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Jack Dorsey's #1 Rule for Raising Venture Capital

By Jack Dorsey · Investing · 3 min read

If we take money from someone, this is like hiring someone we can never fire. So — do we really want to work with this person?

Key Points

Have something to show — if people can't see it and feel it, it's very hard to sell
Taking money from someone is like hiring someone you can never fire
If investors aren't asking tough questions in the pitch, they won't ask them in the boardroom

If we take money from someone, this is kind of like hiring someone that we can never fire.

Have Something to Show

Dorsey: First and foremost, I always want to go to anyone I want to work with — with something to show. Before we talked to any investors on the Twitter side, we actually had people using the service at some scale. On the Square side, we had a working prototype. We had seven merchants when we went to raise money.

If people can't see it and feel it, it's very hard to sell. I don't want to just tell people 'this is going to be the biggest thing ever.' I want to be able to show that and have them feel it.

If people can't see it and feel it, it's very hard to sell. I want to show it, not just tell it.

Hiring Someone You Can Never Fire

Dorsey: If we take money from someone, this is kind of like hiring someone that we can never fire. We can never get rid of them. So — do we really want to work with this person? Is this person going to push us in the way we need to be pushed?

In the first week of pitching Square, a lot of people said — okay great, no questions, we'll get back to you in 30 minutes with a term sheet. I said — I don't want a term sheet, especially if you're not asking any questions. If they're on our board and they're not asking tough questions, they're not going to be constructive.

I don't want a term sheet, especially if you're not asking any questions.

Find the Tough Questions

Dorsey: That second week, we got a lot of tough questions. That's what I love — because if I'm getting tough questions in the pitch, I'm going to get tough questions in the boardroom. And not just the boardroom — every week Vinod emails me about 'have you thought about this, are you doing this, I know this person, can I make an introduction.' It's very useful.

You have to set a very high bar. It's not just about money or the firm — it's about the individual you're going to work with. Find the people you really want to work with. You have to treat it as — I'm adding this person to my team.

It's not about money or the firm. It's about the individual. Treat it as adding this person to your team.