The case for hiring an outside banker — even when you have a great cap table

The pushback we hear most often is some version of 'I know my investors, they know me, why do I need a banker'. It is a fair question. For some founders, the answer is they do not. For many, the answer is more textured than that.

Take access first. Founders with strong networks usually have warm relationships with 5-15 investors. A banker working an active mandate runs outreach to 80-150 investors per round, segments them by fit, and surfaces the 10-20 that are actually in market for your stage and sector right now. The first number is your circle. The second is the addressable universe. Different things.

Now take leverage. When you negotiate directly with one or two investors you have known for years, the conversation is constrained by the relationship. You will accept a slightly worse term sheet from the friendly investor than from a stranger because relationship maintenance has its own cost. A banker doing the same negotiation has no relationship to maintain — and can push harder on price, on preferences, on board composition, without it affecting the founder's relationship with the investor afterward. The investor pushes back at the banker, not the founder.

Now take time. Running a real fundraise is roughly a four-month full-time job. Model, deck, IM, outreach, intro coordination, diligence Q&A, term sheet conversations, SHA negotiation. A founder running this themselves spends three months on it and is barely running the company during that period. Customer churn, ops issues, key hires — all suffer. The investors notice. The numbers reflect it. By the time the round closes, the company is in a weaker position than when the process started.

A banker absorbs the operational load. The founder still pitches — investors want to meet the founder — but the rest of the work happens in the background. The company keeps running. Customer cohorts hold. The team isn't distracted by a process they cannot see. The numbers on the round-end snapshot are the numbers from a healthy company, not from a company that spent the last quarter raising.

Three categories of founder should NOT hire a banker. Founders raising under $3M from existing investors — economics of a process don't work. Founders running a strategic, non-cash deal where the buyer is well-defined and the conversation is already structured. Founders who actively want to run the operational side of the fundraise themselves and have the bandwidth to do it well.

The categories of founder who should: anyone raising primary or secondary above $5M; anyone selling the business; anyone whose round needs to be structured creatively (carve-outs, secondary, structured equity); anyone running a process with more than three or four interested parties.

What we tell founders in the first scoping call is this: a banker is a $X cost, structured as retainer plus success fee. The question is whether the value we add — a wider investor map, a tighter term sheet, an unblocked founder for four months, a partner-supported diligence process — exceeds $X. For most founders raising above $5M, yes. For some, no. We tell people which group they are in honestly. No mandate is also a real answer.