For anyone reading this advice. The number 1 reason why Matt’s fundraising process went as well as it did is because he has a world-class personal track record. This dwarfs all other reasons by a long way. Quite frankly Matt would have been able to raise with complete air (assuming that his cofounders have similar personal track records).<p>That’s not to take anything away from Matt. He’s clearly an accomplished individual and his advice is still sound. But he hasn’t included the glaringly obvious reason why he got funded - he was a professor in CS at Harvard and has had a string of prestigious roles in industry.
Looking at this as a founder thats currently raising a seed round (or pre-seed, tho as I understand, same position as OP) in Europe with an MVP.<p>Some parts ring true, as in VC's you never heard of contacting you on LinkedIn, sharing decks between their contacts and keeping in touch to build a relationship. The part about common pitch deck advice being geared towards live pitches especially - we haven't done a single pitch with a deck live. If it was a live meeting, they've already seen the deck or we've done a short pitch over zoom already. The "stand in a meeting room and pitch to VC's" thing is mostly a myth nowadays.<p>But a 5 million raise without even having a product just sounds insane. We've been offered 50-100k offers due to our team and product, but rarely anyone wants to invest more than that in a pre-revenue/pre-launch startup. And if they do, they would do it in tranches and by the time they would invest 500k we'd be giving them more than 20% equity.<p>The difference in valuations is just insane, with even VCs straight-up telling us that if we were raising in US we'd be offered 5-10x more than here.<p>Honestly, this whole ride makes me think I should just get a job at a US startup and use the cost of living difference to pay devs out of my own salary.
This post is all true. One caveat (which is mentioned in the post): this person has multiple VC’s in his network and knows multiple founders who have raised on nothing but a deck.<p>Many, many, many future founders are not as lucky.<p>So, I guess rule -1 is: get to know VC’s, Angels and other previously funded founders.
A few things I've learned:<p>1. SAFEs are convenient if everyone is amenable, but be careful about having SAFEs sitting around too long or with different terms. They're like the Mogwai in the Gremlins films. They're kind and cuddly unless you feed them after midnight or get them wet.<p>2. Stay in touch with your angels even if they don't initiate. It'll help in tons of ways and they can interpret lack of contact as a sign that you're dying and that they shouldn't think about you anymore. This isn't good.<p>3. Be careful about any terms (e.g. in side letters) that might allow someone to stand in the way of a priced round in the future. Even if someone doesn't use them to play hardball for terms (they can), it might make things inconvenient and add dangerous delays.<p>4. Have a lawyer look things over BEFORE you get into priced round negotiations with VCs or you might end up dragging the process out and risking losing the deal because the lawyers find a problem that needs fixing.<p>5. If you use standard/canned documents, check (3).<p>Generally all this boils down to: keep terms simple and universal as much as possible, be communicative, and don't let things sit too long.<p>It's possible to do a priced round without a lead if you have SAFEs/notes sitting around too long. You can use standard documents to minimize legal. It may be necessary to clean up your cap table.
One interesting thing I learned from my previous startup is that when you're raising, you need to find investors that understand your market.<p>The more niche the market, the more difficult it'll be for you to find an investor. But when you find that investor the likelihood of them investing will be higher.<p>Why is that? Because if you have to educate your VC as to what you're doing, you've lost.<p>Let's say I'm building an AI that helps agencies set pricing for their ad inventory. Ideally I would want a VC that understands adtech, because they already understand the problems in that field (at some level) and how big it us.<p>I don't have to explain how much of a fucking pain in the ass it is to manage all the line items, creatives, placements, and pricing rules. Someone who wasn't in adtech would be like "google's GAM does that for you." Uh, not really.<p>A VC in adtech would be all "here's my money and a LOC."<p>And, the VC will be able to help you with some client introductions, so you can get more customers.<p>That said, my business co-founder couldn't sell water to a man in the desert, so we crashed and burned. Live and learn.
My experience is that timing is a huge element. VC groups have teams that specialize in certain areas (biotech, hospitality, crypto, whatever), but those specialties change over time as the business landscape changes.<p>If your pitch lands in the sweet spot of the kinds of things they are looking to fund right now (and you can back it up with experience/traction/team quality/whatever), you will have a relatively easy time raising money. If your idea is good but the timing isn't right for the VC market and they don't have people that understand your idea, you will have a very hard time raising money.<p>Likewise, different VCs are experts in different areas (even between big name firms). We met VCs who knew our market extremely well and had a very deep network in our specific niche. We also met VCs where we had to explain the basic premise of our market from zero. Do some research to find the VCs that work in the niche you work to have the best chance of not only raising money quickly, but getting access to a network of people who can actually be beneficial to your company.
Sorry but is this a f*ing satire article? Ex-google ex-apple guy calls up his VC friends to ask how to raise a $5M (!!!!) seed round?<p>For god's sake. It's something straight out of the Silicon Valley TV series.
Might be a very unpopular opinion here, but the overall attitude I'm seeing IRL these days is favoring bootstrapping. I asked why and was told essentially suits provide a very specific and targeted value with limited application outside of those areas. It's no longer an accelerator for an exit, it's someone buying the position of your employer and the choices are no longer yours to make. I can see that.
I raised a few $M with just 10 slides during the VC frenzy last year. I agree with the post but I view this from a social angle. The entire VC industry is driven by BullShit. VCs raise money from LPs (pensions, rich people) by claiming they have deal flow (they can get into the next big thing) and an “investing thesis” (some BS about the future, usually a bombastic spin on a current fad). VCs are finance bros that believe their own BS.<p>Your pitch should fit the current investing zeitgeist. If you pitch some oddball idea then you need to move your audience from 0 to 100% in 1 hr. If you pitch “AI generated metaverse for basketweaving” then the background hype has sold half your story. But also, VCs need other VCs to co-invest. They need to explain this investment to their LPs. It’s easier to pitch AI nonsense than something truly novel.<p>Every VC wants to see Matt’s pitch because he’s got a great resume. VCs don’t invest alone, so they will pass the deck around to their VC network. But it’s also sharing deal flow: I send you this, please send me the decks you’ve got.<p>VCs like to keep their options open. Even if they hate your idea, if A16Z invests then they’ll want to get back in. Or if you succeed then they’ll want to get into the next round. I had a VC offer a very low valuation. When I got 10X more elsewhere, they called back that they wanted in. The numbers are all BS: valuations, seed size, etc. Remember, their goal is to invest as cheaply as possible. Your goal is to sell as little of your company as possible.<p>Strangely, BS artists love other BS artists. Adam Neumann is a God-tier bullshit messiah with sociopathic self-confidence. It’s no wonder that he raised billions after the self-dealing disaster at WeWork. Matt is right: confidence is insanely important. Your company is a $1T opportunity that will change the course of humanity. (In fact, outrageous confidence is important everywhere. Humans are just really gullible fools.)
He got funded because: He was a Prof CS at Harvard.<p>He did hit on the most imp point: be confident in your pitch.<p>Like 200% more confident than you are about anything.<p>I can’t overemphasize this. This is more important than anything else.
If you are in a flyover state, learn about venture tax credits and other startup investment incentives. You can often get investors a state tax credit that is up to 25% of the amount they invest. For angels, this is basically a 25% discount on their investment, and substantially reduces financial risk. Also, at least until you take in institutional money, being an LLC can unlock loss cary-forwards for your investors.
I disagree with your approach on deciding if YC is worth it. I feel like VCs are particularly biased against YC and are incentivized to tell you it's not worth it. I think what you should have done is also seek out as many YC alumni as you can and ask what their opinion was. I guarantee you all of them would've said it's worth it.
This article is not useful for a typical entrepreneur. Most work for many years with little chance of raising capital. This guy makes it sound like all you need is some experience and a good idea. And now he’s writing a “all I learned” article about his past 3 months. Give me a break.
(And no offence OP but I do feel it sounds out of touch)
"Before starting the fundraising process, my first stop was to call up some VC friends of mine and ask them how to get things going."<p>ah, so it is
I felt like I wasted time reading this. It was someone with a terrific network talking about how amazing he is (yet with limited substantiation how that translated to success), with shitty DALL-E artwork interspersed between paragraphs. Yawn. Been there, seen that.
This tweet from Roon applies: <a href="https://twitter.com/tszzl/status/1573564546052067328" rel="nofollow">https://twitter.com/tszzl/status/1573564546052067328</a>
I wish I knew more about the company, perhaps even a slide deck. It might make some of the ideas easier to connect with!<p>Anyone have a link to the deck?