
The good thing is that this has happened with most of the companies.
“Airbnb is a big example.”
VCs rejected them countless times, and many told them, “Their idea would never work.”
Today, they are a $100B startup.
But they still might be struggling if they didn’t get help from the YC founder.
“Paul Graham”
He has helped startups raise billions in funding, and he says the real challenge of fundraising isn’t convincing investors that your company is valuable but creating the perception that everyone else thinks so, too.
“I’ve observed a critical truth about investor psychology that most founders miss: Investors are heavily influenced by what other investors think.
The Momentum Paradox
This creates what Graham calls a “chicken and egg problem.” As he puts it:
“It’s hard to get meetings with investors. It’s even harder to get them to commit… And what investors like best is to invest in deals that are starting to ‘happen’— deals that other investors are already taking seriously.”
But this dynamic can work powerfully in your favor once you understand how to leverage it.
Don’t get defensive when an investor asks, “Who else is investing?”. Instead, prepare a concise answer about other investors engaged in your process.
Even if they haven’t committed yet, try:
We’re in advanced discussions with [Angel X] and [VC Y], who have both followed up for a second meeting.”
This signals momentum without misrepresenting your position.
5 Graham’s Tactical Advice
(For creating and sustaining fundraising momentum):
As a founder, your goal shouldn’t be to convince investors to choose you, it’s to make them want you so much that you get to choose them.
1. Start with Angels for Initial Momentum
Graham has consistently observed that angels make faster decisions:
“Angel investors and VCs are different types of investors. They operate on different time scales. Angels can usually decide in a week whether to invest… VCs usually take several weeks.”
Starting with angels allows you to build momentum and social proof before approaching VCs.
Actionable Takeaway:
Identify 10-15 angel investors with relevant industry expertise or connections to your target VCs.
Approach them with a condensed pitch and clear ask:
“We’re raising $X with the first $Y from angels before approaching institutional investors.
“We’d love to have you involved at the early stage.” When approaching VCs, you can name the specific angels who have committed, creating immediate credibility and social proof.”
2. Sequence Your Investor Meetings Strategically
Graham advises against the common approach of targeting your most desired investors first. Instead:
“Talk to investors in parallel rather than serially. You can’t afford the time it would take to talk to investors one at a time. You have to be talking to multiple investors, at multiple stages in the process.”
His recommendation:
“Don’t start with the investors you most want to get… Start with the ones that will be most likely to give you good advice, because that’s how you’ll improve your fundraising pitch.”
Actionable Takeaway:
Create a tiered list of target investors before beginning fundraising.
Schedule your “practice” investor meetings first, followed by your “target” investors, saving your “dream” investors for last when your pitch is sharpest.
3. Use the “If X, Would You?” Technique
When an investor seems interested but isn’t ready to commit, Graham suggests asking:
“If [prestigious investor] were to invest, would you be interested in investing too?”
This technique gets you a soft commitment that you can leverage to create actual obligations.
Graham notes:
“One of the most useful things you can do is get some initial commitments. It’s usually fairly easy to convince investors to do this…
Then when you get an actual commitment from an investor, you can tell the other investors who said they’d invest if other investors did. But only if they’d specifically mentioned the investor who committed.”
Actionable Takeaway:
At the end of promising investor meetings, ask this exact script: “If we get commitment from [name specific, respected investor they’d recognize], would you be interested in participating in the round?”
Document their response.
When you get a commitment, immediately email the conditional investors: “As discussed in our meeting, I wanted to let you know that [Investor X] has now committed to our round.
You mentioned this would be meaningful to you—are you ready to move forward, too?”
4. Be Clear & Make Everything Easy To Understand
Graham has consistently emphasized that investors need to understand your business quickly:
“Explain what you’re doing as if you were explaining it to a busy colleague who you ran into in the hall.”
He’s noted that YC founders who can explain their business in one clear sentence have consistently better outcomes in investor meetings.
Actionable Takeaway:
Practice explaining your startup in plain language until non-experts can understand and repeat it accurately. Remove all jargon and complexity.
5. Treat Rejections as Data Points, Not Judgments
Perhaps Graham’s most encouraging insight is about the nature of rejection:
“Investors are not a homogeneous group. Different investors are looking for different things. The best way to deal with rejection is to forge ahead with your startup and prove the skeptics wrong.”
He often recounts how Airbnb, now worth over $100 billion, was rejected by numerous investors who couldn’t see the potential in the “air mattress” concept.
Actionable Takeaway:
Treat investor rejections as data points, not definitive judgments. Focus on finding the right investors who understand your vision rather than convincing skeptics.
Understanding investor psychology and creating momentum isn’t about manipulation, it’s about working within the reality of how investment decisions actually happen.
Finding the right investors for your vision is hard, but what would attract them naturally?
Consistently sharing your unique perspective about your industry.
The investors you actually want are looking for founders who think differently.
What’s more powerful than letting them discover your thinking before you even pitch?
