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I still clearly remember being taught the waterfall product development process in my software engineering undergrad class as the ‘proper’ way to develop software. It’s amazing how in just a few years the waterfall process has become passé in the software community, especially at startups.

A/B testing, hypothesis validation, and build-measure-learn have taken the place of rigid phases of design, implementation, and verification.

Amazingly, though, most entrepreneurs still follow the “waterfall model” when it comes to raising venture financing. A typical process has the following steps: realize that the company needs money → put together a deck → send deck to many VCs → set up bunch of meetings → hope to close the round quickly.

This is just as risky as working on a product for a year before launching and hoping that your customers love it. They may, if you get lucky. But smart entrepreneurs don’t rely on luck and instead focus on learning and iterating to get to product-market fit as efficiently and quickly as possible. So why not apply the same approach to find “pitch-VC” fit?

Below are 5 of Eric Ries’ lean startup principles you can apply to the fundraising process to increase your odds of success:

1. Build-measure-learn. Your pitch is your product and potential investors your market. Most entrepreneurs view the fundraising process as a sequential set of steps. If you really follow the iterative mindset, then your deck should look (even if slightly) better after each pitch. But I bet you most entrepreneurs use the exact same deck throughout the process!

In fact, I would recommend entrepreneurs start the fundraising process months before they actually want to fundraise, put together an “MVP-deck,” and seek feedback from mentors and advisors that are also investors. The point here is that you have to look at the entire fundraising process as a build-measure-learn loop, where you are constantly looking for feedback to improve your pitch. And if that’s the case, you’ll want to think about how you sequence your pitch meetings as well.

2. Value hypothesis. Value hypothesis tests the likelihood of customers to continue using your product, i.e. they will continue using the product only if it delivers value. An easy way for you to tell if the investor finds “value” is by the amount of time they are spending on diligence. Investors can only work on a few deals at any point of time, so if you are not towards the top of the stack, chances are they are not going to invest.

If they are not asking for follow up materials, spending more time with you or doing reference calls, I would not hold your breath for this investor.

Some investors have FOMO and will keep deals on the back burner in case the deal gets hot, but you don’t want that kind of investor for various reasons (e.g. they are probably not investing based on conviction). VC excitement for a deal has a half-life of a few days from your first meeting. If you haven’t heard back from the investor, it’s less likely that they are running diligence and more likely that they are not interested. Ask yourself: If you are not getting past the first meeting, is it your pitch, or are you pitching the wrong VCs? Answer this question early to save yourself a lot of time and agony.

3. Theory of small batches. Most entrepreneurs will block off a few weeks for fundraising and set up back-to-back meetings with investors. I think this is very dangerous because it gives you little opportunity to identify fundamental issues in the way you are positioning your story and to make any meaningful changes. By the time you realize there is a problem, you have already used all your bullets. Instead, I recommend you segment your hit list into small batches, starting off with investors you feel would provide the most constructive feedback.

4. Validated learning. Ries advises that startups run experiments to test parts of their product so they can scientifically figure out what’s working and what’s not. Given the relatively small number of investors you will pitch, it’s hard to run experiments in the true sense. That being said, it’s important for entrepreneurs to understand the various dials and knobs in their pitch, test different versions, and figure out what’s working best. A learning mindset is key.

For instance, does your pitch go better if you start with a demo? Or should you open with the team slide? Does it help/hurt to have all cofounders in the meeting? Maybe most investors think that the market opportunity is small, so you proactively address the elephant in the room. Are there any patterns from pitches that go well versus the ones that don’t? Reflect and learn from each pitch. And I’d recommend leaving 5-10 minutes at the end of the pitch to ask for feedback — what the investor liked the most and what he/she is most concerned about. This will give you fodder for future iterations.

5. Cohort analysis. In addition to catching issues early, segmenting your pitch meetings into small batches/cohorts will help you analyze and understand how changes you make to your pitch actually impact your success. It is important to attach changes you are making to the pitch to a cohort of pitch meetings so you can accurately attribute the net effect. Just making changes on the fly has too much room for error.

The crux of the lean startup model is to reduce waste by not working on the wrong thing for too long. It saddens me when I see entrepreneurs go through 20 VC pitches and then realize that there was some fundamental issue with their pitch they should have addressed a long time ago.

At least with product development, if you screw up your first launch, you can always change the branding and go after a different set of users. Or just call it a beta. But with VCs it is very hard to go back for a second shot in the same round once you have received a no. It is almost impossible to change the investor’s mind once he/she is negatively biased.

It’s time we stop wasting precious time and resources on pitch meetings that could’ve been a lot more productive for everyone involved, especially the entrepreneur. Lean methodology applied to product development is inarguably superior to the waterfall model. I am confident we will see the same outcome when we apply the lean methodology to fundraising. All the best!

Gaurav Jain is a Principal at Founder Collective, one of the most active seed funds in the country. Follow him @gjain.

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