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Story time: In early 2012, the startup I was working for, Thumbtack, had struggled for 6-8 months to raise a Series A but finally got to the finish line. Arou
by birken 9y ago
Story time: In early 2012, the startup I was working for, Thumbtack, had struggled for 6-8 months to raise a Series A but finally got to the finish line. Around the same time, Justin Kan co-founded a company called Exec, and within a few months raised a "party round" that was nearly as much as our Series A, with a valuation twice as high. Our company was years old and had serious traction, Kan's company had done essentially nothing. At the time it was a quite upsetting turn of events.
But there was a valuable lesson... How Justin Kan fundraises is irrelevant for you and me, because we aren't Justin Kan. There was no rational basis for Exec to have been worth so much at that time, but when you are Justin Kan that isn't relevant. And look, good for the Justin Kans of the world who can take advantage of that, but that doesn't mean it is helpful advice for the rest of us.
I can say from experience that going into VC meetings with a bunch of false bravado, hoping to "hold the tension" and out-negotiate the VCs is mostly irrelevant advice. By far the most important thing for the average founder is getting the VCs to look up from their phones and care or be interested in your pitch, which isn't going to happen unless you've created the right fundraising dynamic for your company.
One of my favorite Paul Graham essays of all time, "How To Raise Money" [1], fully captures what my experience was in the fundraising realm, both when it went well and when it went poorly. I'd point you there for more practical advice.
1: http://paulgraham.com/fr.html http://paulgraham.com/fr.html
- jacquesm 9y agoExactly. It's FOMO rather than anything tangible, which can work quite well as long as you don't mess up completely. Anybody remember color.com? https://www.fastcompany.com/3002341/color-failed-what-happens-its-41-million https://www.fastcompany.com/3002341/color-failed-what-happen... I don't think Bill Nguyen would be able to repeat that sort of raise.
- kayhi 9y agoIt’s funny in life that a person who may not be able to that type raise again doesn’t need to do one (ie. has enough money to never work again)
- jacquesm 9y agoHe already had achieved that when he did the 'Color' thing. I think plenty of these serial entrepreneurs raise money for the PR and validation reasons, not because they actually needed the money to begin with.
- pwaai 9y agoI find that a lot of articles shared on HN along the lines of "This is how you do X" conveniently cherry picks anecdotes from the perspective of an individual blind to their own intrinsic edge and attempts to generalize which poses many problems for the average reader. For example, charging people before you make a software product. Very rarely can you convince someone you never met over the phone or email to give you money for something that doesn't exist yet but this is apparently what you need to do as an average joe.
- tebugst 9y agoI never understand one point. I am using bunch of paid services and many free services. For paid services, I am paying from first day but in case of free services when they start charging I find alternatives.
- assetvault 9y agoThat is a classic and ever insightful essay
- billyhoffman 9y agoJokes on him. Thumbtack still exists and is doing awesome! Exec... well... not so much