Playing the VC game: A founder’s guide

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Decoding the VC Game: A Founder’s Guide to Fundraising

At Web Summit Vancouver 2025, Founder Mike Sigal shared insights into the venture capital game, offering founders a playbook for successful fundraising. Mr. Sigal, an eight-time founder and former VC, emphasized understanding the VC perspective as crucial for securing funding.

He highlighted that a VC’s primary goal isn’t solely supporting entrepreneurs, but generating substantial returns for their investors (LPs). This involves adhering to a specific investment thesis, a contract with LPs outlining investment stages, sectors, geographies, and differentiation strategies. Founders must align with this thesis to be considered.

VCs play three key games: the LP game, the portfolio game, and the market timing game. The LP game involves demonstrating traction to LPs through realized returns, markups from subsequent funding rounds, or valuable market insights. The portfolio game centers on securing “dragons,” companies that yield significant returns, often exceeding the entire fund investment. This explains why VCs may deem some deals too small, as early-stage investments must generate substantial returns within a limited timeframe.

Finally, the market timing game considers a fund’s lifespan, market momentum, and the availability of follow-on funding. Mr. Sigal noted the impact of market trends, like the surge in e-commerce during the COVID-19 pandemic, and the influence of factors like IPO activity and interest rates on funding availability. He emphasized the importance of conveying a sense of urgency and demonstrating why a company is essential in the current market.

Ultimately, VCs invest in startups that contribute to their career success. Founders must understand this dynamic and demonstrate how their venture aligns with the VC’s goals, addressing their need for returns, portfolio diversification, and market timing.