This tweet from Roon applies: https://twitter.com/tszzl/status/1573564546052067328
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
#52No post body was provided.
Re: Everything I wish I had known about raising a seed round
#53Looking at this as a founder thats currently raising a seed round (or pre-seed, tho as I understand, same position as OP) in Europe with an MVP. Some parts ring true, as in VC's you never heard of contacting you on LinkedIn, sharing decks between their contacts and keeping in touch to build a relationship. The part about common pitch deck advice being geared towards live pitches especially - we haven't done a single…
>>with even VCs straight-up telling us that if we were raising in US we'd be offered 5-10x more than here Serious question: Then why even remotely bother raising from European VCs? Doing so is clearly not in your best interest. Is it a matter of pride?
Serious answers (from someone who just raised €10M from European VCs for a pre-revenue, pre-launch company):
1) While US investors can and will invest in Europe, they are more likely to do so at a later stage.
2) Not everybody wants to move to the US on a pipedream, particularly those with family, kids, and roots on this side of the Atlantic. Again, at later stages, when there is more stability to the company, this can change.
3) the lower cost of operations in most of Europe partially makes up for the lower amount you raise - our monthly personnel cost is a fraction of what it would be in the bay area. And again, as you grow, and need to hire really senior experienced talent, this changes.
4) there is early stage money in Europe. Maybe you don’t raise 5M with a PowerPoint, but you can raise. There is also a vibrant startup scene with several hubs (Berlin, London, Barcelona). Though I will admit, it’s not as crazy as Silicon Valley where everyone I meet seems to have a crazy startup idea.
The biggest downside I see is that, as a European founder, you likely have to go through one if not two pre-seed rounds before you can raise ‘decent’ money, which dilutes you and puts you at a disadvantage for when you eventually move to the US (which you probably will do at some point, at least in terms of incorporation).
Yet, despite knowing this, I’m not sure I would have done that much different in my journey so far.
Re: Everything I wish I had known about raising a seed round
#54Looking at this as a founder thats currently raising a seed round (or pre-seed, tho as I understand, same position as OP) in Europe with an MVP. Some parts ring true, as in VC's you never heard of contacting you on LinkedIn, sharing decks between their contacts and keeping in touch to build a relationship. The part about common pitch deck advice being geared towards live pitches especially - we haven't done a single…
This is 100% a symptom of not being in the US. Seed stage VC might as well not even exist in Europe. It’s so risk averse that it’s something else. It’s not VC.
In the US, you can raise money ($1m+) with just an idea if you have some combination of the following (often times just one of these is enough)…
- you have some traction in the form of pre-signed customers
- you have previously had startups success (multiple rounds, an exit, etc.)
- you are a master networker with a very large Twitter/LinkedIn following
- you are well known within your circle of expertise. Could be that you run a large newsletter, or podcast, or blog
- you know VCs personally, and are close enough with them that they’re willing to take on some risk with you
- you have a world class team of co-founders. Could be someone that built something open source, or lead some large branch of a FAANG company (I’ve seen former AWS employees raise on the simple fact that they worked for AWS)
- you went to a prestigious university like Harvard or Stanford. Many VCs attended these universities and are more willing to work with you in these cases (as much as people don’t want to believe this it’s true)
There are probably dozens of other scenarios and combinations of scenarios that would allow you to raise with just an idea. But it’s 100% possible (I’ve done it).
Re: Everything I wish I had known about raising a seed round
#55Earlier quoted context omitted.
> 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.
> round composition
For my current company (self-funded for the past year, raising about the same size seed round now) I have a goal of 1/3 strategic partner, 1/3 customer, 1/3 professional investor. But I know if I get a professional investor(s) to cover more than 1/3, or all of the round I'll just take it and move on to the next task. Fundraising always takes too long and is too distracting to try to optimize on this scale at this point in time.
A strategic investor is extremely rare at the seed stage, and for many of the reasons that it is rare, it usually a problem when you do it. Our plan is a very special case...but still it's unlikely, despite expressed interest.
Re: Everything I wish I had known about raising a seed round
#56One interesting thing I learned from my previous startup is that when you're raising, you need to find investors that understand your market.
The more niche the market, the more difficult it'll be for you to find an investor. But when you find that investor the likelihood of them investing will be higher.
Why is that? Because if you have to educate your VC as to what you're doing, you've lost.
Let's say I'm building an AI that helps agencies set pricing for their ad inventory. Ideally I would want a VC that understands adtech, because they already understand the problems in that field (at some level) and how big it us.
I don't have to explain how much of a fucking pain in the ass it is to manage all the line items, creatives, placements, and pricing rules. Someone who wasn't in adtech would be like "google's GAM does that for you." Uh, not really.
A VC in adtech would be all "here's my money and a LOC."
And, the VC will be able to help you with some client introductions, so you can get more customers.
That said, my business co-founder couldn't sell water to a man in the desert, so we crashed and burned. Live and learn.
Re: Everything I wish I had known about raising a seed round
#57For 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…
I was trying to gauge some interest for a seed round as well a few months back. For someone with my background, most investors want to see a prototype with some users, at the very least.
It’s actually worked out better for me since it’s made me realize that I don’t need that much funding that soon. Working on the prototype and getting some users has also given me far more clarity about the product and customer acquisition strategy.
Re: Everything I wish I had known about raising a seed round
#58Earlier quoted context omitted.
> 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.
> I am shocked -- shocked! -- that our deck is being passed around. ;)
Often there is important insight and market detail in a deck, especially first-financing deck, that could help a fast follower, so you wouldn't want it shared widely.
But in the end there's a big, big difference between idea an execution, and if a fast follower could get it from a deck, perhaps there isn't much differentiation in what you do.
Decades ago I was advised to act as if any competitor had full access to our internal systems (payroll #s, marketing plans, the works) and assume that prospects and customers not only don't know anything about what we do but also that they could not care less. I've taken this to heart.
Re: Everything I wish I had known about raising a seed round
#59Earlier 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.
How to raise a seed round:
1. Become a professor in CS at Harvard. Achieve big career successes in prestigious technology companies. Build a network of SV founders and VCs.
2. Raise the f*king seed round.
Re: Everything I wish I had known about raising a seed round
#60Earlier 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.
It’s also about “pattern matching”….
https://www.holloway.com/g/venture-capital/sections/pattern-...
https://www.adamantventures.com/blog-post/the-problem-with-p...