Live data from Hacker News

Everything I wish I had known about raising a seed round

mdwdotla.medium.com

31–40 of 95 posts

Re: Everything I wish I had known about raising a seed round

#31
post #16

Earlier quoted context omitted.

> Honestly, this whole ride makes me think I should just get a job at a US startup and use the cost of living difference to pay devs out of my own salary. I know this was an off-hand remark that you're probably not thinking much about, but you're absolutely right, and it might be worth seriously considering it. Moving to the US is probably the single biggest improvement you can make to your career and opportunity opt…

Oh it's not just an off-hand remark, been thinking a lot lately, especially the closer we are to closing a round the more it's on my mind. I know that career-wise I'd have more opportunity in US, but besides that, not much attracts me there - quality of life is way better here. Especially if I can work remotely for a US based company and use 50% of my salary to hire at least 2-3 developers locally to work on my produ…

Be careful, US companies usually have you sign IP contracts and do not approve of moonlighting.

They could well try to claim stake or ownership on your company, even if they lost, the distraction and money it would cost to defend probably aren’t worth it.

Re: Everything I wish I had known about raising a seed round

#32
If you are in a flyover state, learn about venture tax credits and other startup investment incentives. You can often get investors a state tax credit that is up to 25% of the amount they invest. For angels, this is basically a 25% discount on their investment, and substantially reduces financial risk. Also, at least until you take in institutional money, being an LLC can unlock loss cary-forwards for your investors.

Re: Everything I wish I had known about raising a seed round

#33

For anyone reading this advice. The number 1 reason why Matt’s fundraising process went as well as it did is because he has a world-class personal track record. This dwarfs all other reasons by a long way. Quite frankly Matt would have been able to raise with complete air (assuming that his cofounders have similar personal track records). That’s not to take anything away from Matt. He’s clearly an accomplished indivi…

Yes and he was also part of the boys club by knowing a bunch of VCs. Who you know is more important than what you are building in the modern game of venture capital.

> Who you know is more important

Networking is all about who knows you, not who you know.

Re: Everything I wish I had known about raising a seed round

#35
post #11
post #10

Earlier quoted context omitted.

> 1. SAFEs are convenient if everyone is amenable, but be careful about having SAFEs sitting around too long or with different terms. They're like the Mogwai in the Gremlins films. They're kind and cuddly unless you feed them after midnight or get them wet. Your analogy is funny but you don't actually explain why SAFEs are dangerous, could you develop?

If you have SAFEs with different terms the calculations for your cap table can become onerous and complicated and confusing. If things get confusing some SAFE holders might feel like they're getting a worse deal than others, which can cause acrimony on your investor team. If they sit around too long the risk of these things increases. SAFEs are so easy someone can offer to invest and you say yes and BAM you sign one.…

Isn't this really an issue with SAFEs that have pre-money terms? Genuinely asking bc idk. I thought post-money SAFEs kinda solved for this. Less favorable for the founder, but far less complex when dealing with multiple investors.

Re: Everything I wish I had known about raising a seed round

#36
post #23

For anyone reading this advice. The number 1 reason why Matt’s fundraising process went as well as it did is because he has a world-class personal track record. This dwarfs all other reasons by a long way. Quite frankly Matt would have been able to raise with complete air (assuming that his cofounders have similar personal track records). That’s not to take anything away from Matt. He’s clearly an accomplished indivi…

Absolutely true. I'll add that THREE paragraphs start with "calling my VC friends", which factors in heavily on how "easy" it was to raise.

yeah I don't really have any VC friends :( nor a prestigious pedigree :(

Guessing both are big factors in how easy it is to raise funds as a first time founder.

Re: Everything I wish I had known about raising a seed round

#37
post #33

Earlier quoted context omitted.

Yes and he was also part of the boys club by knowing a bunch of VCs. Who you know is more important than what you are building in the modern game of venture capital.

> Who you know is more important Networking is all about who knows you, not who you know.

>Networking is all about who knows you, not who you know.

Need to steal that.

And is this a reason why Twitter, Social Media, and self branding on the internet are so important? Since it is all who knows you?

Re: Everything I wish I had known about raising a seed round

#38

For anyone reading this advice. The number 1 reason why Matt’s fundraising process went as well as it did is because he has a world-class personal track record. This dwarfs all other reasons by a long way. Quite frankly Matt would have been able to raise with complete air (assuming that his cofounders have similar personal track records). That’s not to take anything away from Matt. He’s clearly an accomplished indivi…

Absolutely agreed -- without knowing the specifics of the idea, this is the world's easiest raise. I'll add a few other tailwind factors here:

1. He didn't raise that much money. I know this sounds obscene (isn't $5M a lot of money?!), but to a VC, this is a small bet. In particular: this is a bet small enough that a single VC can just... do it -- they don't need the firm to buy in. (Or that buy-in is perfunctory.)

2. He's not a solo founder -- and his founders have startup experience. This might be a push, but if one of his co-founders was a previous startup founder and that company had a successful exit, that co-founder can raise on literally anything -- especially from the VC for whom they made money.

3. This sector is still hot. We don't know much about what he's making, but "it relies heavily on AI" (and, um, it's the TLD), which -- unlike web3 -- has remained (for the moment, anyway) white-hot.

4. The environment is (paradoxically!) great for this kind of startup. I know this sounds absurd because the environment has gotten worse (and he's certainly right that the valuation would have been higher a few months ago!), but because we are coming off of very frothy times, there is tons of dry powder out there: VC firms have raised massive funds, many of them targeting early stage (Seed/Series A). Those firms have to put that capital to use, and the ones that are queasiest about the macro prospects (for good reason!) want to go as early as they possibly can (i.e., first capital in) because that gives the macro factors the longest possible time to sort themselves out.

5. They have deal heat. In part because they have all of these other tailwinds, they got a additional huge tailwind in that multiple firms are vying for a deal. This is every entrepreneur's fantasy, and it results in the kind of behavior he sees: VCs absolutely tripping over themselves to be helpful. This is absolutely the exception, and highlights just how much all these other factors have lined up.

The title of this piece is what he wishes he had known, but it's not really clear what the true lessons are. That it's easier if you've actually built something? That your pitch deck gets around? Perhaps fixie.ai will just live a charmed life where everything is easy (and hey, more power to them), but if they are like most, the blog entry to read will be the one two to three years from now: "What I wish I had known about how hard a Series A is relative to a Seed."

Re: Everything I wish I had known about raising a seed round

#39
post #37
post #33

Earlier quoted context omitted.

> Who you know is more important Networking is all about who knows you, not who you know.

>Networking is all about who knows you, not who you know. Need to steal that. And is this a reason why Twitter, Social Media, and self branding on the internet are so important? Since it is all who knows you?

Yes and the luck surface area.

Your amount-of-luck is the surface area of a rectangle. A side is the interestingness of what you do, B side is how many know about it. The bigger the rectangle, the more opportunities you get.

https://swizec.com/blog/your-luck-and-opportunity-surface-ar...

This is how you get opportunities when you aren’t even in the room. Someone says ”Oh yeah I know , they’re doing cool things X in the area you just mentioned an interest in”. Or ”Oh yeah for problem Y, you should ping , they’re the expert”

Re: Everything I wish I had known about raising a seed round

#40
post #39
post #37

Earlier quoted context omitted.

>Networking is all about who knows you, not who you know. Need to steal that. And is this a reason why Twitter, Social Media, and self branding on the internet are so important? Since it is all who knows you?

Yes and the luck surface area. Your amount-of-luck is the surface area of a rectangle. A side is the interestingness of what you do, B side is how many know about it. The bigger the rectangle, the more opportunities you get. https://swizec.com/blog/your-luck-and-opportunity-surface-ar... This is how you get opportunities when you aren’t even in the room. Someone says ”Oh yeah I know , they’re doing cool things X in t…

Missing credit to the original creator of both the term “luck surface area” and the chart: https://www.codusoperandi.com/posts/increasing-your-luck-sur...

The idea was also expanded upon by one of his friends in a mental models book here: https://www.amazon.com/gp/product/0525533583/

Post reply on HN