Why Founders Struggle With Fundraising (and It’s Not What They Think)

Most founders believe fundraising is about storytelling, networking, or finding the right investor at the right time.

In reality, fundraising can also break down when founders aren’t financially prepared to explain their own business.

Over the years, I’ve seen the same patterns repeat — smart, capable founders making decisions that quietly hurt their credibility with investors. Not because they lack vision or ambition, but because they lack financial clarity.

Here are four of the most common mistakes — and what investors are actually looking for instead.

1. Founders Confuse Financial Terms — and Lose Trust Without Realizing It

Founders lose credibility — and investor attention — the moment they misuse financial terms like income vs. cash flow, or pre- vs. post-money valuation.

It usually sounds harmless.

“We’re profitable.”
(They mean revenue exceeded expenses this month — but they’re still burning cash because enterprise customers pay later.)

“Our burn is low.”
(They’re looking at expenses, not how quickly cash is leaving the bank.)

“Our valuation is $10M.”
(They’re not sure whether that’s pre- or post-money.)

None of this is malicious. Most founders were never taught accounting.

To an investor, it’s like a transportation startup mixing up miles and kilometers. Nobody corrects you. They just stop taking notes.

I’ve seen it happen on calls. The investor nods, but I can feel the room go quiet. Not because the founder said something wrong — but because they revealed they don’t fully understand their own numbers.

And that’s the key point:

Your business speaks to you through numbers. 

Financial statements. Cash flow. Retention. Churn. 

There is no other language.

If you can’t interpret that language, you miss critical signals about what’s actually happening in your company.

Accounting isn’t about compliance and reporting.
It’s about you taking control of your company’s future.

2. “We’re Too Early for Numbers” Is the Wrong Mental Model

I often hear founders say:

“We’re very early.”
“We don’t have revenue yet.”
“So why do we need financials?”

Here’s the part that surprises them:

Investors don’t believe your numbers anyway.

And that’s okay.

Early-stage investors are not looking for precision. They’re looking for how you think.

A financial model at the early stage is not a prediction tool. It’s a reasoning tool.

It shows:

• your execution roadmap
  
  
• your logic and assumptions
  
  
• your ability to translate vision into measurable goals
  
  
• your understanding of what it actually costs to build the business you’re describing
  
  

The model isn’t there to say, “Here’s exactly what will happen.”

It’s there to say, “This is how I think about building a business.”

That’s what creates confidence.

3. Founders Overshare Expenses — and Undershare Strategy

Another common mistake shows up on “Use of Funds” slides.

I often see pages filled with line items:

Developers — $700k

Website redesign — $300k
Virtual assistant — $1k/month
Bookkeeper — $4.5k

Miscellaneous – $15K

The slide runs out of space before it ever explains the point.

Here’s the uncomfortable truth:
Investors don’t care about Bookkeeper Mary.

(Sorry, Mary.)

They’re not funding expenses.
They’re funding outcomes.

A much stronger framing looks like this:

Use of funds – $1M

• Product development – 40%
  
  
• Sales & marketing – 30%
  
  
• Operations – 30%
  
  

Goal of the raise

• Reach $1M in ARR
  
  
• Acquire 300 customers
  
  
• Launch v2 of the core product
  
  

Now the story is clear.

I understand where the money goes.
I understand why it’s being raised.
And I understand what success looks like.

Details matter later. Strategy comes first.

4. Valuation Discounts Aren’t Strategy — They’re Math

A founder recently told me:

“I want to offer our strategic partner a 30% valuation discount so we can get the deal done.”

I asked a simple follow-up:

“How did you calculate the discount?”

He paused.

“I actually don’t know how much the company is worth.
Thirty percent just sounded like a reasonable deal.”

This is not about founders “giving away” value.

It’s about founders not knowing how valuation works.

Valuation is not a number you pick.
Discounts are not gestures of goodwill.

Both should be grounded in a financial forecast.

Without a model, you can’t:

• explain what your company is worth
  
  
• quantify what a strategic partner actually adds
  
  
• justify what discount (if any) makes sense
  
  

A strong financial model brings everyone onto the same page.

It makes assumptions explicit.
It shows how value is created.
And it turns negotiations from opinion into logic.

That’s how fair deals get done — for founders and investors.

The Throughline: Financial Storytelling

All of these mistakes share the same root cause.

Founders think finance is about spreadsheets and precision.
Investors experience it as storytelling with accountability.

When your numbers align with your strategy, your execution plan, and your decisions, fundraising becomes clearer — and fairer — for everyone involved.

If you want your pitch to stand out, start with financial storytelling.

Victoria Yampolsky is a serial entrepreneur, strategic CFO, startup advisor, and expert in financial modeling and valuation. She’s a passionate advocate for female founders and fair access to capital for all. 

As the President and Founder of The Startup Station, a strategic CFO advisory firm and financial education platform for startups and small businesses, she has collaborated with over 150 founders across 15 industries, assisting them in raising more than $50M in venture capital funding.

Victoria has taught finance to over 20,000 entrepreneurs worldwide through The Startup Station’s courses on accounting, financial modeling, valuation, and startup finance, as well as through The Startup Station’s meetups, 15+ accelerators, and the Bank of America Institute of Women’s Entrepreneurship at Cornell. With veteran investor Jeanne M. Sullivan, she is now running the Fundraising Bootcamp for revenue-generating/MVP market-ready startups.

In 2023, Victoria represented New York State on the NSBA Leadership Council, advocating for fair access to capital for women. She is currently working to pass NY State Bill A09786 to promote diversity in venture capital.

Before venturing into entrepreneurship, Victoria spent nearly a decade on Wall Street in Deutsche Bank Research and IT Consulting at CapGemini. 

Victoria holds a Bachelor’s degree, cum laude, in Computer Science with a minor in Mathematics from Cornell University, and an MBA, with honors, from Columbia Business School.