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Ask HN: tips about VCs and angels

5 pointsby schtogalmost 17 years ago
I am new to the startup thing and i am just starting to form some ideas and working on them.<p>If i succeed i am very likely to need funding and i dont know the best way to approach it.<p>Googling and clicking on the first link works obviosuly but where do I find the best and most trustworthy investors?<p>What kind of deals should I demand/expect?<p>At what stage is good to start seeking VC?<p>Or shouldn't i seek but let the VCs find me(i.e. launch product and if it is good people will come and VCs will come)?<p>What is normal, VCs approaching startups or startups approaching VCs?<p>Are there a lot of unsinister "sharks" in the business?<p>What else to think about?

5 comments

mlinseyalmost 17 years ago
First read up on this: <a href="http://www.gabrielweinberg.com/startupswiki/Ask_YC_Archive" rel="nofollow">http://www.gabrielweinberg.com/startupswiki/Ask_YC_Archive</a><p>and "The Startup Company Bible", a book that is particularly useful on explaining the mechanics of raising VC rounds, should you decide to go that route.<p>As for your specific questions:<p>"googling and clicking on nr1 works obv but where do i find the best and most trustworthy investors?"<p>Get to know other entrepreneurs, angel investors, and other members of the startup community and ask them about their experiences raising money, and when you are ready to raise money than try to get one of them to introduce you to a firm. Getting introduced to a VC via a connection, even a very casual connection, is virtually the only way that you will have the opportunity for a first meeting, unless your site is already well-known.<p>"what kind of deals should i demand/expect?"<p>Depends a lot on how much you have to show. If you already have a product and users, your valuation will be higher and you can get a better deal.<p>"at what stage is good to start seeking VC?"<p>When your company absolutely needs the money and/or connections to succeed. For some ideas (probably not most web application ideas though), this may be before you even start building the product. For other ideas, this may never happen at all. People get somewhat religious in this particular debate, and I won't try to defend one particular side except to say you shouldn't be opposed to VC funding on principle because some ideas absolutely need it, but many web companies don't. You should take a long and serious look at your company to determine which category it falls under.<p>"or shouldnt i seek but let the VCs find me(ie laucnh product and if it is good people will come and VCs will come)?<p>If launching your product and looking to get users before raising money is an option, you should take that option. There are many reasons for this, and not just "so the VC's will come to you." The most serious is that when you raise a large sum of money to execute on a certain idea, you lose flexibility in being able to change your idea. If you don't have any users yet, changes are good that your idea will need to change. If you've raised VC money, it can be difficult (but by no means impossible) to sell them on your new direction.<p>"what is normal, VCs approaching startups or startups approaching VCs?"<p>I would say that a startup approaching a VC is many orders of magnitude more common, but a VC approaching a startup certainly happens and is much more likely to result in a deal being made.<p>"are there a lot of unsinister "sharks" in the business?"<p>I think you mean a "sinister shark", as an <i>un</i>sinister shark wouldn't be anything to worry about, now would it! (Plus, the alliteration is spoiled!). But sure, there are slimy people in any business, but especially in businesses that have the opportunity to make people rich. Get to know enough people and you should be able to identify who these people are.<p>"what else to think about?"<p>Your product! Making sure people want it, building it, growing it. This should be your primary focus.<p>Also, and not to be too impolite about it, you should also think about using proper grammar and spelling on this site if you want people to have a good impression of you.
babulalmost 17 years ago
Don't worry about investors yet. Focus on product development and value (making something people want and ideally will be passionate about).<p>Build a prototype and go as far as you can before getting (bogged down in acquiring) investment. This will not only make it easier for you to pitch/demo something, but will clarify and refine your ideas and give others something to work with in terms of financing values etc.
kynikosalmost 17 years ago
Think about building your product, illustrating market potential, and how you are meeting an unmet need. Once you do this, you can worry about where to get funding and VC interaction. At such an early stage, you've got a better chance getting a small amount of money from an angel investor or group of angels than a large VC. Angels also enable you to retain more control and equity. Good luck.
mrtronalmost 17 years ago
Perceptions are very important. I perceive this post as uneducated and immature, just because of spelling and grammar. It may be completely inaccurate, but remember you are giving anyone a polaroid shot of everything about you.<p>It is a good question, but it has been addressed a few times on here.
schtogalmost 17 years ago
obv i will build my product first and then worry about investments, im just curious.