💡 I am writing this blog for engineers who can build product, distribute and provide value to customers. This should help them to now take the next step, think business and raise capital to fund their initiatives to build meaningful companies.

Why am I writing this? - because I started as just a developer and I wish someone told me these things about storytelling, pitches, accelerators, negotiations and legal-processes in a quick primer. Would have saved us time and efforts.

So I’ll write this blog as a manual of rules and tools you can use.

5 cardinal rules for this process

1. Know how much you’re raising and for what → set a goal and try to back calculate how many hires in what fields will it take to get there and add up the costs.
   
   

2. Set a deadline to how much time you will give to raising this money. Will focus your effort
   
   

3. Storytelling should be simple and played in favor of what you’re good at. For us it was “execution” intensity. No one cares about revenue, just the founders and their ability to build + sell. You don’t need make a deck, a 1 pager is good enough - https://riverline.notion.site/Recontact-Investment-Memo-1bceedaaab8581ecadccc3a39f3eea51
   
   

4. Optimize for quality of people who’ll come onboard, not for amount of money from random people. More money from people who back you for unclear reasons will only hurt later. Trust your gut about people.
   
   

5. Have the legal-paperwork up and running so well that the moment someone says yes, within 5mins you send them an online document to sign

Helpful tools for your investment conversations

tl:dr; → in this stage, people fund the team, not the idea so find folks who will take a bet on you.

1. Getting Clarity & Preparing Your Memo

Pro‑tip: keep a one‑page “blurb” (≤ 50 words) derived from the memo for WhatsApp/DM outreach. Here’s ours:

“””I'm Ankit and our company, Riverline (http://riverline.ai), provides AI agents to banks, to automate debt collections. Banks are losing $500B annually to bad loans, because their debt-collection teams struggle with manual and costly operations.

Our AI agents automate the entire collection process (right from risk prediction to following-up). We have already made a part of this process - 15x faster and 10x cheaper for over 25k+ loans for our clients.

We're engineers from IIT Madras and CMU - currently, we're raising $xk ($yk committed ✅) to automate more collection workflows with AI. Here's our 1 pager investment memo - https://riverline.notion.site/Recontact-Investment-Memo-1bceedaaab8581ecadccc3a39f3eea51. Would you be interested to have a conversation about participating in this round?”””

2. Angels & the Entity‑Structure Hurdle

1. Ok, but who are angels and how will they give me money?

   • Angels are quite literally “angels” who will look at you and decide to give money, since you barely have traction in this stage.
     
     

   • Go within your professional network, friends‑of‑friends, cold email founders that you admire. 1 of the cheques we got is actually from a person I used to report to as an intern. 2 more are folks my cofounder cold-emailed.
     
     

   • Filter: these folks should give a clear yes/no by the end of the call or within 5  days after. Don’t set hopes too high from folks who’re taking longer.

     
     

2. What am I offering in return?

   • At this stage you are NOT giving anyone direct equity in the company. You issue something called a convertible note
     
     

   • What is a convertible note - it basically means, today you are taking a loan from a person with the promise that when you raise your next round, you will give them equivalent shares for this instead of now. We don’t give shares rightaway because giving someone shares in your company is a filing nightmare that takes time and for small cheques, not worth the effort. So you pick a convertible note as a simple document that you can sign and receive investment money.
     
     

   • What’s in it for investors? - Here’s where you innovate. You offer them something called a “discount” and a “valuation cap”. Here’s a simple explanation for it - via an analogy and a real-world example
     
     

     🧪 Analogy:
     
     

     • Imagine your favorite artist is going to perform in 6 months. Right now, the tickets aren’t available to the public, but you get an exclusive offer:

     • You can buy a ticket now for $80.

     • When tickets officially go on sale later, they’ll be $100.
       
       

     Why would you buy early?

     1. Discount – You get the same ticket but cheaper (20% off).

     2. Cap – Let’s say the artist blows up and ticket prices go to $300. The early access deal says, “Even if that happens, we’ll cap your ticket price at $100.” So you’ll never overpay, no matter how popular the event gets.

     This is how convertible notes work too.
     
     
     

     🧪 Real world Example:

     You’re raising $100K in pre-seed money using a convertible note.

     Let’s say:

     • You offer a 20% discount.

     • You also set a valuation cap of $5M.

     Then, 8 months later, you raise a real seed round at a $10M valuation.

     Without any discount or cap:

     If someone invests $100K at $10M, they’d get 1% of your company.

     But your pre-seed investor gets better terms:

     • Discount: They can buy at 20% off = effectively at an $8M valuation.

     • Cap: BUT, you also promised a max price of $5M. Since $5M is lower than $8M, they get to convert at $5M.

     So they now get $100K / $5M = 2% of your company — double the equity they’d have gotten at the $10M price.

     
     🧠 TL;DR:

     Term	Analogy	Purpose
     Discount	“Early bird gets 20% off”	Reward for investing early
     Cap	“You’ll never pay more than $100 no matter what”	Protection if the company takes off

     
     

     
     Personal Opinion: Usually, in this investment round, founders offer 25-30% “discount” and set a valuation cap anywhere from $4M-$10M - depending on how much traction you have. To set the right number between $4M and $10M - ask 2-3 founder-friends who have raised pre-seed how would they value your company based on traction you have and set a number here.
     
     

3. How shall I set a deadline for this?

   
   

   • Set a 5 week deadline and then all you worry about is ensuring you hit weekly goals of cheques getting closed.

   • Timeline abiding is super important, since wiring the money will get delayed, for valid reasons.

   • With this internal 5‑week close date; tell everyone “we’re closing in 2–3 weeks.”

   • Treat every yes like gold: send the investment doc within 15 minutes of the call ending in a yes (DocuSign / Mercury / Zoho Sign).
     
     

4. How to keep track of so many conversations?

   Be boring, make a spreadsheet - track - Name, how you know this person, how the chat has gone so far, how much money they will give. And after they commit, track whether they’ve signed the docs.
   
   

5. How to ask for money at the end of the call?

   “I had a great conversation with you. Would love for you to come in as an investor We’re capping this SAFE at $10 m and plan to finish the round by Aug 10. Would you like to participating in this round?”

   By the way, if at the end of the conversation you don’t get good vibes from the person, don’t ask for their money.
   
   

6. Ok and how do you do “legal work” and get the money?
   
   

   Simple - reach out to a trusted CA in your network to prepare a doc that you can share via Docusign/ZohoSign/whatever-digital-sign. This document takes 2 days to prepare if you have the terms ready.

   • US C‑Corp → wire immediately after SAFE.

   • Indian Pvt Ltd → work with a good CA to prepare something called a “CCD” (like a SAFE, but not exactly, since India rules apply) sign, then file Valuation & Form PAS‑3 before the wire; pre‑book a trusted CA/lawyer so this step never blocks money.
     
     

7. Quality > Quantity

   Take 30 small cheques if that’s what fills the round, but never sacrifice integrity signals. Reference‑check every stranger; politely decline red‑flag money.

3. Micro VCs & the Physics of FOMO

How to ask money - Say what you want and how quick confidently in front of a VC

eg: “We’ve collected $300 k of the $500 k SAFE from operators at Google & Zerodha. Round closes in 18 days. Our cap is fixed at $10 m. Are you comfortable wiring $100 k on that timeline?”

Hold silence. The tension is the leverage.

Negotiation guard‑rails - what if a VC gives me a counter offer?

• If a micro VC demands “2 % at $8 m post” (effectively repricing the round), buy time:

  “Appreciate the offer; let me review internally and get back tomorrow.”

  Then sanity‑check with mentors before accepting or walking away.

Remember: you’re a steward of the company, not a job applicant.

4. Accelerators: Why YC & SPC Still Matter

Application tips - have written a more detailed blog here

• Re‑use the memo; YC/SPC expect the same ingredients.

• Be honest about holes:

  “We don’t yet know the CAC for SME borrowers—my next 30 days are focused on running paid WhatsApp funnels to learn.”

• Ask for recommendations (your coaching counterpart offered one for SPC).

• Skip low‑leverage accelerators that offer < $50 k for 8 % unless they deliver a network you cannot access otherwise.
  
  

5. Suggested Timeline

6. Closing Mindsets

1. Set deadlines or drag will fill the vacuum. This should not take > 5 weeks.

2. Play to your strengths; never over‑justify.

3. Trust is compounding capital—guard it.

4. Speed wins: 30‑min calls, 15‑min paperwork of signing.

Copy, paste, adapt, and help the next founder you see, who needs help in raising.

Pro tip: There are going to be a lot of adhoc negotiation and communication improvs you will have to do. So do this entire 5 week activity while chatting with your founder friends who have already raised a pre-seed, actively about the deals you have, so you can strike them better.

7. Acknowledgements

Massive thanks to:

• Abhishek and Jayanth, my cofounders, without whom none of this would be possible. Shoutout to Jayanth for motivating me to write this guide.

• All our investors who backed us in our early days as we fumbled around getting so many of the above things right, since we were still figuring out our playbook.

• Mentors who coached me in this and connected us to more investors - Akash Anand, Pranjal Mehta, Sudarshan Kamath, Kedar Kulkarni, Swaroop Kolluri