8 ms·

Fundraising Advice for YC Companies

234 points by cryptoz 11y ago

arasmussen 11y ago
> "so far we haven't seen nearly as much of an effect on early-stage fundraising as the level of press coverage would seem to indicate" This is pretty interesting to me. I wonder if the press is just blowing things out of proportion, or if there's some Big Money™ behind this so that investors can convince companies to agree to worse terms.
- sama 11y ago
  It's definitely had a big effect at late stages. Early stages may not have been mis-priced, or it just may take longer to filter down. We don't know yet.
- api 11y ago
  It's the unicorn crash. It's mostly affecting later stages of hugely valued companies. So far the impact in the seed and A markets and more reasonably valued companies is minimal. Whether that changes depends on a bunch of factors. The two biggest are the overall health of the economy and how economically incestuous high-tech has become. If write-downs and possibly failures among the unicorns trickles down a lot to smaller ventures and investors, it will get worse. Otherwise it will be mostly isolated to that segment of the market. Edit: check the other response to the parent-- looks like we might indeed be seeing a pullback in angel/seed.
- sharkweek 11y ago
  Hmm in the aggregate, we reported a pretty sharp decline in 3Q and 4Q 2015 for angel/seed round count - http://imgur.com/CSqVOVQ http://imgur.com/CSqVOVQ I don't think the sky is falling, but people are tightening up on the number of deals being done, there's no doubt about that.
- mathattack 11y ago
  Early funding is a very small part of the overall pool of capital available. If every seed round is $2.5 million, 10,000 seed deals (~100X YC's size) is $25 billion in capital spent. For context: - It's less than ten percent of Google's market cap ($490 billion) [0] - The average Series D or later round is 40x higher ($100 million) [1] - It's less than a tenth of a percent of the US bond market ($40 trillion.) [2] Net - seed funding is just not a lot of money compared to the market at large. If founders and VCs have money, they can spend it. It gets very different later on. [0] http://www.google.com/finance?cid=304466804484872 http://www.google.com/finance?cid=304466804484872 [1] https://www.preqin.com/docs/press/Venture-Capital-Q1-15.pdf https://www.preqin.com/docs/press/Venture-Capital-Q1-15.pdf [2] http://money.cnn.com/2015/10/14/technology/cb-insights-venture-capital/ http://money.cnn.com/2015/10/14/technology/cb-insights-ventu... [2] https://en.wikipedia.org/wiki/Bond_market https://en.wikipedia.org/wiki/Bond_market
kirinan 11y ago
This seems like the same advice YC has been giving for years minus the fact that the market seems to restricting based on the unicorn mess happening which is ultimately probably a good thing in the long term to avoid a bubble and a later collapse. Maybe I've missed the difference between this and the message they had been saying for years now. Though this does seem very solid and something not just YC companies should aim to do. Picking good investors is much more valuable than having a lot of money. Bad investors will give you a lot of money to spend on whatever they tell you spend it on, sometimes good sometimes bad, whereas good investors will give you a little less money and give you the freedom as the founder who may know best to spend it on what you think is best in the long run with some guidance.
cryptoz 11y ago
> It's important to articulate why the company will eventually be in a strategically valuable position (i.e. a monopoly). I find it interesting, and disconcerting, that articulating a defensible competitive advantage is no longer sufficient advice. Now it's, "can you be a monopoly? no? go home". I realize this is a good way to maximize value for investors, but is this a healthy way to grow new companies and build a better society?
- kitbrennan 11y ago
  Really this advice is born out of two things: 1. Many investors argue you should build your product in a narrow vertical that has the opportunity to turn into a much larger market. Given you start in a narrow vertical, you should aim to dominate that vertical ('Crossing The Chasm' makes a very coherent argument in favour of this). 2. Investors are aiming for 10-100x returns, and it's hard to do that if you are not going to become the clear market leader. Whether this leads to a better society is an interesting question. One might argue that it makes your company more likely to be successful, and successful startups are job/value creators which is better for society.
- andreasklinger 11y ago
  why? it's the ideal state in capitalism for the single market player. it's just the extreme version of unfair market adv and most will anyhow not succeed getting there (btw no political notion to this - it just is fact from my pov)
  - calpaterson 11y ago
    The ideal state in capitalism is for businesses to be interchangable and suffer perfect competition in order to maximise the consumer surplus. This is different from the ideal state for capitalists, who obviously want a monopoly.
    - beat 11y ago
      As Peter Thiel observed, in the "ideal state" of capitalism, profit is impossible. Perfect competition drives profits to zero. All profit in capitalist systems results from various forms of friction - imperfections in "perfect competition". Barriers to entry are an imperfection. We're not in the startup world out of an ideological obsession with the perfectly spherical cows of economic fantasy. We're here to make money (among other things). We are trying to build high-growth sustainable business models. That means high profits, much higher than can be achieved in highly competitive industries. Perhaps we shouldn't be saying "monopoly" so much as high demand, low competition, high barrier to entry.
spoiledtechie 11y ago
I love this article, but would love to see some Marketing advice for YC companies....
- staunch 11y ago
  Probably the single best essay on startup advice that has ever been written: Jessica Livingston: Why Startups Need to Focus on Sales, Not Marketing http://blogs.wsj.com/accelerators/2014/06/03/jessica-livingston-why-startups-need-to-focus-on-sales-not-marketing/ http://blogs.wsj.com/accelerators/2014/06/03/jessica-livings...
  - spoiledtechie 11y ago
    thanks
whitenoice 11y ago
As an employee how can you get these details? and how should you act once you have the information?
- cududa 11y ago
  As an employee, you probably aren't the one fundraising.
  - whitenoice 11y ago
    Yes, what I was implying is - based on the result of the fundraising what point of action should an employee at an early stage start-up take considering the current climate. Or what questions should you ask the founders.
    - argonaut 11y ago
      Just ask the founders what you want to know. No need to play mind games or whatever, tiptoeing around what you actually want to know. If you're at an early stage startup and you don't get a satisfactory answer, you need to leave.
brotherjerky 11y ago
I really appreciate that a document like this is public. It would be very easy to send this out via private email list or internal wiki. Cheers for sharing!
volaski 11y ago
> I'd close the first, say, $200k from the first reasonably good investors that offer it on reasonable terms--say a $5 million pre-money valuation or higher. This removes some uncertainty and pressure, gives you capital to execute with while raising the rest of your round, puts you in a stronger position, etc. It's worth a discount for all of this. Wow 5MM pre-money for seed is considered reasonable (and considered a discount) nowadays? Or have I misinterpreted?
- jkaljundi 11y ago
  https://angel.co/valuations https://angel.co/valuations shows $6.5m average for YC, $6–8M 25 th / 75 th (does not include valuations over $10m).
- mojuba 11y ago
  I also find it strange to mention numbers without saying whether it's revenue generating, MVP or what.
- jedberg 11y ago
  Yes. Pretty much any investor you talk to will "lowball" with 2 on 6. 5M would be a discount. I'll make no judgement on whether this is bad or or not.
- argonaut 11y ago
  Keep in mind the "tech startup slowdown" that the media is talking about right now is pretty much concentrated in the late stage: Series A and later. There are still tons of angel investors out there.
- ryporter 11y ago
  For YC companies, which also benefit from a Bay Area premium. Up here in Seattle, 5MM is not a discounted, seed stage, pre-money valuation.
dsugarman 11y ago
One thing I think might be important to distinguish is how different companies coming out of YC (and not in YC) are in different stages. No matter how many times the partners told our batch to not compete over valuations, it still happened. Personally I felt like without a competitive price tag, we wouldn't be looked at as a promising company even though we had less traction than other companies. We had a (rightfully) pretty lame raise after YC. I think one thing that might help is to be explicit with the companies, give them some idea of what their perceived stage is and what valuation range would be a good place for them to start.
- logicallee 11y ago
  what's a "competitive price tag" for a "pretty lame raise" mean in valuation for you? I was shocked to see the article say: >I'd close the first, say, $200k from the first reasonably good investors that offer it on reasonable terms--say a $5 million pre-money valuation or higher. This removes some uncertainty and pressure, gives you capital to execute with while raising the rest of your round, puts you in a stronger position, etc. It's worth a discount for all of this. (Emphasis added.) Which means that a $5M seed-stage is a 'dicount'! (The true price would be at a higher valuation.) That is a shocking phrase to use, when selling a company for $5M outright is a pretty good outcome for 95% of people who create a company in the tech space.
  - peterjancelis 11y ago
    An investor buying $200K preferred equity at 5 million pre is not implying that investor would buy the entire company for 5 million cash. The preferred equity makes high valuations possible as the first $200K goes back to the investor.
    - huac 11y ago
      it's kind of a nuance, but an early stage investment is a bet on the founders/core team as much as it is on the idea. so you want the founders to retain significant equity (i.e. not purchase outright) to align the incentives.
kzhahou 11y ago
> It's important to articulate why the company will eventually be in a strategically valuable position (i.e. a monopoly). Is it possible to ever answer this in a meaningful way, besides "we're going to be the best and get mindshare and beat everyone out of the market"? Anyone have examples, or care to imagine what the answer would have looked like for those few companies that DID go on to dominate a market? I guess if your product has vendor lock-in or network/virual effects then you're in a better place to answer it well (?).
- blizkreeg 11y ago
  second this. At an early stage, pre-PM/fit or revenue, is articulating this good story-telling? I mean, we're going to give it our best shot and try to wow our customers and stay ahead of competition. Examples would be great, if any of you have some.
  - moonchrome 11y ago
    >At an early stage, pre-PM/fit or revenue, is articulating this good story-telling? At that stage almost everything is story telling
- rl3 11y ago
  >Is it possible to ever answer this in a meaningful way, besides "we're going to be the best and get mindshare and beat everyone out of the market"? I'd imagine a good answer might try to elucidate what it is they intend to do, and at least approximate how world domination could be achieved. Explaining the market fit of the startup in detail, and how it meshes with present and future trends probably wouldn't hurt either.
- patio11 11y ago
  Imagine Slack's answer to this, which is "network effects within teams and, more subtly, between teams. Slack will be proposed by your engineering team because their OSS projects use Slavk, their conferences use Slack, their last client used Slack, etc. Then after your entire corporate brain uses Slack for its synapses we, not to put too fine a point on it, own your soul."
mineshaftgap 11y ago
Can someone please explain why raising money from VC sharks to pay for a hipster office build out and other trivialities is considered smart? If you can possibly tighten your belt and keep most of your company you keep the money, assuming you have a good product. How much of this is cargo cult?
rcarrigan87 11y ago
Missing from all of this... Hey, you may not be ready to take investor money and that's completely fine. Maybe you've realized you'd rather have a bootstrapped business instead of a unicorn. Cool, actually think about what taking investor money means. Figure out what's best for you and your team.
- _sentient 11y ago
  To be fair, this letter was targeted at companies in the current YC batch. They've already explicitly opted-in to going the venture route, at least in some capacity. Bootstrapped businesses can be awesome; I've built a couple myself. But the time to be asking these sorts of existential questions would be before you take VC money, not after.
  - rcarrigan87 11y ago
    For a group that focuses primarily on young, inexperienced founders and is so founder focused, I think it would be reasonable to expect them to allow for founders to take the exit ramp if they decided the VC route didn't make sense for their business based on their YC experience.
ryporter 11y ago
Question for Sam -- How do you raise the first 200K at a different valuation without significant extra cost and hassle? I'm guessing it would be a SAFE or convertible note, in order to avoid issuing such a small amount of equity.
- paul 11y ago
  Yes, the SAFE is designed to make seed funding very cheap, easy, and fast (and it has proven very successful at doing so).
  - ryporter 11y ago
    And the 5MM valuation refers to the cap?
    - paul 11y ago
      Yes
apapli 11y ago
I know this is probably covered in day-to-day conversations with founders at YC, and this email is about raising funds... but, I'm astounded there is not a single word in here about building a business to be profitable, or to "polish up the business plan" ready for investors to review. Or put another way - with all the issues documented (and probably over-blown) in the media regarding the current fund raising climate, is it truly good advice to just give a suggestion to "3) You should raise enough money to get to your next significant milestone.". Surely developing the business case and reaching profitability should rate a mention somewhere when it comes to giving out fund raising advice, particularly when this is being released publicly for budding entrepreneurs not part of YC? And even more importantly because investors will be motivated to use this current climate as an excuse to negotiate harder than usual and get more stock for less money?
- mattzito 11y ago
  I think it's a combination of: - common sense (you should have a business plan) and - avoiding premature optimization If you can build an unprofitable business that is growing like crazy and has a clear path to profitability (i.e. the fundamentals of the business are not based on unscalable factors), it shouldn't matter so much how close you are to profitability.
- jusben1369 11y ago
  YC is still YC. Investor's come to YC to win, and win big. They want to see companies shooting for the moon, not worried about profitability 12 weeks in.
  - jblock 11y ago
    Can't you do both?
    - lmeyerov 11y ago
      12 weeks in validates a market.. and proves you're easily displaced
robertpohl 11y ago
This post tell us how undervalued Swedish startups are. We created the term `Swedish series A` a while back, which is around ~$1m - $3m. Interesting that this a seed round elsewhere. High tax and all.. :)

234 points by cryptoz 11y ago

> "so far we haven't seen nearly as much of an effect on early-stage fundraising as the level of press coverage would seem to indicate" This is pretty interesting to me. I wonder if the press is just blowing things out of proportion, or if there's some Big Money™ behind this so that investors can convince companies to agree to worse terms.

sama 11y ago
It's definitely had a big effect at late stages. Early stages may not have been mis-priced, or it just may take longer to filter down. We don't know yet.
api 11y ago
It's the unicorn crash. It's mostly affecting later stages of hugely valued companies. So far the impact in the seed and A markets and more reasonably valued companies is minimal. Whether that changes depends on a bunch of factors. The two biggest are the overall health of the economy and how economically incestuous high-tech has become. If write-downs and possibly failures among the unicorns trickles down a lot to smaller ventures and investors, it will get worse. Otherwise it will be mostly isolated to that segment of the market. Edit: check the other response to the parent-- looks like we might indeed be seeing a pullback in angel/seed.
sharkweek 11y ago
Hmm in the aggregate, we reported a pretty sharp decline in 3Q and 4Q 2015 for angel/seed round count - http://imgur.com/CSqVOVQ http://imgur.com/CSqVOVQ I don't think the sky is falling, but people are tightening up on the number of deals being done, there's no doubt about that.
mathattack 11y ago
Early funding is a very small part of the overall pool of capital available. If every seed round is $2.5 million, 10,000 seed deals (~100X YC's size) is $25 billion in capital spent. For context: - It's less than ten percent of Google's market cap ($490 billion) [0] - The average Series D or later round is 40x higher ($100 million) [1] - It's less than a tenth of a percent of the US bond market ($40 trillion.) [2] Net - seed funding is just not a lot of money compared to the market at large. If founders and VCs have money, they can spend it. It gets very different later on. [0] http://www.google.com/finance?cid=304466804484872 http://www.google.com/finance?cid=304466804484872 [1] https://www.preqin.com/docs/press/Venture-Capital-Q1-15.pdf https://www.preqin.com/docs/press/Venture-Capital-Q1-15.pdf [2] http://money.cnn.com/2015/10/14/technology/cb-insights-venture-capital/ http://money.cnn.com/2015/10/14/technology/cb-insights-ventu... [2] https://en.wikipedia.org/wiki/Bond_market https://en.wikipedia.org/wiki/Bond_market

kirinan 11y ago

This seems like the same advice YC has been giving for years minus the fact that the market seems to restricting based on the unicorn mess happening which is ultimately probably a good thing in the long term to avoid a bubble and a later collapse. Maybe I've missed the difference between this and the message they had been saying for years now. Though this does seem very solid and something not just YC companies should aim to do. Picking good investors is much more valuable than having a lot of money. Bad investors will give you a lot of money to spend on whatever they tell you spend it on, sometimes good sometimes bad, whereas good investors will give you a little less money and give you the freedom as the founder who may know best to spend it on what you think is best in the long run with some guidance.

cryptoz 11y ago

> It's important to articulate why the company will eventually be in a strategically valuable position (i.e. a monopoly). I find it interesting, and disconcerting, that articulating a defensible competitive advantage is no longer sufficient advice. Now it's, "can you be a monopoly? no? go home". I realize this is a good way to maximize value for investors, but is this a healthy way to grow new companies and build a better society?

kitbrennan 11y ago
Really this advice is born out of two things: 1. Many investors argue you should build your product in a narrow vertical that has the opportunity to turn into a much larger market. Given you start in a narrow vertical, you should aim to dominate that vertical ('Crossing The Chasm' makes a very coherent argument in favour of this). 2. Investors are aiming for 10-100x returns, and it's hard to do that if you are not going to become the clear market leader. Whether this leads to a better society is an interesting question. One might argue that it makes your company more likely to be successful, and successful startups are job/value creators which is better for society.
andreasklinger 11y ago
why? it's the ideal state in capitalism for the single market player. it's just the extreme version of unfair market adv and most will anyhow not succeed getting there (btw no political notion to this - it just is fact from my pov)
- calpaterson 11y ago
  The ideal state in capitalism is for businesses to be interchangable and suffer perfect competition in order to maximise the consumer surplus. This is different from the ideal state for capitalists, who obviously want a monopoly.
  - beat 11y ago
    As Peter Thiel observed, in the "ideal state" of capitalism, profit is impossible. Perfect competition drives profits to zero. All profit in capitalist systems results from various forms of friction - imperfections in "perfect competition". Barriers to entry are an imperfection. We're not in the startup world out of an ideological obsession with the perfectly spherical cows of economic fantasy. We're here to make money (among other things). We are trying to build high-growth sustainable business models. That means high profits, much higher than can be achieved in highly competitive industries. Perhaps we shouldn't be saying "monopoly" so much as high demand, low competition, high barrier to entry.

spoiledtechie 11y ago

I love this article, but would love to see some Marketing advice for YC companies....

staunch 11y ago
Probably the single best essay on startup advice that has ever been written: Jessica Livingston: Why Startups Need to Focus on Sales, Not Marketing http://blogs.wsj.com/accelerators/2014/06/03/jessica-livingston-why-startups-need-to-focus-on-sales-not-marketing/ http://blogs.wsj.com/accelerators/2014/06/03/jessica-livings...
- spoiledtechie 11y ago
  thanks

whitenoice 11y ago

As an employee how can you get these details? and how should you act once you have the information?

cududa 11y ago
As an employee, you probably aren't the one fundraising.
- whitenoice 11y ago
  Yes, what I was implying is - based on the result of the fundraising what point of action should an employee at an early stage start-up take considering the current climate. Or what questions should you ask the founders.
  - argonaut 11y ago
    Just ask the founders what you want to know. No need to play mind games or whatever, tiptoeing around what you actually want to know. If you're at an early stage startup and you don't get a satisfactory answer, you need to leave.

brotherjerky 11y ago

I really appreciate that a document like this is public. It would be very easy to send this out via private email list or internal wiki. Cheers for sharing!

volaski 11y ago

> I'd close the first, say, $200k from the first reasonably good investors that offer it on reasonable terms--say a $5 million pre-money valuation or higher. This removes some uncertainty and pressure, gives you capital to execute with while raising the rest of your round, puts you in a stronger position, etc. It's worth a discount for all of this. Wow 5MM pre-money for seed is considered reasonable (and considered a discount) nowadays? Or have I misinterpreted?

jkaljundi 11y ago
https://angel.co/valuations https://angel.co/valuations shows $6.5m average for YC, $6–8M 25 th / 75 th (does not include valuations over $10m).
mojuba 11y ago
I also find it strange to mention numbers without saying whether it's revenue generating, MVP or what.
jedberg 11y ago
Yes. Pretty much any investor you talk to will "lowball" with 2 on 6. 5M would be a discount. I'll make no judgement on whether this is bad or or not.
argonaut 11y ago
Keep in mind the "tech startup slowdown" that the media is talking about right now is pretty much concentrated in the late stage: Series A and later. There are still tons of angel investors out there.
ryporter 11y ago
For YC companies, which also benefit from a Bay Area premium. Up here in Seattle, 5MM is not a discounted, seed stage, pre-money valuation.

dsugarman 11y ago

One thing I think might be important to distinguish is how different companies coming out of YC (and not in YC) are in different stages. No matter how many times the partners told our batch to not compete over valuations, it still happened. Personally I felt like without a competitive price tag, we wouldn't be looked at as a promising company even though we had less traction than other companies. We had a (rightfully) pretty lame raise after YC. I think one thing that might help is to be explicit with the companies, give them some idea of what their perceived stage is and what valuation range would be a good place for them to start.

logicallee 11y ago
what's a "competitive price tag" for a "pretty lame raise" mean in valuation for you? I was shocked to see the article say: >I'd close the first, say, $200k from the first reasonably good investors that offer it on reasonable terms--say a $5 million pre-money valuation or higher. This removes some uncertainty and pressure, gives you capital to execute with while raising the rest of your round, puts you in a stronger position, etc. It's worth a discount for all of this. (Emphasis added.) Which means that a $5M seed-stage is a 'dicount'! (The true price would be at a higher valuation.) That is a shocking phrase to use, when selling a company for $5M outright is a pretty good outcome for 95% of people who create a company in the tech space.
- peterjancelis 11y ago
  An investor buying $200K preferred equity at 5 million pre is not implying that investor would buy the entire company for 5 million cash. The preferred equity makes high valuations possible as the first $200K goes back to the investor.
  - huac 11y ago
    it's kind of a nuance, but an early stage investment is a bet on the founders/core team as much as it is on the idea. so you want the founders to retain significant equity (i.e. not purchase outright) to align the incentives.

kzhahou 11y ago

> It's important to articulate why the company will eventually be in a strategically valuable position (i.e. a monopoly). Is it possible to ever answer this in a meaningful way, besides "we're going to be the best and get mindshare and beat everyone out of the market"? Anyone have examples, or care to imagine what the answer would have looked like for those few companies that DID go on to dominate a market? I guess if your product has vendor lock-in or network/virual effects then you're in a better place to answer it well (?).

blizkreeg 11y ago
second this. At an early stage, pre-PM/fit or revenue, is articulating this good story-telling? I mean, we're going to give it our best shot and try to wow our customers and stay ahead of competition. Examples would be great, if any of you have some.
- moonchrome 11y ago
  >At an early stage, pre-PM/fit or revenue, is articulating this good story-telling? At that stage almost everything is story telling
rl3 11y ago
>Is it possible to ever answer this in a meaningful way, besides "we're going to be the best and get mindshare and beat everyone out of the market"? I'd imagine a good answer might try to elucidate what it is they intend to do, and at least approximate how world domination could be achieved. Explaining the market fit of the startup in detail, and how it meshes with present and future trends probably wouldn't hurt either.
patio11 11y ago
Imagine Slack's answer to this, which is "network effects within teams and, more subtly, between teams. Slack will be proposed by your engineering team because their OSS projects use Slavk, their conferences use Slack, their last client used Slack, etc. Then after your entire corporate brain uses Slack for its synapses we, not to put too fine a point on it, own your soul."

mineshaftgap 11y ago

Can someone please explain why raising money from VC sharks to pay for a hipster office build out and other trivialities is considered smart? If you can possibly tighten your belt and keep most of your company you keep the money, assuming you have a good product. How much of this is cargo cult?

rcarrigan87 11y ago

Missing from all of this... Hey, you may not be ready to take investor money and that's completely fine. Maybe you've realized you'd rather have a bootstrapped business instead of a unicorn. Cool, actually think about what taking investor money means. Figure out what's best for you and your team.

_sentient 11y ago
To be fair, this letter was targeted at companies in the current YC batch. They've already explicitly opted-in to going the venture route, at least in some capacity. Bootstrapped businesses can be awesome; I've built a couple myself. But the time to be asking these sorts of existential questions would be before you take VC money, not after.
- rcarrigan87 11y ago
  For a group that focuses primarily on young, inexperienced founders and is so founder focused, I think it would be reasonable to expect them to allow for founders to take the exit ramp if they decided the VC route didn't make sense for their business based on their YC experience.

ryporter 11y ago

Question for Sam -- How do you raise the first 200K at a different valuation without significant extra cost and hassle? I'm guessing it would be a SAFE or convertible note, in order to avoid issuing such a small amount of equity.

paul 11y ago
Yes, the SAFE is designed to make seed funding very cheap, easy, and fast (and it has proven very successful at doing so).
- ryporter 11y ago
  And the 5MM valuation refers to the cap?
  - paul 11y ago
    Yes

apapli 11y ago

I know this is probably covered in day-to-day conversations with founders at YC, and this email is about raising funds... but, I'm astounded there is not a single word in here about building a business to be profitable, or to "polish up the business plan" ready for investors to review. Or put another way - with all the issues documented (and probably over-blown) in the media regarding the current fund raising climate, is it truly good advice to just give a suggestion to "3) You should raise enough money to get to your next significant milestone.". Surely developing the business case and reaching profitability should rate a mention somewhere when it comes to giving out fund raising advice, particularly when this is being released publicly for budding entrepreneurs not part of YC? And even more importantly because investors will be motivated to use this current climate as an excuse to negotiate harder than usual and get more stock for less money?

mattzito 11y ago
I think it's a combination of: - common sense (you should have a business plan) and - avoiding premature optimization If you can build an unprofitable business that is growing like crazy and has a clear path to profitability (i.e. the fundamentals of the business are not based on unscalable factors), it shouldn't matter so much how close you are to profitability.
jusben1369 11y ago
YC is still YC. Investor's come to YC to win, and win big. They want to see companies shooting for the moon, not worried about profitability 12 weeks in.
- jblock 11y ago
  Can't you do both?
  - lmeyerov 11y ago
    12 weeks in validates a market.. and proves you're easily displaced

robertpohl 11y ago

This post tell us how undervalued Swedish startups are. We created the term `Swedish series A` a while back, which is around ~$1m - $3m. Interesting that this a seed round elsewhere. High tax and all.. :)