We all know that having information and insights can allow you to make better business decisions. It can help you close deals, avoid time-wasting activities, and accelerate your business. I've noticed a particular information asymmetry in startups around what startup founders know about investors and what investors know about startups.

In the startup world, advisors, books, and blogs teach you to treat fundraising as a semi-confidential process. Like dating or job searching, you don't always want everyone to know that you are searching for a match. If you're job searching and every company you applied to had full knowledge that many other companies had seen your application, they might be less likely to hire you. Why have other companies passed on investing in you? Do they know something is wrong with you? Et cetera.

Similarly, with startups, if you are fundraising, but everyone knows that everyone has seen your deal and passed, then they will pass, too. The reality is, website marketing notwithstanding, most investors don't decide to invest all on their own; they are followers.

It's in the startup's best interests to manage its fundraising process, speak to as few investors as possible, and get a deal done while the deal is hot. Therefore, startups can't talk to a ton of funds and find out which might be the right fit because exposing their deal to a bunch of investors produces negative impacts.
For the investors, though, they love to share their deals. They talk to each other about who pitched them. They share slide decks as if they are nothing. Deal sharing can be useful, if a lead brings others in, but often means that many investors know about a startup, while an individual startup knows about fewer investors.

Since startups are, by nature, private companies, there is minimal information on startup metrics. (The "fake it 'til you make it" culture also implies that somebody may have exaggerated those same metrics.) Weak metrics and private companies lead to a massive asymmetry of information between startups and their investors.
Investors: a) talk to each other, b) see lots of deals, c) have a portfolio of companies.

Startups founders: a) have one company, b) tend to exaggerate, c) don't get 100% truth from their fellow founders.

If there were clear funding metrics (e.g., $1MM annual run rate = $X in funding), there would be some way around this, but even those guidelines you read on twitter are generally not accurate. (If you know the right people, are super cool, etc. they don't apply to you.)

Assessing startup progress and whether you are ready to or even fundraise further is a big challenge due to this lack of clear information. What shows market traction? At what stage should you have hit certain milestones? The answer is not clear.

With more than 700 venture funds out there, it seems that, if there were a straightforward matching tool, you could rapidly find a fund that is interested in your business and move forward. However, there isn't, and using a tool like that would be counterproductive to venture firms that sell their services to their limited partners, including "proprietary deal flow." (They see deals before anyone else sees them.)

I've struggled with this post for months because it feels whiny. It's not clear to me that there is a real solution, so perhaps, merely a complaint that I don't have more insight on the other side of things and what would make our investment opportunity more appealing.

The answer to this asymmetry may be to ignore it. Most markets are not winner-take-all. As a result, it doesn't matter if a different credit card startups have hundreds of thousands of waitlist members (are they even real?)? What matters is, are we showing consistent progress and that consumers love to use our product? If we can do that, we can focus on the information we know accurately and work with investors who understand and are excited about our opportunity.