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The best way to raise a series A is to be almost ready to raise a series B, which is why the series A is so frustrating.
But these things are impossible to arrange for many businesses.
Hello HN: Justin here. Happy to answer any questions you guys have about raising money!
Thanks for the article, and putting on a workshop on fundraising. Regarding the workshop -- it seems like the application's only substantial question is "what business metrics do you have to support your beliefs?"
Do you believe there are quality businesses out there who can, should, and will be able to raise an A that don't have obvious metrics? It seems like that sort of question only applies to website- or app-centric companies that have obvious and easily-anagrammable metrics (ARPUs, CAC, churn, etc).
It's my feeling that some of the best, most disruptive companies won't have those metrics if they're operating in another space. (Though I have my bias; my company is one of those, at the moment.)
I fear that spreadsheet-driven investing tends to overfund incremental companies, but won't make the foundational investments required to build new platforms. But again, that's my bias.
Curious for your thoughts -- thanks!
Do first-time founders really ever raise A rounds anymore without first raising some kind of significant unpriced seed round?
I have heard from some seed stage investors that they will do priced seed rounds -- even some that claim to prefer it -- so there may be technical exceptions that really reinforce your point.
To be fair, the workshop's website also asks about previous fundraising. I've found this always comes up during fundraising discussions, too. Partially because the company's finances matter, but also because investors want social proof. I don't think this is as negative as it seems: early stage startups are black boxes, and any signal is helpful, I suppose -- and there's some sense that previous ability to 'sell' is indicative of future success. (I try to empathize with the investors on this one; they see a lot of pitches.)
Do first-time founders really ever raise A rounds anymore without first raising some kind of significant unpriced seed round?
> The more nuanced answer is when you have achieved compelling enough intermediate milestones that convince VCs that cash is your constraint to scaling your business. In other words, you have something that works, and all it takes is pouring money on it to grow it much, much bigger.
Hello HN: Justin here. Happy to answer any questions you guys have about raising money!
Hello HN: Justin here. Happy to answer any questions you guys have about raising money!
sorry I don't quite understand this part. What would be the benefit of not saying who? (i.e. the first term sheet investor). Wouldn't saying it be more convincing and put more pressure on other investors?
> you can immediately call the other potential investors, and tell them that you have a term sheet from someone (don’t say who), and put pressure on them to give you a term sheet sorry I don't quite understand this part. What would be the benefit of not saying who? (i.e. the first term sheet investor). Wouldn't saying it be more convincing and put more pressure on other investors?
> you can immediately call the other potential investors, and tell them that you have a term sheet from someone (don’t say who), and put pressure on them to give you a term sheet sorry I don't quite understand this part. What would be the benefit of not saying who? (i.e. the first term sheet investor). Wouldn't saying it be more convincing and put more pressure on other investors?
If you have a term sheet from a bad or unknown investor, you don't say who it is because all investors (great, good, bad, or ugly) will discount their offer significantly. There is a huge difference (even if it's bullshit) in getting a $10m A from Sequoia vs. a $10m A from a Dutch strategic investor who's making their second investment in three years.