0/ Questionable fund raising advice you may want to think twice about before following. A thread.
1/ As an entrepreneur I had to raise money many times. Not knowing what I was doing, I’d follow popular advice on the topic. As an investor, I now realize how much of that wisdom likely worked against me. Here are my picks for the most questionable fund raising tactics ...
2/ "Raise in May or Sept. because VCs are gone for summer ": This is simply no longer true, most of the VCs I know work through the summer. I sure do. And I have a lot more time then since many founders believe this anachronism.
3/ “Put time pressure on the raise”: While some deals go quickly, that is often due to legitimate market dynamics (well known company/team). If that's not you, adding artificial deadlines can push investors away who don’t believe they’ll have adequate time for diligence.
4/ “Add buzz words in your pitch” Trust me, we’re likely way more tired of buzzwords than you are. Improper or gratuitous use of buzzwords will strictly weaken your pitch. On the other hand, if a phrase is buzzy, but well defined and germane, it’s fine to include.
5/ “Raise while claiming you’re not raising”. Either you are raising or you aren’t. Either are fine. But if you claim not to be raising, an investor is less likely to do the work needed. It looks particularly bad if you turn around and say your raising a few weeks later.
6/ “Don't speak to junior partners” Junior partners often are the true experts in a space. Without their support, the GP is less likely to gain confidence in a deal. Working through junior partners is generally the right path unless you know the GP well.
7/ “Pretend to be more mature than you are” We write checks for teams with little more than a slide deck. So we have no problem with immaturity. Posturing as more mature than you are may instigate more rigorous diligence. And over claiming rarely looks good.
8/ I’d love to hear other questionable fund raising advice. There is a lot of bad or outdated guidance out there. Thanks for reading :)
• • •
Missing some Tweet in this thread? You can try to
force a refresh
I just love that random Twitter responses to content I post is still more relevant than much of the feedback I’ve gotten during the academic pier review process ✊✊✊
Hehe peer review process too
It’s like ... “hey, I just saw your note and I happened to have this similar situation in 2013. You’re mostly right, but actually this thing also happened that you should account for. DM me and let’s think it through”
0/ Here is a thread on the Cloud analysis piece @sarahdingwang and I posted recently. We love the level of response and discussion. But wanted to summarize and address some of the comments.
1/ If you haven't read the piece, it's here (hint: neither Dropbox nor repatriation are core to the analysis. Nor have much to do with the results or conclusion)
"We only hire from top schools" is lazy practice that results in less-than-top teams. This thread is a rough attempt to explain why 🧵👇
Quickly about me: for undergrad I went to NAU, the smallest of three state universities in Az. I did my Masters and PhD at Stanford.
At Stanford I TA'd, I co-taught courses, I sat on the masters admission committee in CS as a consulting faculty, and I've been involved in hiring hundreds of folks as a founder, tech exec, and board member.
0/ VCs benefiting from offering bad advice to founders is such a tired canard. But it’s repeated enough that it’s worth addressing in some detail (a thread)
1/ VCs avoid investing in companies that don’t have potential for venture economics. We vet heavily for this. Founders' intentions is a huge part of the calculus. If there is early misalignment in vision and expectation, something went very wrong during the investment process.
2/ Different investors have vastly different risk tolerances and return expectations. There are many funds that invest in smaller TAMs or focus on efficiency over growth. It is incumbent on both sides prior to investment to ensure alignment.
1/ Advice on finding “the right idea” is often a variant of the tired painkillers vs. vitamins cliche -- focus on a problem you’ve experienced or others are experiencing yada yada
Yet, many impactful ideas were more akin to aesthetics, how founders felt the world should be.
2/ Take compute virtualization. For decades, VMs were an elegant oddity. The VMware team viewed them as the right way to abstract compute but weren't quite sure the killer use case(s). And yet that led to multiple deca-billion dollar markets.
3/ Many platforms and OSes have followed similar paths. They didn’t address a particular burning need now, but if adopted they would change how we did work and thought about work.