I'm a 12 year veteran of early stage startups. One thing I found interesting about the whole experience was that on the technical side, smarts-based meritocracy was valued above all else, or at least that was the line we told ourselves. However, when it came to raising money, the most archaic, beers in the back-room, who-knows-who-knows-who boys-club approach was the norm. The things I saw would have made a 1920s Harvard admissions officer, or a 1950s hiring manager at an investment bank blush.<p>That said, the most successful startup I worked at raised money in an almost mechanical manner, with little or no beer drinking, or even much contact with the investors. YMMV.
"If you need money, you are too late."<p>really means<p>"If you appear to need money, you are too late."<p>and restated the way one of my investors once put it<p>"If you have the stench of death about you it's impossible to raise."<p>If you don't need money, don't raise.
It's Ironic how people who are really among the best and brightest in the industry, can have such different observations:<p>Sachin Agarwal (Posterous)<p>"A couple months before you're going to raise, schedule a coffee meeting with all the VCs. No pitching, no deck. We did this and it was a great way to meet VC partners in a more casual setting. If they like you, they will even help you with your pitch."<p>Ben Horowitz:(Andreesen Horowitz)
(<a href="http://bhorowitz.com/2010/04/13/four-things-some-vcs-do-that-i-dont-like/" rel="nofollow">http://bhorowitz.com/2010/04/13/four-things-some-vcs-do-that...</a>)<p>"However, many VCs who want to have coffee with me are none of the above. Worse yet, they have no agenda and no purpose. They just want to “compare notes.”<p>When I was CEO, I didn’t take meetings with no agenda and no purpose. I’m not sure why I should take them as a VC. Of course, when I was CEO, people knew better than to request a meeting with me with no agenda and no purpose. I think that these VCs have mammas that didn’t raise them right."
"Beware of associates". I cannot stress this enough.<p>DO NOT EVER WASTE YOUR TIME MEETING WITH ASSOCIATES IF THERE ARE NO PARTNERS PRESENT. They have no freaking clue. By associates I mostly mean MBA's with no startup founding experience.<p>Infact there are VC partners in India who are more like associates in the US, with absolutely zero founding experience. Stay as far away from them as possible. Do not cold call them and dont take their calls - they are not worth the time and dont know shit.
"If you ask me about barriers to entry, you don't understand the internet."<p>Asking about barriers to entry does not mean the potential investors don't understand internet. This comment says to me the author does not understand business or investing.
Sage advice. More generally "work with people you like."<p>Life's too short to work with jerks. Making a point to surround yourself with quality people will enrich your life. I sometimes forget this and almost always regret it.
This 'cultural' matching process is <i>the</i> most important element of having anyone join your business - investors, board members, staff, even clients if your business involves ongoing interaction with them.<p>I like to think of the 'have a beer with' as having the 'family photo fit' - if you can't picture this person fitting into a photo of your business family, then you don't want to work with them. <i>Especially</i> if they are bringing money you need, because personal differences will painfully divide the business.
"There are plenty of posts online about valuations, term sheets, and how to negotiate. I'm not going to get into that stuff here. This post is about the personal side of finding investors."<p>Really? From my point of view, I constantly find articles about personal fit, finding the people who have the same goals, etc. I'd love an article about valuation, term sheets and how to negotiate.<p>Can anybody tell me where to start?
Can someone explain what he meant by this. "If you ask me about barriers to entry, you don't understand the internet."<p>Is he saying that you should not worry about your competition?
Thanks for the advice. In your section about getting to know vc's you mention a few methods. What method have you found to be most successful? Do you believe coming out of ycombinator gave you an instant "in" with VC's?