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Everything I wish I had known about raising a seed round

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

#41

Post by gumby »

bcantrill wrote: post #38
davidhunter wrote: post #7

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…

> The title of this piece is what he wishes he had known, but it's not really clear what the true lessons are.

he restates the lesson at the end: he thought that raising money would be like a grant submission, not realizing that it would be more collaborative (after all you're gonna have the investors along for a while, unlike a grant agency).

There were a few other small lessons too (e.g. your deck will be passed around, which used to be a no-no in the "old days")

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

#42

Post by helloworld11 »

influx wrote: post #31
thecupisblue wrote: post #19

Earlier quoted context omitted.

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.

How the hell can they justify this habit of telling a developer what they can and can't work on in their own time, or making any claim to it afterwards just because someone worked at company X during the same time they made side project Y? The whole tendency seems grossly onerous and unjustifiable to me.

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

#43

Post by ksec »

AlchemistCamp wrote: post #40
Swizec wrote: post #39

Earlier quoted context omitted.

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/

Thank You. Swizec and AlchemistCamp. Will have to find time to read it all.

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

#44

Post by dottedmag »

influx wrote: post #31
thecupisblue wrote: post #19

Earlier quoted context omitted.

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.

If they hire as a contractor, then it's easy to say no to these clauses. If they hire through a local subsidiary then these clauses are against the law in much of the Europe.

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

#45

Post by gumby »

influx wrote: post #31
thecupisblue wrote: post #19

Earlier quoted context omitted.

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.

> They could well try to claim stake or ownership on your company...

Note that not only is this not legal in California (but is in others -- Texas is particuarly notorios) but any employment agreement in California must specifically include a copy of the relevant section of law so that the employee is a aware of their rights. But don't use any of the employer's property (e.g. computer, IP) or do it when you are supposedly working: in that case the law does not apply and the employer does get the rights.

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

#46

Post by gumby »

baxtr wrote: post #26
davidhunter wrote: post #17

Earlier quoted context omitted.

Very few US VCs will/can invest in non-US companies at the seed stage.

What does non-US mean? European Founders could register a Delaware company. Is that good enough?

Partially. By investing in a delaware corp they know the law that will apply, and the tax code.

However if you're far away it's harder to keep up with what's going on with your company and many will not want to deal with that.

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

#47

Post by bcantrill »

gumby wrote: post #41
bcantrill wrote: post #38

Earlier quoted context omitted.

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…

> The title of this piece is what he wishes he had known, but it's not really clear what the true lessons are. he restates the lesson at the end: he thought that raising money would be like a grant submission, not realizing that it would be more collaborative (after all you're gonna have the investors along for a while, unlike a grant agency). There were a few other small lessons too (e.g. your deck will be passed ar…

I am shocked -- shocked! -- that our deck is being passed around. ;)

Given that they did have deal heat, I would love to know what they actually did for round composition and how they made that decision -- especially if it was on something deeper than firm prestige or valuation.

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

#48

Post by gumby »

aliyeysides wrote: post #35
api wrote: post #11

Earlier quoted context omitted.

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.

No, both get their pain from different discount rates.

I was sorry when SAFEs switched to post money -- it was a power play for the investors.

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

#49

Post by peyton »

FranksTV wrote: post #30
danr4 wrote: post #23

Earlier quoted context omitted.

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.

This is some "the rest of the owl" material for sure.

It should hopefully be obvious that you should befriend rich people if you think you will need access to capital in the future.

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

#50

Post by yeasurebut »

ksec wrote: post #37
Swizec wrote: 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?

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