Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask HN: What's your advice for someone who's raising capital for the first time?

news.ycombinator.com

Post reply on HN
Print view View original

61–70 of 81 posts

Re: Ask HN: What's your advice for someone who's raising capital for the first time?

#61

Post by zerkten »

nobody271 wrote: post #49
rsweeney21 wrote: post #44

I've started a few modestly successful companies over the past decade. Most of them were bootstrapped, but for one of them I went the VC route. I raised $16M over 4 years, starting with Angel, then VC, then "top-tier" VC. Taking VC funding made the experience of owning and operating a business worse in almost every way. There are many reasons why I wouldn't recommend raising VC money, but I'll focus on just two right…

How do you know what type of company to start and how much of your own money did you invest when bootstrapping a company. I heard about startups that do something like make medical insurance billing easier. That raises a lot of questions, actually. * How does one even learn that is an issue? * It seems like something where getting started is driven entirely by having contacts in the industry. * There has to be a ton…

> * How does one even learn that is an issue?

> * It seems like something where getting started is driven entirely by having contacts in the industry.

Get a job in an industry and learn the domain. It's that simple, in theory at least. The "advantaged" have friends and family who educate you on these industries, but it's hard to really get domain expertise without doing the work.

You aren't "only good at programming." If that is the case you underestimate yourself, are lazy, etc. That's not meant to be mean, but you can achieve more.

The challenge is that domain expertise can be a significant investment when:

* You could be doing more fun things

* It might be location specific

* Might impact your earnings

* May result in your settling down to a different life than you expected.

> Say you're really only good at programming and want to start a ...fashion business. How do you even start?

Get a side hustle. For that exact scenario see https://twitter.com/donasarkar and http://donasarkarbooks.com/fashion-design/.

Re: Ask HN: What's your advice for someone who's raising capital for the first time?

#62

Post by qaq »

kenneth wrote: post #38

I run a $30M early stage venture fund. Here's what I wish first-time founders knew: • Don't bother cold emailing me, you'll end up straight in the trash. Don't even think about reaching out on LinkedIn, I open it once a month to mark everything as spam. Instead, find someone we know in common and ask for a warm intro. I receive way too much inbound, and a referral from someone I trust is one of the best ways to skip…

Turning things around a bit why would people care enough to spend time to get a meeting with you? 30M is a tiny fund the advice you give is pretty much what all VCs say but you are wording it in a very master of universe type of language. I would be slightly surprised if Doug Leone phrased it like this but to see such wording from a small fund partner to me is already a big red flag.

Re: Ask HN: What's your advice for someone who's raising capital for the first time?

#63

Post by alexhutcheson »

beat wrote: post #58
nobody271 wrote: post #49

Earlier quoted context omitted.

How do you know what type of company to start and how much of your own money did you invest when bootstrapping a company. I heard about startups that do something like make medical insurance billing easier. That raises a lot of questions, actually. * How does one even learn that is an issue? * It seems like something where getting started is driven entirely by having contacts in the industry. * There has to be a ton…

Become a technical co-founder for someone with a deep knowledge of some valuable business, who has a great idea for a startup but lacks the technical skill to make it work. There are lots of them.

Be careful: signal/noise ratio is extremely low here. There are lots of people, particularly in SV, with vague ideas and a general desire to be a "non-technical cofounder", but far less that have the deep, valuable domain knowledge being discussed here.

Re: Ask HN: What's your advice for someone who's raising capital for the first time?

#64

Post by rsweeney21 »

rcdwealth wrote: post #51
rsweeney21 wrote: post #44

I've started a few modestly successful companies over the past decade. Most of them were bootstrapped, but for one of them I went the VC route. I raised $16M over 4 years, starting with Angel, then VC, then "top-tier" VC. Taking VC funding made the experience of owning and operating a business worse in almost every way. There are many reasons why I wouldn't recommend raising VC money, but I'll focus on just two right…

If you are not well versed in company structures, than maybe you really loose control. But that depends of you. In a LLC/LIMITED company you as shareholder/member of the company, decide of your structure. So if you do decide that you give up some shares/interest to the investors, then that can be the reason why you would loose the control. But even if you give up all the shares, by means of controlling the initial ar…

  - VCs won't invest in LLCs or LLPs. They invest in C-Corps. The possible arrangements you described don't apply to VC backed companies.
  - You only get to set the terms when you don't need their money. This won't apply to you unless you've bootstrapped to significant revenue or you already have a previous successful exit under your belt.

Re: Ask HN: What's your advice for someone who's raising capital for the first time?

#66

Post by ajcodez »

Keep everything incredibly simple. Follow the standard 10 slide deck pattern. Focus on the value your service provides in concrete terms. It’s not the time for subtlety. Spell things out explicitly in big font.

Set the price of shares at $0.10 or a round number. Raise a normal amount of money like $150k or $250k at a normal valuation like $1M (depends on industry etc). Get someone close to you to put in any nominal amount like $10k and tell investors you already have committed funds. If possible use a SAFE contract to accept funds faster.

Hire a freelance designer to clean up the deck and website home page if that is an issue. Ask friends to review both deck and home page. If possible make a product video walkthrough.

In meetings keep things friendly. Stick to the plan. Pitch and then ask if they are interested. Answer questions truthfully but in line with expectations. Never complain or give excuses for anything. Follow up frequently because investors are often busy and literally might forget they agreed to invest in your co.

Source - closed $250k seed round this month. Woohoo. Back to work.

Re: Ask HN: What's your advice for someone who's raising capital for the first time?

#67

Post by beat »

alexhutcheson wrote: post #63
beat wrote: post #58

Earlier quoted context omitted.

Become a technical co-founder for someone with a deep knowledge of some valuable business, who has a great idea for a startup but lacks the technical skill to make it work. There are lots of them.

Be careful: signal/noise ratio is extremely low here. There are lots of people, particularly in SV, with vague ideas and a general desire to be a "non-technical cofounder", but far less that have the deep, valuable domain knowledge being discussed here.

Well, yeah. Vet your partners. They need to have a realistic and achievable idea that makes sense to you. "Business plan" becomes their responsibility, and it needs to be better than "collect underpants, ???, profit!", or "Facebook for cats" or whatever.

Re: Ask HN: What's your advice for someone who's raising capital for the first time?

#69

Post by AriaMinaei »

coffeemug wrote: post #17

Speak softly and carry a big stick. VCs constantly talk about supporting entrepreneurs through tough times, enabling creativity, building amazing companies, etc. They're not lying -- they really believe it, and it's an important thing for them to believe. But while they say all this stuff, they're also human. And humans follow their incentives. They do that before they do anything else. So your job is to make it easy…

Eloquently put! Can you recommend books/articles that'd go along with this advice?
Post reply on HN