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A Fundraising Survival Guide

paulgraham.com

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Re: A Fundraising Survival Guide

#31

Post by lisper »

MaysonL wrote: post #30
lisper wrote: post #20

I disagree with one point: "They do seem to expect an answer to the [question of how much money you are trying to raise]. But I don't think you should just tell them a number." It's very useful to have a number in mind, and it's very helpful for an investor to know what that number is. If I only have $50k to invest and you're trying to raise $10M then talking to you is probably wasting both of our time. (The reverse…

Of course, the question should also go the other way: "If you're going to invest, how much are you willing to put up?

Absolutely.

Re: A Fundraising Survival Guide

#32

Post by pg »

abiek wrote: post #26

"Not everyone has Sam's deal-making ability. I myself don't. But if you don't, you can let the numbers speak for you." PG you have hundreds of people applying to make a deal with you (through YC) and once you agree to make a deal--a decision that takes you 20 minutes--you are rarely rejected. Plus, when you are rejected the people who reject you usually fail. I appreciate the modesty but by no means do you seem like…

I meant ability to convince people to do what one wants.

Re: A Fundraising Survival Guide

#33

Post by pg »

gojomo wrote: post #17

The very last sentence of the last footnote caught my eye: Oddly enough, the best VCs tend to be the least VC-like. I suspect that rather than being odd this is nearly tautological for any profession -- "the best X tend to be the least X-like". Professional stereotypes are set by the multitudes in the middle, not the highest-performing outliers. Further, atypical behavior can be both a cause and effect of excellence.…

I've been thinking about that. It's not true of all fields. It's true of painters, but not mathematicians.

Maybe it depends on whether a field has a lot of fakers. Painting and VC both do. Math has few to none (I can't judge well enough to say for sure).

Re: A Fundraising Survival Guide

#34

Post by pg »

prakash wrote: post #4

on an average how long do YC companies take to raise the next round (could be series A, or another larger angel round) of funding after the YC funding?

Average, maybe 2-3 months from Demo Day. But the range is wide, from a few days for a small angel deal to many months for a series A.

Re: A Fundraising Survival Guide

#35

Post by skmurphy »

abiek wrote: post #26

"Not everyone has Sam's deal-making ability. I myself don't. But if you don't, you can let the numbers speak for you." PG you have hundreds of people applying to make a deal with you (through YC) and once you agree to make a deal--a decision that takes you 20 minutes--you are rarely rejected. Plus, when you are rejected the people who reject you usually fail. I appreciate the modesty but by no means do you seem like…

Picking who to give money to is not "deal making," or at least bears little resemblance to the deal making that founders need to become proficient at to gain customers and partners. In particular the exploding offer structure ("make your decision before you leave the room") is only possible when one side in the negotiation is in a highly advantaged position.

"So how can startup founders learn to be good deal makers." Practice, negotiation training, cultivating a creative frame of mind, preparation, spending two-thirds of your preparation trying to look at the situation from the other party's perspective.

Re: A Fundraising Survival Guide

#36

Post by skmurphy »

davidw wrote: post #13
tonystubblebine wrote: post #2

As a fan and practitioner of bootstrapping I was interested in the part where pg says that the delay caused by bootstrapping can be fatal to many kinds of startups. Flipping that around, are there kinds of startups where the delay is not fatal? Taking Basecamp as an example, it was released probably decades after the first project management software. Is bootstrapping best if you're going after a mature class of soft…

Depends on the economics of what you're doing: - Winner take all markets with strong positive network externalities have bit first mover advantages: eBay. - Products requiring large investments probably require investments: if you trade time for money, you might be really late to market compared with a firm that got money. - Products where it's easy to start competing and carve out a nice probably don't require much…

eBay was far from the first on-line auction site. In particular OnSale was founded a year earlier was running on-line auctions in May of 1995 six months before eBay was founded.

Re: A Fundraising Survival Guide

#38

Post by netcan »

skmurphy wrote: post #36
davidw wrote: post #13

Earlier quoted context omitted.

Depends on the economics of what you're doing: - Winner take all markets with strong positive network externalities have bit first mover advantages: eBay. - Products requiring large investments probably require investments: if you trade time for money, you might be really late to market compared with a firm that got money. - Products where it's easy to start competing and carve out a nice probably don't require much…

eBay was far from the first on-line auction site. In particular OnSale was founded a year earlier was running on-line auctions in May of 1995 six months before eBay was founded.

First mover doesn't necessarily mean absolutely first. "Early mover" is probably a better term. Either way, it tends to apply to the first (or one of the first) to cross a certain hurdle.

Re: A Fundraising Survival Guide

#39

Post by netcan »

cperciva wrote: post #14
tc7 wrote: post #10

"If you factor out the "bootstrapped" companies that were actually funded by their founders through savings or a day job, the remainder either (a) got really lucky, which is hard to do on demand, or (b) began life as consulting companies and gradually transformed themselves into product companies." I had to read the paragraph a few times, so I may be misunderstanding it, but why do we factor out bootstrapping through…

why do we factor out bootstrapping through savings or a day job? Is that not 'real' bootstrapping? I'd say that those have more in common with angel funding -- the money is coming from an external source which has lots of it. Bootstrapping, in contrast, suggests that the company is being funded out of the company's revenues. But it's a rather blurry line: What do you call a company which operates for N months out of…

Doesn't bootstrapping also imply operating on founders' credit?

Re: A Fundraising Survival Guide

#40

Post by netcan »

pg wrote: post #32
abiek wrote: post #26

"Not everyone has Sam's deal-making ability. I myself don't. But if you don't, you can let the numbers speak for you." PG you have hundreds of people applying to make a deal with you (through YC) and once you agree to make a deal--a decision that takes you 20 minutes--you are rarely rejected. Plus, when you are rejected the people who reject you usually fail. I appreciate the modesty but by no means do you seem like…

I meant ability to convince people to do what one wants.

I appreciate the distinction (& the modesty) but I think that YC is exceptionally sold. It seems to be a pretty good machine for getting people to do what you want them too. Does YC convince people to start companies? ..move cities? ..change game plan in a way that is as significant or more significant (to them) then signing a deal is to a VC?

But I get what you mean. That knack for projecting momentum is rare.

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