For YC Companies Raising Seed Rounds

Mar 6, 2019

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.
How to reply to angel intros.
VC economics and incentives.
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?

Hope this is useful!

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

MY BOOK
You can order the High Growth Handbook here.

RELATED POSTS
Raising Money

Managing Investors

Markets: