For YC Companies Raising Seed Rounds

In the weeks before demo day, a number of YC founders will reach out to me for advice on fundraising or early customer acquisition. In general, the same set of questions come up from the founders. Below are a set of links and takeaways that I hope will be of help to founders.

1. Fundraising.

• Overall:

  • My slides on fundraising

  • YCs guide to fundraising 

• Your pitch deck:

  • Sequoia template 

  • Why its important to wow people in the first 5 minutes

  • Common questions VCs ask

  • How to present to investors from Paul Graham on demo day

• Choosing a mix of angels or investors.

  • What mix of angels should you get

• What is a seed round versus a series A.

  • Difference between a seed round and series A

  • What is a party round?

  • How to raise a series A

• How to reply to angel intros.

  • Elevator pitch

  • Email reply format

  • How to ask for an introduction

• VC economics and incentives. 

  • Why VCs care about % ownership?

  • What is a good VC?

  • Founders tend to maintain board control after series A.

  • Investor herd effects from Paul Graham

• How to tell if an investor is not that interested?

  • Ways to gauge investor (lack of) interest

Some takeaways (usually items discussed live with founders):

• Every company is unique and edge cases may emerge for you. When in doubt talk to a trusted angel or advisor. If you are in YC, talk to your YC partner (they see a ton of parallel fundraises!) to get another view.

• If your company does well, you will be working with your investors for the next 5-10 years. As such, you should optimize for (i) who can help your company and (ii) who you have good personal chemistry with. It is a long road.

• Over optimizing for valuation and brand tends to be a common first time founder thing. The specific partner at a fund, or set of angels you work with is more important than a bit more dilution or a brand name firm with a partner you don't really gel with.

• In reality, there is not that big a difference between SAFE notes and equity raises. SAFEs tend to be easier and faster and most (probably 70-80%) of seed companies do those. But an equity raise is OK too.

• Ask your investors to commit time to help as part of their investment. Even the busiest people are more likely to carve out time to help you if you ask as part of them investing.

• You usually do not give up a board seat for a seed round, and almost always do for a series A. If you add a board member, make sure to vet them with other founders. In particular focus on how they help, and also how they act if things go badly.

2. What to do once you have investors.
You spend all this time raising money, how should you make use of your investors?

• How to make use of investors?

• Investor email update template

Hope this is useful!

Thanks to Avichal Garg for a quick sanity check look at this post.

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