Building the Company
100 Insider Rules for Beating the Odds
Short, blunt rules from a veteran venture investor and a startup CFO on choosing, raising and managing capital without wrecking the company.
The big idea
Komisar and Reigersman organize a hundred brief rules around the life of a venture-backed company: fundamentals, choosing investors, raising, working with a board, and getting to liquidity. The thread running through them is that capital strategy is an ongoing discipline, not a one-time event. Raising the wrong kind of money, from the wrong people, on the wrong terms is among the most expensive mistakes a founder can make, and most of those mistakes are avoidable with some advance thinking.
Key takeaways
Venture money suits only a small fraction of businesses: those with a very large market, a credible path to outsized returns, and a real advantage from growing fast. Taking it commits you to aggressive growth. A profitable business growing steadily may be excellent and still a poor venture investment. Customer revenue, debt or patient capital can be far cheaper than equity for those companies.
Each dollar raised costs equity now and raises expectations later, because every round sets a higher bar for the next. Raise enough to reach the next milestone that meaningfully changes your value, plus a buffer for things taking longer than planned. Overraising at a high price is a common path to a later down round.
A term sheet has two kinds of terms: economics, which decide who gets paid what, and control, which decide who makes decisions. A higher headline price with heavier terms can leave founders with less at a realistic exit than a lower price with clean terms. Read the whole document and model outcomes before celebrating the number.
You can replace an employee far more easily than an investor. Diligence the individual partner who will join your board: how many boards they already sit on, how far into the fund's life they are investing, and how they behaved when a company struggled. Talk to founders they backed, including at least one whose company failed.
Growth multiplies whatever economics you already have, good or bad. Before spending heavily on acquisition, know your customer acquisition cost, payback period and contribution margin. Scaling a business that loses money on each sale only increases the losses, and investors who see that pattern will discount the growth. Fix pricing, cost to serve or channel efficiency first, then spend.
Fundraising works best as a focused sales process: a qualified list, conversations in parallel, a short window, and a clear close. Start while you still have meaningful runway, because investors notice urgency and price it in. Between rounds, keep a few investor relationships warm so the next raise doesn't start cold.
A small board works better than a large one, and an independent director added early can help balance founder and investor views. Send materials well ahead, deliver bad news before the meeting rather than in it, and use meeting time for decisions rather than status reports.
The framework
Decide whether venture capital fits and get unit economics right first.
Pick individual partners whose fund, incentives and temperament match your plan.
Run a focused, parallel process and raise only what the next milestone needs.
Keep it small, prepared and free of surprises.
Plan exits early; durable companies have more options.
Apply it this week
Read next
An investor's-eye view of how venture funds work, so you can read a term sheet and pick partners with open eyes.
Five business models that let customers' payments fund your company, so you can grow before or without outside investors.
A practical guide to building, running, and evolving a startup board so it helps the company instead of just supervising it.
This page is an original summary and commentary prepared by XRAYCLOUD.AI with AI assistance. It is not affiliated with or endorsed by the author or publisher, and it is no substitute for the book — read it for the full argument.