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

A Guide to Seed Fundraising

themacro.com

Post reply on HN
Print view View original

31–40 of 62 posts

Re: A Guide to Seed Fundraising

#31

Post by josh_carterPDX »

salmonet wrote: post #4

Seed fundraising is so confusing, especially for first-time founders. Everyone seems to have a different opinion and you can never be sure about people's bias or motives. I appreciate YC leveling the playing field with straightforward founder-friendly information.

I agree with this so much. For me, I was getting so many people hitting me with different advice. Don't include this in your pitch deck. Ask for less money. Don't reach out without an intro. It's tough to know who to listen to. However, the best advice will come from yourself and just putting yourself out there. I met with some really cool VC folks who gave me great feedback. I think the best feedback I got (and would equally give) is to have a thick skin. This is your baby, but if you can't take honest criticism then you're in the wrong business. People may not like what you are doing, but as long as your open minded enough to listen to the feedback and take it to heart, you're doing the right thing.

Re: A Guide to Seed Fundraising

#32

Post by prostoalex »

jedberg wrote: post #7

This was a great writeup with lots of great information. One thing that bugged me though was the "When to Raise Money" section. It says, in part: "However, for most it will require an idea, a product, and some amount of customer adoption, a.k.a. traction." There was a great comment on HN a while back (I wish I remembered who said it) that said, "If you're asking about traction or revenue, you aren't making a seed inv…

The set of requirements to raise a seed round changes as the set of requirements to launch, test and validate an idea changes.

Money from seed rounds in the past would be usually spent in infrastructure and distribution. With cloud providers and app stores that part of equation got changed, so some ideas (not all) can be validated on the cheap. (I believe even one of your examples, Google, existed as a proof of concept product called Backrub, working on Stanford network, before the incorporation event took place).

Another point is that investors judge the pitch by the quality of other pitches they heard this day/week/month/year. If you browse AngelList, there are companies raising seed rounds with a functional team, a built-out product, traction and a plan to scale. If someone comes right after them and tries to raise a similar round with nothing but a Powerpoint deck, they will be (even subconsciously) compared against the others.

Re: A Guide to Seed Fundraising

#33

Post by amorphid »

cperciva wrote: post #13

How rapid is interesting? This depends, but a rate of 10% per week for several weeks is impressive. I wish this was a bit more specific -- how long exactly is "several weeks"? 3 weeks (total growth of 33%)? 7 weeks (total growth of 95%)? 13 weeks (total growth of x3.45)? 52 weeks (total growth of x142)?

Show accelerating growth. Focus on that.

Re: A Guide to Seed Fundraising

#34

Post by jacquesm »

josh_carterPDX wrote: post #28
aagha wrote: post #24

If you hear an angel/VC saying they're interested in investing in you but they haven't done so within a couple of meetings, politely walk away. When you're in the seed stage, angels are investing in you and the idea. Some will want to know about traction MRR (walk away)and others will want to do deep-dives of your concept (again, walk away).

It's funny. I read this and thought about a meeting with a VC a friend of mine had where the VC Partner was on his phone the whole time. My friend suddenly stopped talking and sat there for a good minute before the VC realized he had stopped. When he asked why he stopped, my friend said that he took the meeting to get his full attention. After a while the VC did it again. My friend closed his laptop and walked out of…

That's super rude and your friend is incredibly patient for even giving the guy another chance. I'd have walked out on the first time.

Re: A Guide to Seed Fundraising

#35

Post by jacquesm »

aagha wrote: post #24

If you hear an angel/VC saying they're interested in investing in you but they haven't done so within a couple of meetings, politely walk away. When you're in the seed stage, angels are investing in you and the idea. Some will want to know about traction MRR (walk away)and others will want to do deep-dives of your concept (again, walk away).

You are 100% spot on. I've been part of 3 seed rounds, and one of those had a bunch of savvy investors jerking the founders around waiting to see how desperate they would become before investing (better terms I guess). I didn't want any part of it, called a meeting with all the wanna-be investors and the two founders and committed on the spot. Then those that would have eventually invested all followed afraid to miss out on the deal as it was set at that moment (which was a pretty sweet one for the founders).

So if you are in a situation like this force their hand, the ones that are in will still be in and the ones that were just dicking you around will bow out right away.

The company is still around, they're doing fine. They will never be a 'homerun' but I don't care, they're good people and they work hard, it's just that their pivot turned out to be less of a money maker than the project they envisioned starting out (it was either pivot or die, I give them great respect for staying alive and generating a ton of work during the last 8 years), and I'll always have their back, no matter what.

Re: A Guide to Seed Fundraising

#36

Post by jacquesm »

danieltillett wrote: post #29
ig1 wrote: post #21

Earlier quoted context omitted.

I believe Google was already in the millions of searches territory by that point. What made Andy a risk taker in that case wasn't the traction (which would still be significant in todays terms with a vastly larger internet population) but rather that search was seen as a dead space. It would have been the equivalent of investing in podcasting in 2013, a space considered played out and dominated by existing players wi…

There was also the minor point that Larry and Sergey were just a couple of PhD students with no business and no clear path to revenue. Still a gutsy move which many of the current crop of angels and VC would pass on.

> Still a gutsy move which many of the current crop of angels and VC would pass on.

And some of them did and were brave enough to write it up:

https://www.bvp.com/portfolio/anti-portfolio

Re: A Guide to Seed Fundraising

#37

Post by AndrewKemendo »

josh_carterPDX wrote: post #28
aagha wrote: post #24

If you hear an angel/VC saying they're interested in investing in you but they haven't done so within a couple of meetings, politely walk away. When you're in the seed stage, angels are investing in you and the idea. Some will want to know about traction MRR (walk away)and others will want to do deep-dives of your concept (again, walk away).

It's funny. I read this and thought about a meeting with a VC a friend of mine had where the VC Partner was on his phone the whole time. My friend suddenly stopped talking and sat there for a good minute before the VC realized he had stopped. When he asked why he stopped, my friend said that he took the meeting to get his full attention. After a while the VC did it again. My friend closed his laptop and walked out of…

I've seen this so many times and did the same thing. Actually turned out about the same for us, so I'm glad other people aren't taking any guff.

Re: A Guide to Seed Fundraising

#38

Post by S4M »

w1ntermute wrote: post #25
oneloop wrote: post #18

Earlier quoted context omitted.

What do you mean, get info? Do you think successful people just do stuff in the dark without any idea of what they're doing?

No, they usually know other successful people to ask. Those who don't have to "get info from a website ".

Some people can have solid technical chops, a good idea and a working prototype and not know angels. Not everybody lives in Silicon Valley or some startup hubs. In fact, there is an essay from Paul Graham explaining why some of the best ideas come from outsiders [0].

[0] http://paulgraham.com/marginal.html

Re: A Guide to Seed Fundraising

#39

Post by jmorrow977 »

danieltillett wrote: post #14
jedberg wrote: post #7

This was a great writeup with lots of great information. One thing that bugged me though was the "When to Raise Money" section. It says, in part: "However, for most it will require an idea, a product, and some amount of customer adoption, a.k.a. traction." There was a great comment on HN a while back (I wish I remembered who said it) that said, "If you're asking about traction or revenue, you aren't making a seed inv…

I just think we need a new term besides "seed" to differentiate it from the true seed investments. I agree. I have been thinking about what to call an investment at the concept stage. The obvious one is “seed bed” (you need a seed bed before you can plant a seed). The other is something combining founder and investor as any investor at the concept stage is really more a founder than an investor - festor doesn’t have…

Why not call it a "POC" (proof of concept) round, or "concept round", or "dice round"?

Re: A Guide to Seed Fundraising

#40

Post by jacquesm »

javajosh wrote: post #27

These rules are nowhere near as complex as combat rules in AD&D and yet I find my eyes glaze over when reading even clearly well-written summaries. I think the problem is actually that these are actually "combat rules", but they are never explained as such. The combat is between the investor and the investee, in that the investor wants as much as possible for his money under every circumstance, and the investee wants…

You should really make this into a novella, it would be a fascinating world to map the world of start-ups onto.
Post reply on HN