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1/ Let's talk about fundraising: In 2009, Y Combinator only gave us $15K, half our YC batch died after demo day, 11 firms told us no, 2 firms wanted to find us a CEO, 1 VC told me, point blank, we would fail, we were a week away from death but luckily raised $500K @ 2M pre.
2/ A lot has changed: huge valuations, more capital available, funding vehicles at all stages, "founder friendly" is the norm, uncapped conv notes, seed stage is the new series A, YC isn't as tight knit anymore, hire a COO is the new replace the CEO, & a16z is the new Sequoia 👀.
3/ Some things haven't changed in fundraising land: male dominated/biased, herd mentality, VCs still struggle to pass on a company directly, top 5 firms founders want to raise from are relatively the same, access is still intro-based, and raising money is still a drain.
4/ After raising money, I learned a lot of the rules that were told to me were wrong/broken. Eg Investors are hyper competitive but they're friends/know each other. It's not imperative that they all don't know about each other. It may help you to name names to create a competion.
5/ There are 2 major drivers that matter to raise money successfully: (1) your team, (2) your idea is personally interesting to them. Nobody wants to commit to helping a company that's boring or with founders who suck. The major exception to all rules: incredible growth rates.
6/ Your pitch deck should not tell your company's story, YOU should. I made this mistake early on & failed. Your deck is supporting material but it's important to show people how much you know, how commited you are, and excited you are. A deck, alone, will never accomplish that.
7/ Most important rule: one founder focuses on fundraising while the rest stay focused and work. Put your ego aside. Fundraising sucks. It's more fun to keep the company progressing than to get turned down each day.
8/ Raise what you need and maybe a little more. Don't lock yourself into a valuation and a preferred money stack you can't realistically exceed. It'll hurt you in the long-run and you may make $0. Don't use valuations as a personal measuring stick of your success thus far.
9/ Raising money != Success. I know you probably know that. But, internalize it to your core because everyone will make you feel like you're successful now. They may even think you're rich when you're poor. Don't have a fundraising party, wait & have a cash flow + party instead.
10/ I always thought raising money would be easier the next time around (more proof of success, better odds). My wife pointed out that, that's what I always said each time and she was right. It's the same level of hard because your expectations proportionally adjust.
11/ Someone younger, a worse product, a worse team, a "celebrity" founder, a better marketer will raise more money than you at a higher valuation. Ignore! It doesn't matter in the long-run if you accomplish your goals. Money won't solve all problems in a company anyway.
12/ Early on take the smartest money you can get (ideally past founders/CEOs). I'd cut my valuation in half just to get it. It can be the diff between life & death. A local maxima or a global maxima in terms of impact. Ideally, people who can empathize with you. It's worth it.
13/ If you raise money but are reticent about a new person you've never met joining your board, take the advice I got from someone: "Just break bread with them. It'll be hard for them to f*** you over later." Work hard at the relationship though too.
14/ For the love of God: don't make graphs look exponential with 6 mo of data. Stop using hyperbole about your market being $400B. Don't make amazing projected growth targets 5 years out. You're pitching to smart people who can sniff the BS from a mile away. I did it too 😭.
15/ Lastly, try to remember through all the rejections that sometimes you only need one "yes" to survive and continue the journey. Nobody knows your market like you do--especially not investors so don't get discouraged. You got this. I believe in you. 💪
PS: Thank you to @mlevchin and @mickbirch for believing in us and cutting us that $500K check. Founders: go bug them for money.
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