Nearly lost a term sheet: the $1B founder reveals what VCs actually want from startups

Sasha Orloff, founder and CEO of Puzzle and a Startup Battlefield alum, has built companies that collectively raised over $1 billion. In the latest episode of Build Mode, hosted by Isabelle Johannessen, he shared hard-earned lessons about what venture capitalists truly look for during fundraising — and the answer may surprise founders who chase perfection.

According to Orloff, investors don't expect a startup to be flawless. What they do expect is that the founder has a solid grasp of the company's financial reality. Messy data, misunderstood metrics, or waiting until the startup is nearly out of cash before starting to raise can cost founders leverage, valuation, and even a term sheet.

Orloff broke down the key financial metrics every founder should know by heart before pitching VCs. These include revenue growth and the quality of that revenue, runway, margins, sales efficiency, and profitability. He emphasized that investor expectations shift as a startup matures: what works at pre-seed and seed stages is different from what matters at Series A, B, and beyond.

The founder also shared a personal story about how he nearly lost a term sheet because his data room wasn't ready. He stressed that getting a startup's financial house in order is not just about avoiding mistakes — it's about building confidence and leverage. When founders understand their numbers, they can raise with more conviction and negotiate from a stronger position.

Orloff's advice is clear: don't wait until you're running out of cash to start fundraising. The earlier you prepare your financial data and understand your metrics, the more control you have over the process. VCs are not looking for a perfect business — they are looking for a founder who truly understands the business they are building.