When fundraising, you’re selling stock, not your business. This difference creates incentives that most founders don’t fully grasp.

Your valuation bears little resemblance to business performance. It’s the cost of market opportunity. After pre-seed, your stock becomes a private market instrument where you and your early investors package stories for growth investors in subsequent rounds. The tale your backers weave matters infinitely more than underlying reality—artificial benchmarks invented by VCs determine whether the story continues.

Most investors never truly comprehend what your business does. They see productivity metrics and believe money will follow. The narrative doesn’t need truth, just conviction and coherence. This gap becomes stark when companies go public and face traders shorting, longing, and creating derivatives around your stock price.

Private market stories rarely survive public scrutiny. Companies routinely trade below their final private valuations once exposed to real market forces. Private markets reward compelling narratives; public markets punish businesses without substance.

Some venture firms understand this divergence. Founders Fund and Greenoaks evaluate fundamentals over fashionable stories. Y Combinator backs teams over metrics. These outliers consistently outperform because they recognize the difference between narrative and value creation.

The most successful founders navigate both worlds simultaneously. They craft stories that unlock capital while building businesses with genuine unit economics. They hit the benchmarks that keep narratives alive while creating foundations that withstand public market reality.

The pitch itself reveals this duality. Great founders don’t present themselves as scrappy indie hackers—they present as the public company they’ll become. They paint a picture of their place in the S&P 500 in ten years, articulating how they’ll command market leadership in a massive category. VCs aren’t investing in your current state; they’re buying shares of your future public entity.