[HN Gopher] Everything I wish I had known about raising a seed r...
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Everything I wish I had known about raising a seed round
Author : mad
Score : 189 points
Date : 2022-10-11 04:58 UTC (2 days ago)
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(TXT) w3m dump (mdwdotla.medium.com)
| davidhunter wrote:
| 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 individual and his advice is still sound. But he
| hasn't included the glaringly obvious reason why he got funded -
| he was a professor in CS at Harvard and has had a string of
| prestigious roles in industry.
| zcombynator wrote:
| Growth is the most convincing metric. If you have growth, you
| will get funding. So how to get growth? Build something users
| want/like. How to know what they want/like? Talk to them.
| Build. Talk. Build. Talk.
| mbesto wrote:
| Sure, but this isn't mutually exclusive.
| clpm4j wrote:
| If there's an actual business, then the VCs will evaluate and
| choose whether to bet on that. If there's no business, then the
| VCs will evaluate the founders and choose whether to bet on
| them. A real (successful) business AND extremely impressive
| founders don't have to reach out to VCs because they're already
| beating a path towards them.
| bcantrill wrote:
| 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."
| gumby wrote:
| > 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")
| bcantrill wrote:
| 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.
| gumby wrote:
| > 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.
| gumby wrote:
| > 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.
| jiveturkey wrote:
| > number 1 reason [...] a world-class personal track record.
|
| > That's not to take anything away from Matt.
|
| Why would that take anything away from Matt? That's tremendous.
|
| Anyway I'd disagree. The number 1 factor is luck. I like this
| video https://www.youtube.com/watch?v=3LopI4YeC4I but there are
| plenty like it. Luck accumulates/aggregates/concentrates. I
| don't know if they cover it that way in that video.
| Kiro wrote:
| Matt was even portrayed in The Social Network.
| ilrwbwrkhv wrote:
| 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.
| Swizec wrote:
| > Who you know is more important
|
| Networking is all about who knows you, not who _you_ know.
| ksec wrote:
| >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?
| Swizec wrote:
| 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 <ksec>, they're
| doing cool things X in the area you just mentioned an
| interest in"_. Or _"Oh yeah for problem Y, you should
| ping <ksec>, they're the expert"_
| AlchemistCamp wrote:
| 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/
| ksec wrote:
| Thank You. Swizec and AlchemistCamp. Will have to find
| time to read it all.
| yeasurebut wrote:
| scarface74 wrote:
| 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...
| smackeyacky wrote:
| That and "being able to call up a few VC friends of mine" also
| means he is a lot better connected than 99% of startup
| founders. This just reinforces the idea that raising VC is more
| about your background than it is about your ideas or ability to
| execute.
| vecter wrote:
| > This just reinforces the idea that raising VC is more about
| your background than it is about your ideas or ability to
| execute.
|
| At the seed or pre-seed stage that Matt was at, what else
| would it based on? If you have no product or barely an MVP,
| you're almost certainly not near product-market fit and you
| probably have close to zero traction. As an investor, you
| have practically no signal to go off of at that point.
|
| Ideas aren't worth much at that stage, so ability to execute
| is key. And given that there's been so little done, the best
| signal for someone's ability to execute should be their
| background.
| [deleted]
| spoonjim wrote:
| If you are a former Harvard CS professor and engineering
| director at Google then you don't need to know any VCs. They
| will take your call.
| threeseed wrote:
| You don't need to worry about this because VCs on Twitter
| have said many times that they are happy to accept cold
| emails and DMs.
|
| Of course from recent experience they don't actually respond
| so there's that.
| danr4 wrote:
| 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.
| FranksTV wrote:
| This is some "the rest of the owl" material for sure.
| davidhunter wrote:
| 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.
| peyton wrote:
| It should hopefully be obvious that you should befriend
| rich people if you think you will need access to capital in
| the future.
| champagnepapi wrote:
| 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.
| baxtr wrote:
| He is Ex-Google and Ex-Apple... so I guess it's way easier for
| him to raise than for other people.
| mdwelsh wrote:
| OP here. Thanks for the kind words. I certainly didn't feel
| like this was an easy raise, but then again it's the only time
| I've done this and my comparison points were other first-time
| founders who raised 2x what we did with less than we had done.
| Yes, these are all pretty senior, well-established folks, not
| kids straight out of college.
|
| The main point of my article was the surprise around the extent
| of the VC network and the helpful interactions with them.
| Before going through this process, VC was a black box to me.
| Now, a lot less so.
|
| A few folks below have pointed out that I must have had an
| extensive VC network to draw on. Not quite. I knew 3-4 VCs
| casually from having worked at a couple of other startups. None
| of them invested in us by the way. It certainly didn't hurt to
| get their advice. Now, of course, I have a rolodex full of
| dozens I could potentially call up at some point, which is
| useful. I can see how founders who have done it before likely
| find it a lot easier to get the ball (and the checks) rolling.
| ipaddr wrote:
| When you said:
|
| "my first stop was to call up some VC friends of mine"
|
| I wasn't surprised you were funded without a product not
| knowing your history and current role.
| spaceman_2020 wrote:
| 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.
| spoonjim wrote:
| LOL exactly. A Harvard CS professor who had also worked in
| industry wouldn't even need to share the deck or idea to raise
| $5m. John Carmack just raised $20m for his AGI startup and
| doubt he had to share any plans or decks either, and guarantee
| you that Carmack was oversubscribed.
| silverlake wrote:
| I raised a few $M with just 10 slides during the VC frenzy last
| year. I agree with the post but I view this from a social angle.
| The entire VC industry is driven by BullShit. VCs raise money
| from LPs (pensions, rich people) by claiming they have deal flow
| (they can get into the next big thing) and an "investing thesis"
| (some BS about the future, usually a bombastic spin on a current
| fad). VCs are finance bros that believe their own BS.
|
| Your pitch should fit the current investing zeitgeist. If you
| pitch some oddball idea then you need to move your audience from
| 0 to 100% in 1 hr. If you pitch "AI generated metaverse for
| basketweaving" then the background hype has sold half your story.
| But also, VCs need other VCs to co-invest. They need to explain
| this investment to their LPs. It's easier to pitch AI nonsense
| than something truly novel.
|
| Every VC wants to see Matt's pitch because he's got a great
| resume. VCs don't invest alone, so they will pass the deck around
| to their VC network. But it's also sharing deal flow: I send you
| this, please send me the decks you've got.
|
| VCs like to keep their options open. Even if they hate your idea,
| if A16Z invests then they'll want to get back in. Or if you
| succeed then they'll want to get into the next round. I had a VC
| offer a very low valuation. When I got 10X more elsewhere, they
| called back that they wanted in. The numbers are all BS:
| valuations, seed size, etc. Remember, their goal is to invest as
| cheaply as possible. Your goal is to sell as little of your
| company as possible.
|
| Strangely, BS artists love other BS artists. Adam Neumann is a
| God-tier bullshit messiah with sociopathic self-confidence. It's
| no wonder that he raised billions after the self-dealing disaster
| at WeWork. Matt is right: confidence is insanely important. Your
| company is a $1T opportunity that will change the course of
| humanity. (In fact, outrageous confidence is important
| everywhere. Humans are just really gullible fools.)
| FL33TW00D wrote:
| This tweet from Roon applies:
| https://twitter.com/tszzl/status/1573564546052067328
| 0898 wrote:
| How much equity do you typically give up in a seed round?
| Sammyadems1 wrote:
| The bigger question is how much equity do give up for 5mm when
| you have nothing but an idea?
|
| I don't get it..
| axg11 wrote:
| Typically 10-20% but the correct answer to this question is "it
| varies".
| tnolet wrote:
| This post is all true. One caveat (which is mentioned in the
| post): this person has multiple VC's in his network and knows
| multiple founders who have raised on nothing but a deck.
|
| Many, many, many future founders are not as lucky.
|
| So, I guess rule -1 is: get to know VC's, Angels and other
| previously funded founders.
| pas wrote:
| Oh yeah, that Figma post all again. 0 to 5M in 3 months, and
| "how much prep do I need" ... ahaha.
|
| Less "lucky" teams (eg. the other 99.9%) spend more time and
| end up with not even a million Schrute bucks.
|
| Of course there's also a 0.00..1% that is really lucky, finds
| something at the right time, with the right framing/context.
|
| All true, but somehow still very different.
| haasted wrote:
| Yeah, reading the sentence _" Before starting the fundraising
| process, my first stop was to call up some VC friends of mine
| and ask them how to get things going"_ made me roll my eyes.
|
| Rest of the article is interesting, though.
| sirspacey wrote:
| Why?
|
| Making friends with VCs before soliciting them for money is a
| smart move.
| Centigonal wrote:
| yes, but Matt Welsh has yet to write the _Everything I Wish
| I Had Known About Making Friends with VCs_ companion
| article.
| indymike wrote:
| 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.
| uranium wrote:
| +1 this helps even if your angels are out of state. At least in
| Kansas, they can sell the tax credit to someone in-state for
| maybe 80% of its face value.
| api wrote:
| A few things I've learned:
|
| 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.
|
| 2. Stay in touch with your angels even if they don't initiate.
| It'll help in tons of ways and they can interpret lack of contact
| as a sign that you're dying and that they shouldn't think about
| you anymore. This isn't good.
|
| 3. Be careful about any terms (e.g. in side letters) that might
| allow someone to stand in the way of a priced round in the
| future. Even if someone doesn't use them to play hardball for
| terms (they can), it might make things inconvenient and add
| dangerous delays.
|
| 4. Have a lawyer look things over BEFORE you get into priced
| round negotiations with VCs or you might end up dragging the
| process out and risking losing the deal because the lawyers find
| a problem that needs fixing.
|
| 5. If you use standard/canned documents, check (3).
|
| Generally all this boils down to: keep terms simple and universal
| as much as possible, be communicative, and don't let things sit
| too long.
|
| It's possible to do a priced round without a lead if you have
| SAFEs/notes sitting around too long. You can use standard
| documents to minimize legal. It may be necessary to clean up your
| cap table.
| elcomet wrote:
| > 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?
| api wrote:
| 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... without bothering to
| carefully look over all previous SAFEs etc. and make sure
| terms are in line with expectations. They're almost too easy
| to execute.
|
| My analogy came from the fact that if you have these problems
| you can get a complexity explosion during the next priced
| round.
|
| KISS (Keep It Simple Stupid) is really the TL;DR.
| aliyeysides wrote:
| 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.
| gumby wrote:
| 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.
| iovrthoughtthis wrote:
| "Before starting the fundraising process, my first stop was to
| call up some VC friends of mine and ask them how to get things
| going."
|
| ah, so it is
| lucidlive wrote:
| This article is not useful for a typical entrepreneur. Most work
| for many years with little chance of raising capital. This guy
| makes it sound like all you need is some experience and a good
| idea. And now he's writing a "all I learned" article about his
| past 3 months. Give me a break. (And no offence OP but I do feel
| it sounds out of touch)
| steve76 wrote:
| keeptrying wrote:
| He got funded because: He was a Prof CS at Harvard.
|
| He did hit on the most imp point: be confident in your pitch.
|
| Like 200% more confident than you are about anything.
|
| I can't overemphasize this. This is more important than anything
| else.
| uptownfunk wrote:
| Seems like the author here had a much easier time than most
| people I know who have had to fund raise..
|
| is it really that easy?
| ageitgey wrote:
| My experience is that timing is a huge element. VC groups have
| teams that specialize in certain areas (biotech, hospitality,
| crypto, whatever), but those specialties change over time as the
| business landscape changes.
|
| If your pitch lands in the sweet spot of the kinds of things they
| are looking to fund right now (and you can back it up with
| experience/traction/team quality/whatever), you will have a
| relatively easy time raising money. If your idea is good but the
| timing isn't right for the VC market and they don't have people
| that understand your idea, you will have a very hard time raising
| money.
|
| Likewise, different VCs are experts in different areas (even
| between big name firms). We met VCs who knew our market extremely
| well and had a very deep network in our specific niche. We also
| met VCs where we had to explain the basic premise of our market
| from zero. Do some research to find the VCs that work in the
| niche you work to have the best chance of not only raising money
| quickly, but getting access to a network of people who can
| actually be beneficial to your company.
| wizwit999 wrote:
| Asking your VCs if you should do YC is a funny conflict of
| interest, of course they're gonna say no.
| manv1 wrote:
| One 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.
| thecupisblue wrote:
| Looking 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 pitch with a deck live. If it was a live
| meeting, they've already seen the deck or we've done a short
| pitch over zoom already. The "stand in a meeting room and pitch
| to VC's" thing is mostly a myth nowadays.
|
| But a 5 million raise without even having a product just sounds
| insane. We've been offered 50-100k offers due to our team and
| product, but rarely anyone wants to invest more than that in a
| pre-revenue/pre-launch startup. And if they do, they would do it
| in tranches and by the time they would invest 500k we'd be giving
| them more than 20% equity.
|
| The difference in valuations is just insane, with even VCs
| straight-up telling us that if we were raising in US we'd be
| offered 5-10x more than here.
|
| 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.
| CalRobert wrote:
| I'll ask - what's your startup? As an American living in Europe
| who really doesn't want to move back this is disheartening to
| say the least. Moving here did basically mean taking a
| sledgehammer to my career, admittedly.
| thecupisblue wrote:
| Check the link in bio!
|
| In a way it is, the more you know about the US tech scene -
| the more it feels like you're handicapped in Europe -
| especially if you're not living in a tech hub.
| baxtr wrote:
| Two questions: have you considered raising in the US? It's
| gotten easier with the pandemic
|
| And: re new pitch decks. Is there a good template for the new
| type of pitches?
| thecupisblue wrote:
| 1. Not really, since we don't have enough connections in the
| US to make relevant warm intros to the VC's.
|
| 2. Also, not really - we did the YC style one but had to
| explain a lot more in the slides, which means adding more
| pages and more tradeoffs in what's important/what's not. Also
| influences the design a lot, since you can't just do the
| "pretty minimal slides" presentation. If you are used to
| speaking at conferences/meetups/companies, this will probably
| throw you off guard since you have to completely switch-up
| your style.
| syedkarim wrote:
| >>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?
| thecupisblue wrote:
| Not many of them are willing to invest in EU startups at
| early stage - a lot explicitly say they invest in NA only,
| and I assume a lot of them just don't want the legal
| difficulties - also it's much harder to get warm intros to US
| investors if most of your network is based in Europe, and
| logistics to do a in-person meeting are way harder if
| somebody is on the other side of the world.
| pyb wrote:
| Even if the company is incorporated in Delaware ?
| davidhunter wrote:
| Very few US VCs will/can invest in non-US companies at the
| seed stage.
| baxtr wrote:
| What does non-US mean? European Founders could register a
| Delaware company. Is that good enough?
| gumby wrote:
| 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.
| ido wrote:
| How much harder is it for an SFBA investor to keep up
| with what's going on in a Berlin or London startup vs,
| say, an Atlanta or Miami startup? As long as you need to
| board a flight to get there isn't it more or less the
| same, whether that's a 4 hours flight or an 8 hour
| flight?
| AlunAlun wrote:
| Serious answers (from someone who just raised EUR10M 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.
| moreira wrote:
| > 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 options. You will never have as much opportunity in
| Europe as you will in the US, not in the tech world. You might
| be able to eke out some success in Europe, but it'll pale in
| comparison to what you could've achieved in the US.
| thecupisblue wrote:
| 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 product. The difference in
| salaries and cost of living is huge.
| influx wrote:
| 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.
| helloworld11 wrote:
| 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.
| metadat wrote:
| This is precisely it, you get it.
| dottedmag wrote:
| 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.
| gumby wrote:
| > 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.
| ryanSrich wrote:
| 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).
| blobbers wrote:
| I wish I knew more about the company, perhaps even a slide deck.
| It might make some of the ideas easier to connect with!
|
| Anyone have a link to the deck?
| nakedrobot2 wrote:
| Sorry but is this a f*ing satire article? Ex-google ex-apple guy
| calls up his VC friends to ask how to raise a $5M (!!!!) seed
| round?
|
| For god's sake. It's something straight out of the Silicon Valley
| TV series.
| jiveturkey wrote:
| it's just standard SEO fare. don't read too much into it.
| intelVISA wrote:
| Hard to tell with venture capital
| exhibitapp wrote:
| aliqot wrote:
| Might be a very unpopular opinion here, but the overall attitude
| I'm seeing IRL these days is favoring bootstrapping. I asked why
| and was told essentially suits provide a very specific and
| targeted value with limited application outside of those areas.
| It's no longer an accelerator for an exit, it's someone buying
| the position of your employer and the choices are no longer yours
| to make. I can see that.
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