As 2010 proved, the world of startups was about to change dramatically. The “Lean Startup” methodology took hold, tech behemoths formed from the ashes of the Great Recession, and platforms that became iconic like Instagram and Pinterest emerged. Venture capital firm A16Z recently and somewhat immodestly marked its first anniversary. All the while, Uber celebrated a significant victory with its first ride request, ushering in a new age of innovation. As the terrain changed, certain fundraising strategies rose to the surface. Yet, the fundamental dynamics of founder-investor relationships have been incredibly stable, despite this rapidly changing landscape.

The Rise of the Lean Startup and a Changing Landscape

In 2010 Eric Ries popularized the “Lean Startup” movement which focused on rapid prototyping, early user feedback, and working in short iterations. This approach was totally at odds with the big, slow corporate norm, focusing on nimbleness and the customer rather than ego. This was during a period of just emerging from the Great Recession of 2008. FANG companies like Facebook, Google, and Amazon made it known how candy-coated and insulated the tech industry was against hard times.

Yet Instagram and Pinterest came onto the picture as hot new ventures. In the process, Uber made its first moves, using the power of disruptive innovation to play offense. The Lean Startup approach encouraged founders to prioritize product development, focusing on creating a product that resonated with users before scaling distribution or sales efforts. Venture Hacks, through its inimitable blog, helped take this product first philosophy mainstream, engraining it deep into the startup zeitgeist.

Fundraising Advice from a Bygone Era

That was 2010, and the fundraising landscape looks very different from the world we’re in now. Back then, pre-seed rounds were unheard of. Seed rounds began to pick up momentum, but Series A remained the most common funding stage. Back then, one of the investors’ main points was the importance of understanding startup valuation. They underscored the importance of anticipating risks in advance of beginning a fundraising campaign.

One of the biggest takeaways was an emphasis on setting fundraising goals that were tied to concrete, clearly defined milestones. Investors recommended that startups either secure enough capital to reach predetermined milestones or carefully match their spending to available cash. This philosophy was intended to promote long-term economic development without exhausting resources or using up assets before they actually start generating wealth. As many early-stage investors can attest, the invention of the Simple Agreement for Future Equity (SAFE) in 2013 changed the game. It greatly accelerated the time and cost required to close transactions.

Enduring Principles in a Dynamic World

Even if the overall startup ecosystem has changed since 2010, the fundamental building blocks of relationships between founders and their investors haven’t changed all that much. Although funding mechanisms and market dynamics may have changed, the core principles of transparency, mutual respect, and shared vision are required now more than ever. Founders still need to be able to fog a mirror — articulate a compelling vision, demonstrate market traction, and build a strong team to attract investors.

Innovators and entrepreneurs are rewarded with robust investment capital willing to back the best ideas with the greatest chance of realizing a huge exit. They assess what they need to prove around the viability of their product or service. They pitch first and foremost because they judge the skills and character of the founding team. It’s important for founders and investors to accept market realities and adjust accordingly. They must keep lines of communication wide open and build a trustworthy, cooperative rapport to win.