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The difference between the first round and future rounds can be significant. Sometimes there's no company, and since there's no company, a company isn't raising
by benatkin 9y ago
The difference between the first round and future rounds can be significant. Sometimes there's no company, and since there's no company, a company isn't raising money. Often the prospective founders don't start working on their product until they raise, even making it contingent on raising money, which means up until Demo Day the founders haven't tried to build their product and raise money at the same time. Finally, most aren't raising based on market traction – at YC stage it's valid not to have any market traction (though having traction at that stage is also valid).
- ukulele 9y agoBy this logic, YC is investing even before the point that others shouldn't be investing, which would make even less sense.
- benatkin 9y agoHmm, I was going to say that at YC they're investing on the team more than the product, and they can afford to do that, but I think investing primarily based on the team is common after the seed round too. So I concede that it doesn't make logical sense that the YC startups are too early to invest, if you have the right investor, that is going to play a similar role to YC.