When you are raising money, never need a yes and never, ever be surprised by a no

At First Round we get to meet lots of founders who are looking for seed capital and we get to work with lots of founders in our Community as they go out and raise follow-on rounds. During the fund raising process, at any stage, there is nothing scarier to me than a founder with happy ears.

I know being told no sucks, but being told no when you were sure that the next step was a yes can be deadly — negative surprises in the fundraising process are hard to recover from.

People who work in the start-up industry have to be over the top optimistic and always lean toward the positive possibility rather than the negative probability. You are a founder. You believe and you must make plans and act on this optimism or you never get anywhere.

EXCEPT WHEN FUNDRAISING.

Of the 1 million and one problems a founder faces, some have dependencies and some do not. If there are no external dependencies, taking the optimistic approach is the only way to go. However, if there are external dependencies largely out of your control, like getting a VC to a yes, you are best served by being pessimistic. This is not natural for people used to changing the world against all odds, it can be painful, but it is the best approach.

Until the term sheet is signed, assume the financing is not going to happen and make sure you have other options for survival with fewer dependencies — other sources of capital at similar points in the decision making process, ways to reduce your burn and extend your runway, levers to pull to increase revenue etc.

Time is your most valuable resource. Don’t waste it with happy ears and cheerleading when you should be focused on maintaining your options, keeping your back off the wall and eliminating dependencies.

Work to never need a yes and never, ever be surprised by a no.