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Why fundraising is a terrible experience for founders: Lessons learned

80 points by jenthoven 8y ago

machinecontrol 8y ago
I know blockchain gets a lot of hate on HN, but democratizing fundraising via crypto tokens and taking some power away from Silicon Valley VCs is a massive shift. The merit of the projects themselves can be debated, but the fact that technology entrepreneurs all over the world have easier access to capital has got to be a net positive.
- 1996 8y ago
  You mean on a VC run forum, crypto gets a lot of hate because it is an alternative? Color me shocked! Personally, I think bootstrapping + ICO is far less trouble that even bothering with VCs, but I am sure many people with Stockholm syndrome will explain me why I'm wrong!
  - mmt 8y ago
    I actually have no idea if you're right or wrong. However, one of my primary concerns regarding any "crowd-source" or direct-to-retail investment in startups is the information assymetry. It's tough, if not impossible (and certainly not scalable) for individual investors to do something like due diligence, especially in a manner consistent from startup to startup. This is a potentially soluble problem, with adequate regulation, and/or with third party providers (although keeping incentives aligned might be tough), but, in the meantime, I fear it could attract businesses that are much higher risk than even VC-funded startups, if not outright scams. On the other hand, I'm not convinced VCs have quite solved the problem, either, beyond, presumably, filtering out straightforward [1] scams. They do provide some minimum of risk-spreading by not investing in a single company (but their LPs get no say in those choices anyway). [1] i.e. embezzle the money and run, not complex fraud like Theranos, or even dot-com era spending all the money running the business, just with no credible business plan
    - 1996 8y ago
      I agree with you - it is impossible to say if it will be good or bad in the end. However, I believe individual investors will bridge the information asymmetry, since regulation of anonymous fungible crypto is bound to fail (or to be "as successful as the war on drugs" if your excuse my french) Since it can't be regulated, enough people will be scammed to cool down the taste for risk for the remaining ones. Whether the remaining ones is >0, IDK. Maybe yes, because out of a few billions, there will always be a few hotheads? In any case, I see the funding of highest risk business as a positive. I want to see crazy innovation like transhumanism!
      - mmt 8y ago
        > I believe individual investors will bridge the information asymmetry, since regulation of anonymous fungible crypto is bound to fail I'm not sure I follow. I'm willing to assume the latter as being true, but how does that failure lead to the former? Also, are you assuming that crypto will be the only viable crowdfunding venture investment method (perhaps because of its relative immunity to regulation)? > Since it can't be regulated, enough people will be scammed to cool down the taste for risk for the remaining ones. Whether the remaining ones is >0, IDK. That's the thing, though, I wasn't really talking about the supply of capital (i.e. the cash side), but rather the supply of ventures (i.e. the shares/securities side). If scams are possible, would enough legit founders bother going this route? I worry some version of Gresham's Law would take hold. > I see the funding of highest risk business as a positive. I do think that's, generally, the "access to capital" argument I've seen elsewhere in the thread. The counter-argument, which I don't necessarily agree with (and I surmise you firmly disagree with), is that some ventures are just so obviously unlikely to succeed that it's downright irresponsible to allocate any capital to them. (Although, to be fair, some of that criticism may be about the fundamentals of the business model, rather than the risk profile). Such a counter-argument strikes me as inconsistent with the generally-held maxim in capitalist investing regarding capital and asset allocation, which is the joke version of the Golden Rule, "he who has the gold makes the rule". I would be happy to support a system that allows investors the choice of putting their cash into as risky a venture as they want. What I'm leery of is a system that enables tricking investors into putting their cash into something that is riskier than they thought (or locks the cash up for longer, etc).
- mandelbrotwurst 8y ago
  It's a net positive for technology entrepeneurs, certainly. What's less obvious is whether it's a net positive for everyone, e.g. if that "access to capital" comes in the form of naive investors pouring money into projects that are likely to fail (i.e. have been arguably a poor use of capital / a net negative).
  - nine_k 8y ago
    Almost all projects are likely to fail. The key tenet of venture investment is investing in 500 companies, and have 499 fail, while one would give a 1000x return. A "retail" investor is likely not able to follow this strategy, so people who would invest in a few apparently great projects via blockchain technologies may be in for disappointment. But I don't see why small-scale venture investment via an appropriate technology could not work. Invest $10 in 500 companies, get $10k back... eventually.
    - mandelbrotwurst 8y ago
      Fair point. Where I said "likely to fail" what I meant was "so likely to fail that they represent a poor use of capital" (for even a large investor and also for society as a whole). As you've pointed out, there's a distinction between poor use of capital for the individual and a poor use of capital for society, and other groups in between. I'm not proposing that this is the case about any particular investment it just seemed worth pointing out that such a type of investment does exist.
CryoLogic 8y ago
Is there anyway you could have bootstrapped the company? My issue with VCs isn't anything you focused on but instead the unfavorable terms. Liquidation preference and such.
- jenthoven 8y ago
  Yes - we bootstrapped Kapwing for months before deciding to raise. It wasn't an easy decision, but I think it was the right one for us at this point in our career. I wrote a post on this topic on the Kapwing blog you can check out.
- kenneth 8y ago
  Liquidation preferences are not unfavorable terms. A 1x non-participating liquidation preference is standard and protects investors against cheap acquihires founders would otherwise be inclined to take.
  - paulddraper 8y ago
    1x non-participating liquidation is not unfavorable. There are unfavorable terms (and historically it has been more common)...but yeah, that's very reasonable.
x0x0 8y ago
We're in a similar place -- finished our first priced round. Comments: Blatant unfairness: yes, warm intros are required. Yes, this is unfair. However, the onus is on you to make this happen. If you want to found a startup, put your time in to building your network. If you're at a startup now, get intros to the VCs. Ask to go to VC meetings. When you're building the network of people you're going to ask for angel cash, do the same. Lots of them will be happy to give you those warm intros. So start now building a network of people you can ask for $10-$25k. This wasn't obvious to me, but an intro to a vc from an angel who has invested counts as a great intro. The same network will get you into one of the good lawyers (cooley, sonsini, gunderson) with a warm intro who will also do a deferred fee deal for $15-$25k. You want this. The other thing that is unfair is, at least in b2b, the more customers you have the easier a raise will be. How do you get those first customers when you have nothing except a site that breaks all the time and a tiny team? That's your problem; make it happen. Passionate origin story: we build a b2b tech. Most VCs seemed happy with 1 - we understood this problem from working on/near it 2 - we're building a solution Oh, and read the book _venture deals_ by brad feld and jason mendelson [1]. Seriously. It's extraordinarily valuable. Seriously consider doing the YC pre-YC program. It's all funnel for YC, but the info is good. Though it can be summed up (only somewhat facetiously) as, "Have you talked to customers yet? Maybe you should talk to customers. If you've talked to customers, talk to more! If you've talked to more customers, talk to even more! And after that... talk to some customers!" Understand that the seed and A all want 25%; plan accordingly. Within that range, they are less price sensitive. If you have questions, I'm happy to answer them, but I'm busy (the startup experience is everyone in your life is grumpy at you for flaking on them) so no promises on response time. [1] https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalist/dp/1118443616 https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitali...
- digitalboss 8y ago
  Here's the 3rd edition of the Venture Deals book https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalist/dp/1119259754/ref=dp_ob_title_bk https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitali...
- siamakf 8y ago
  How can I reach you for fundraising q's :)
neom 8y ago
Having done this at various scales I can attest to the truth in this article. Fundraising is never fun, doesn't matter if it's $100k or 100MM. Fundraising is exhausting, it creates the deepest amount of imposter syndrome that builds with every meeting. The need to stay focus on what you're doing, how you got to where you are, and why you're doing it becomes a primary concern, having people around you who believe in you is key during this period, but even that often only treats the symptoms. This was an email I got from a VC a couple years back: http://john.je/tA3S http://john.je/tA3S - that wasn't a fun day. I think there is a lot of romance is building a scaled startup, but a lot of folks I know, even those who have had large exits say they'd preferred to have built a much smaller lifestyle business in a more organic manner. The real fact is, building and maintaining any business from zero is really difficult. Even though it can be incredibly rewarding, it's certainly very rarely much fun.
- x0x0 8y ago
  The email is interesting but maybe consider removing fred from it?
  - wolco 8y ago
    Are you Fred?
    - x0x0 8y ago
      No. Is it that hard to comprehend that it's rude to share private correspondence without permission? Particularly from a VC that went above and beyond and shared reasons instead of "not a fit" or "maybe".
      - xseven 8y ago
        but then this just shows him in good light, no?
arikr 8y ago
This is a great post. I think one way to look at it is that the process of fundraising kind of sucks, and that it could be more efficient. I agree with this. Another way to look at it is that fundraising is one of the easiest parts of building a multi-billion dollar company (and if you're aiming to raise from VCs like A16Z, Sequoia, Greylock, then you need to be building a multi-billion dollar company). The "100% responsibility" mindset for fundraising would involve "owning" all of this difficulty. E.g. getting a deep understanding of the business of fundraising by talking to other founders who have raised recently (much more accessible than VCs, in general), accepting that it's a sales process, accepting that it's hard and that it'll suck, but that there'll be many much harder things. I guess I just react with some concern that readers of this post will take the wrong things away from a post like this. So I wanted to emphasize this perspective: It is hard. Like you note, it should be hard to convince strangers to give you a few million dollars. It would certainly be great if it was purely merit based. But for many (not all) companies, sales is a critical part of success of the business, and fundraising is another sales process - so it's a good approximation. And yes, that's not true of all businesses and it would be better if it was perfectly merit based. I think the most helpful takeaway for readers is that fundraising is hard, and that it should be approached with a mindset of "it's really hard so I'm going to figure out why people succeed and fail at fundraising so that I maximize my chances of success." If readers take away a victim mindset with respect to the difficulty, then they'll find it much harder to succeed in fundraising. I know this isn't really what people want to hear, but fundraising is hard, building a company is harder, you don't have to choose to start a startup.
AndrewKemendo 8y ago
Having done the same rounds on Sand Hill plus many up and down the business district of NYC and in Tysons Corner in DC, I will say that was still a flowery writeup - with a happy ending of a sizeable seed. I've come to the conclusion that 99% of startups raise money way too early - hence why it's such a terrible experience for most. Companies that are doing great business, don't need to pitch, and don't "go fundraising." Those companies seem to be actively sought out by money, and refuse checks more than they take them. That's probably 1/100 companies and the ones that should actually raise money. It's all about leverage.
crsv 8y ago
I want to take the high road in reading this, but it's hard to not take this in as some new form of humble brag. Affluent duo with super privileged private school educational pedigree land top tier entry level jobs @ big tech co and bootstrap for an incredibly modest 6 months before raising a relatively fat seed round from big VC firms IN 8 WEEKS and bemoan "how terrible the process was". Oh woe is fucking me.
- tdb7893 8y ago
  Other people have it harder than they do but that doesn't mean that the process want still very stressful and difficult for them.
- matte_black 8y ago
  It's probably not their fault. The reason we get articles like this is because present society encourages you to write about every little experience. If you don't, then it either didn't happen, or it didn't matter. I think they simply have no idea how hard raising money actually is. Pitching for 2 months and raising a fat seed sounds like a dream.
  - jenthoven 8y ago
    This is Julia, the OC. You're totally right that we didn't realize how hard raising money actually is. A lot of other founders I've met also don't realize, which means they're disappointed and discouraged when they try. The point of this post is to encourage founders to keep going even when they're down. I almost stopped fundraising a month in because I was so down, and now I'm grateful that I didn't. Everyone has imposture syndrome when raising. I wrote this post to let founders know they're not alone and to not lose their self-confidence because of investor rejections.
    - matte_black 8y ago
      The irony here is that if I had been trying to raise money for about 6 months with no luck, and I read your article where you raised in just 8 weeks, I'd probably feel like a failure. I know someone that took 2 years of pitching and tweaking his company and bootstrapping before finally raising money. And by the way: In the end, his company failed, all the same.
waytogo 8y ago
> we closed a $1.7M seed round led by Kleiner Perkins [...] in a little over 8 weeks This is fast and it's hard to believe that it was a terrible experience. How would have been your post if you needed 8 months or didn't raise at all after one year?
- EpicEng 8y ago
  When you've been handed everything in life, eight weeks is an eternity to wait.
- deleted 8y ago
  [deleted]
- paulddraper 8y ago
  If 8 weeks of raising $1.7m is "terrible"...you've obviously only gotten to the fundraising step. Wait until you try to make a business make actual money. :)
Aqua 8y ago
I'm not an expert, but writing "My advice to founders: fake it." on a publicly accessible blog doesn't sound wise, it's like saying "I will almost certainly lie to my future investors during the interview". If I were the investor and came across this article when doing startup due diligence, that would have raised some serious concerns about the CEO and her company.
- jenthoven 8y ago
  My advice was not "lie to investors." My advice was to fake your confidence and certainty, even if you're not feeling confident or certain. Investors want to know that the CEO has courage and the ability to evangelize.
  - lstodd 8y ago
    CEO is now "Courageous Evangelizing Officer"? My, my, what the world came to, etc, etc..
    - mmt 8y ago
      I don't see much, if any, novelty here, especially if one substitutes the synonym "Marketing" for "Evangelizing". I vaguely recall it being something of a trope in the software industry (perhaps not even limited to that) decades, if not longer, ago that CEOs were really CMOs.
- mmt 8y ago
  I was going to comment about this but wasn't quite sure what to make of it. However, I would not characterize what the article encourages as lying, but, rather, bluster is the word I'd choose. More importantly, my impression of the article (confirme by the sibling comment) is that this is being advocated because that is actually what the VCs want, to the point where they either asked for it explicitly or asked for a lack of the opposite (humility). Granted, there are specific suggestions to fabricate, literally fake, or pretend, but these need to be understood in context. > Nonetheless, investors want to hear a passionate origin tale. If you don’t have one, make one up. Does the factual accuracy of such a story make a bit of difference in terms of due diligence in the business sense, as opposed to, say, other history, such as education/skills/experience of the founders? > My advice to founders: fake it. Pretend you know exactly what the product will be in five years, even though you know your plan will change. This seems almost silly to criticize, taken in context. As with the rest of the paragraph, there's no advocacy for a founder to falsely claim anything credible. Rather, the advice is to claim, confidently, the incredible (which everyone involved already knows not to be true, because it can't be true). The point is the confidence, evangelism, and, well, bluster. To me, this actually paints the VCs in a bad light, rather than the OP founders. It's one thing to encourage a high degree of confidence (perhaps as a proxy for perseverence), but there's a danger of becoming too accustomed to believing seven impossible things before breakfast and thereby blurring the line between credible and incredible, as well as blurring the line between confident and over-confident. Of course, that doesn't matter if alternate funding decision techniques do no better at overall returns. It's easy to call out Theranos and Juicero as examples, but they just as easily could be nothing more than selection bias.
nanananananana 8y ago
We have been working in our startup full time for the last 18 months. We have a MVP. We have paying customers. We are working with cutting edge web development technologies. We failed to raise $100K. So I'm sorry, but this is not an advice for founders, this is just plain stupid humblebrag. You don't have to do this, seriously.
- plantmanfive 8y ago
  Why does the degree of success indicate how hard fundraising felt for the founders?
type0 8y ago
tl;dr fake it till you make it
kenneth 8y ago
I spent the bulk of this year fundraising, something which I was previously unfamiliar with (I've been in startups a few times, but there was always another "fundraising guy" who took that role. This time I rolled up my sleeve and helped with it.). We managed to get $12M+ and still going. The big surprise was that I loved it. Pretty much every bit of it. Everyone says it, but it'll never sink in until you experience it for yourself: fundraising is always an absurdly slow process where you get nowhere for months, until suddenly everything comes together last minute. For us, it took 4 months of mostly nos, until we got a big name to say yes and suddenly we went from 10% subscribed to 3x oversubscribed with investors calling us with a raging case of FOMO. This is always the process, in any deal I've ever been involved in, as investor or on the other side.
brink 8y ago
> "Humility is the opposite of confidence." Humility is not the opposite of confidence; uncertainty is. Humility is thoughtlessness of self.
paulddraper 8y ago
> Blatant unfairness: VCs rely on their network for meeting, evaluating, and closing deals with entrepreneurs. Founders need “warm intros” to the investors, which generally come from people they know because of luck, circumstance, and social circles rather than merit or professional aptitude. The result is that well-liked entrepreneurs with shitty business ideas get funding immediately while shrewd founders outside of the Club can’t get a foot in the door. It’s not fun to play a game that isn’t fair, even if you win. As much as that sucks to be on the bad end of...this is really common and really understandable. Ask yourself: Suppose you needed to hire someone to fix your lawn sprinklers, or hire an emply to work at your start up, or invest in a business. What role would personal connections and the trusted endorsements play? "Professional aptitude" is extraordinarily difficult to judge by other professions, and even more difficult in a reasonably brief amount of time. And character is a still more difficult judgement. Therefore, we rely on our own prior working relationships and recommendations of others. You can argue this is "unfair" and that everyone be treated at anonymous and unknown for sprinkler repair, early employment, and investment, but what you would call a "fair" strategy (by that standard), I would call a decidedly sub-optimal strategy.
- lkrubner 8y ago
  "Ask yourself: Suppose you needed to hire someone to fix your lawn sprinklers, or hire an emply to work at your start up, or invest in a business. What role would personal connections and the trusted endorsements play?" I've always been curious why people like you feel the need to write comments like this. What is the gender neutral phrase for mansplaining, or mansplaining done to a mostly male audience? Do you really think we don't understand all the various reasons why the system is unfair? We can all easily point out why the system is unfair, without having to remind ourselves of how the unfairness of the system perpetuates itself. The question we need to answer is, how to make this system more fair? Because we can all easily think of a few ways the system could be made more fair, if the will existed to make it more fair.
  - paulddraper 8y ago
    Apologies for the potentially patronizing explanation. Contrary to your comment though, I've found lots of people who put "decisions businesses/rich people make" and "decisions I make" on different planes. Example: A business looking to save money on their workforce is inherently Bad. But me looking to save every dollar I can on consumer goods is inherently Good (and different). I've found lots of people think in this "separate universes" mentality.
ummonk 8y ago
Replace “investors” with “women” and “founders” with “men”, and you could accurately describe dating in the valley. Low hit rate, the need for warm intros, the need to fake it till you make it for confidence, ghosting, all part of the dating experience. Which makes me wonder - could male founders be more immunized to this experience due to practice from the dating arena?
xseven 8y ago
I messaged the CEO on LinkedIn to indicate interest in funding them. No response :(. A "No, thank you. We have bigger fish raise from" would've been nice.
graycat 8y ago
Best I've seen about what early stage information technology VCs want to see: (1) Product/service in and/or exploiting information technology with traction significant and growing rapidly. Traction can be number of paying customers, traffic to Web site (e.g., Comscore numbers) or, better, revenue, or best, earnings. (2) The market large enough to permit a company worth $1+ billion in five years, no longer than 10 years. (3) Something serious in a Buffett moat, that is, a way to beat, i.e., block, competitors. E.g., network effects, high switching costs, cases of lock in, technological advantage, e.g., secret sauce, a platform company that has advantages because others build on, depend on, the work of the company, etc. (4) Team of at least two that does well covering both business and technology. (5) Nothing obviously wrong, e.g., not depending on only one or just a few customers, no on-going co-founder disputes, no signs of being sloppy, no signs of criminality, no signs of drug or alcohol problems, no big problems with communications, no bad prior investor situations, etc. My guess from reading VC Web sites was that they would make a "seed" investment, say, $150,000, with (A) a highly qualified team, (B) some excellent, powerful, valuable secret sauce, work difficult to duplicate or equal, for (C) a service likely of interest to nearly everyone on the Internet, with (D) so far nothing comparable on the Internet, where (E) if successful, worth $0.5-1+ T. Nope. Instead, I conclude (A)-(E) flops and (1)-(5) is about it. Okay. Wish I'd known that. Indeed, in the last year or so there was a post by USV's Fred Wilson on his blog AVC.com of a company his firm had their eye on and off and on over some months pursued the company and finally talked them into taking the company's first equity investment. Lesson: If you really have what they want, then they will notice you and call you. Indeed, likely the best "warm introduction" is that the VCs have already discovered the product/service and really, in the word of Paul Graham, "love" it. A big surprise to me was the reaction of the information technology community to secret sauce technology: In my career, I've been used to seeing new technology carefully evaluated. I saw this in the beginning of my career in applied math and computing for mostly US national security around DC. E.g., I worked in the group that did the navigation satellites for the US Navy (GPS by the USAF was the second version; the Navy did the first version) and heard the stories of how the work was approved from just the basic physics, essentially back of the envelope. A long list of projects for US national security was funded just from proposals on paper that were carefully reviewed, e.g., the SR-71. My Ph.D. dissertation was carefully reviewed. My published papers were carefully reviewed. For US information technology VCs, I had to conclude that under no circumstances would they take seriously anything technical about the technology or any technical reviews of the technology and, indeed, quite solidly would absolutely refuse any reviewing of the technology at all. Period. No exceptions. Feet locked 5' deep in reinforced concrete, they simply will not, Not, NOT, NOT consider a technical review of technology. NSF, NIH, ONR, etc. will review technology, insist on it, but information technology VCs will, in a word, NOT. My understanding is that bio-medical VCs will review and take seriously reviews of the claimed new, powerful, valuable bio-medical technology. The information technology VCs commonly claim on their Web sites that they want leading edge technology; they neglect to say that they will never consider any such technology in funding decisions and, indeed, will NEVER review it or consider any reviews of it. It was a surprise to me! Okay by me; I just wish I'd known. The VC information technology Web sites were highly misleading. Okay -- gotta beware of that in business!!!! Being a determined entrepreneur ready to keep going after a few dozen "No" responses, the misleading VC Web sites cost me a LOT of important time, money, and effort. I was ripped off. But, this is cast in concrete, wrapped in cast iron, and protected with a layer of uranium -- never but NEVER will an information technology VC pay any attention at all to a theorem and proof in measure theory!!!! Not in this solar system!!! Sure, uh, the flip side of that situation is an opportunity!!!! Finally I reminded myself that in the US, coast to coast, from barns behind farm houses on 50 acres to cross road villages to ... the largest cities, entrepreneurs start and grow successful businesses without equity funding. How? Do well running 10 fast food restaurants -- pizza carryout, McDonald's, ... Chinese -- and can do well. Also, run a successful, local independent insurance agency that knows nearly everyone in town and, thus, has a fantastically good "loss ratio". Run the local, dominating electrical supply house, plumbing supply house, building materials house, or any of many cases of "big truck, little truck" businesses, that is, where buy with a big truck and sell with several little trucks. Commercial real estate. On and on. Can see a lot of examples on Main Street. I used to go to yacht clubs; saw some big boats and some well off people; never saw anyone who took equity funding. A guess: For nearly all the students at Ivy League colleges whose parents pay the tuition, the money was from running a successful family owned business without equity funding. For starting a business, information technology should be a big advantage: E.g., last I checked, the price, quantity one, retail, of the AMD FX-8350 processor, 64 bit addressing, 8 cores, 4.0 GHz standard clock speed, goes for less than $100 (commonly was $300+ -- the one I have looks terrific). For less than $2000, can put together a Web server that is, in the history of computing back 20 years, just astoundingly powerful. If can build a Web site that is popular enough to keep that server half busy 24 x 7 and run ads at the rates suggested in the Meeker KPCB reports, then should be able to get revenue $100,000+ a month. So, we're talking capex ballpark $2000. So, compare that with the capex for, say, just a grass mowing service -- riding mower, $10,000+, trailer for the mower, ~$5000, truck to pull the trailer, $30,000, etc. Or compare with the capex for a pizza carryout, an auto repair shop, and auto body shop. With revenue of $100,000 a month, why bother with a dinky seed round of $1.7 million with the term sheet, vesting schedule, loss of control, too many lawyers, BoD, C-corp, etc.? With revenue of $100,000 and the rest of (1)-(5), let the VCs call you while you have a dozen nice ways to tell them "No". Don't be cruel to them: They are only finance guys who likely have never written much code and got an MBA instead of a Master of Science! They are unable to review any very technical secret sauce. And likely what they can fund is highly constrained by agreements with their limited partners who supplied nearly all the money.
koolhead17 8y ago
This post is a fluf, more like marketing piece. If your pedigree is Google and you are able to raise in 8 weeks, feel blessed. It would be great to hear VC side of story as well like: * 4X return to LP's. * Show enough exits in 7-8 years fund cycle. * Always on the road for raising next fund. * Coordinating with portfolio founders or other bigger investors for follow on. * Managing on a limited management fees. * How every fund has it's own investment thesis and they keep getting emails from rookie founders.
nsmog767 8y ago
I thought this post had more humility and self-awareness than it's getting credit for. "The result is that well-liked entrepreneurs with shitty business ideas get funding immediately while shrewd founders outside of the Club can’t get a foot in the door. It’s not fun to play a game that isn’t fair, even if you win." Coming from someone who was successful, this is a pretty unbiased observation!

80 points by jenthoven 8y ago

I know blockchain gets a lot of hate on HN, but democratizing fundraising via crypto tokens and taking some power away from Silicon Valley VCs is a massive shift. The merit of the projects themselves can be debated, but the fact that technology entrepreneurs all over the world have easier access to capital has got to be a net positive.

1996 8y ago
You mean on a VC run forum, crypto gets a lot of hate because it is an alternative? Color me shocked! Personally, I think bootstrapping + ICO is far less trouble that even bothering with VCs, but I am sure many people with Stockholm syndrome will explain me why I'm wrong!
- mmt 8y ago
  I actually have no idea if you're right or wrong. However, one of my primary concerns regarding any "crowd-source" or direct-to-retail investment in startups is the information assymetry. It's tough, if not impossible (and certainly not scalable) for individual investors to do something like due diligence, especially in a manner consistent from startup to startup. This is a potentially soluble problem, with adequate regulation, and/or with third party providers (although keeping incentives aligned might be tough), but, in the meantime, I fear it could attract businesses that are much higher risk than even VC-funded startups, if not outright scams. On the other hand, I'm not convinced VCs have quite solved the problem, either, beyond, presumably, filtering out straightforward [1] scams. They do provide some minimum of risk-spreading by not investing in a single company (but their LPs get no say in those choices anyway). [1] i.e. embezzle the money and run, not complex fraud like Theranos, or even dot-com era spending all the money running the business, just with no credible business plan
  - 1996 8y ago
    I agree with you - it is impossible to say if it will be good or bad in the end. However, I believe individual investors will bridge the information asymmetry, since regulation of anonymous fungible crypto is bound to fail (or to be "as successful as the war on drugs" if your excuse my french) Since it can't be regulated, enough people will be scammed to cool down the taste for risk for the remaining ones. Whether the remaining ones is >0, IDK. Maybe yes, because out of a few billions, there will always be a few hotheads? In any case, I see the funding of highest risk business as a positive. I want to see crazy innovation like transhumanism!
    - mmt 8y ago
      > I believe individual investors will bridge the information asymmetry, since regulation of anonymous fungible crypto is bound to fail I'm not sure I follow. I'm willing to assume the latter as being true, but how does that failure lead to the former? Also, are you assuming that crypto will be the only viable crowdfunding venture investment method (perhaps because of its relative immunity to regulation)? > Since it can't be regulated, enough people will be scammed to cool down the taste for risk for the remaining ones. Whether the remaining ones is >0, IDK. That's the thing, though, I wasn't really talking about the supply of capital (i.e. the cash side), but rather the supply of ventures (i.e. the shares/securities side). If scams are possible, would enough legit founders bother going this route? I worry some version of Gresham's Law would take hold. > I see the funding of highest risk business as a positive. I do think that's, generally, the "access to capital" argument I've seen elsewhere in the thread. The counter-argument, which I don't necessarily agree with (and I surmise you firmly disagree with), is that some ventures are just so obviously unlikely to succeed that it's downright irresponsible to allocate any capital to them. (Although, to be fair, some of that criticism may be about the fundamentals of the business model, rather than the risk profile). Such a counter-argument strikes me as inconsistent with the generally-held maxim in capitalist investing regarding capital and asset allocation, which is the joke version of the Golden Rule, "he who has the gold makes the rule". I would be happy to support a system that allows investors the choice of putting their cash into as risky a venture as they want. What I'm leery of is a system that enables tricking investors into putting their cash into something that is riskier than they thought (or locks the cash up for longer, etc).
mandelbrotwurst 8y ago
It's a net positive for technology entrepeneurs, certainly. What's less obvious is whether it's a net positive for everyone, e.g. if that "access to capital" comes in the form of naive investors pouring money into projects that are likely to fail (i.e. have been arguably a poor use of capital / a net negative).
- nine_k 8y ago
  Almost all projects are likely to fail. The key tenet of venture investment is investing in 500 companies, and have 499 fail, while one would give a 1000x return. A "retail" investor is likely not able to follow this strategy, so people who would invest in a few apparently great projects via blockchain technologies may be in for disappointment. But I don't see why small-scale venture investment via an appropriate technology could not work. Invest $10 in 500 companies, get $10k back... eventually.
  - mandelbrotwurst 8y ago
    Fair point. Where I said "likely to fail" what I meant was "so likely to fail that they represent a poor use of capital" (for even a large investor and also for society as a whole). As you've pointed out, there's a distinction between poor use of capital for the individual and a poor use of capital for society, and other groups in between. I'm not proposing that this is the case about any particular investment it just seemed worth pointing out that such a type of investment does exist.

CryoLogic 8y ago

Is there anyway you could have bootstrapped the company? My issue with VCs isn't anything you focused on but instead the unfavorable terms. Liquidation preference and such.

jenthoven 8y ago
Yes - we bootstrapped Kapwing for months before deciding to raise. It wasn't an easy decision, but I think it was the right one for us at this point in our career. I wrote a post on this topic on the Kapwing blog you can check out.
kenneth 8y ago
Liquidation preferences are not unfavorable terms. A 1x non-participating liquidation preference is standard and protects investors against cheap acquihires founders would otherwise be inclined to take.
- paulddraper 8y ago
  1x non-participating liquidation is not unfavorable. There are unfavorable terms (and historically it has been more common)...but yeah, that's very reasonable.

x0x0 8y ago

We're in a similar place -- finished our first priced round. Comments: Blatant unfairness: yes, warm intros are required. Yes, this is unfair. However, the onus is on you to make this happen. If you want to found a startup, put your time in to building your network. If you're at a startup now, get intros to the VCs. Ask to go to VC meetings. When you're building the network of people you're going to ask for angel cash, do the same. Lots of them will be happy to give you those warm intros. So start now building a network of people you can ask for $10-$25k. This wasn't obvious to me, but an intro to a vc from an angel who has invested counts as a great intro. The same network will get you into one of the good lawyers (cooley, sonsini, gunderson) with a warm intro who will also do a deferred fee deal for $15-$25k. You want this. The other thing that is unfair is, at least in b2b, the more customers you have the easier a raise will be. How do you get those first customers when you have nothing except a site that breaks all the time and a tiny team? That's your problem; make it happen. Passionate origin story: we build a b2b tech. Most VCs seemed happy with 1 - we understood this problem from working on/near it 2 - we're building a solution Oh, and read the book _venture deals_ by brad feld and jason mendelson [1]. Seriously. It's extraordinarily valuable. Seriously consider doing the YC pre-YC program. It's all funnel for YC, but the info is good. Though it can be summed up (only somewhat facetiously) as, "Have you talked to customers yet? Maybe you should talk to customers. If you've talked to customers, talk to more! If you've talked to more customers, talk to even more! And after that... talk to some customers!" Understand that the seed and A all want 25%; plan accordingly. Within that range, they are less price sensitive. If you have questions, I'm happy to answer them, but I'm busy (the startup experience is everyone in your life is grumpy at you for flaking on them) so no promises on response time. [1] https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalist/dp/1118443616 https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitali...

digitalboss 8y ago
Here's the 3rd edition of the Venture Deals book https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalist/dp/1119259754/ref=dp_ob_title_bk https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitali...
siamakf 8y ago
How can I reach you for fundraising q's :)

neom 8y ago

Having done this at various scales I can attest to the truth in this article. Fundraising is never fun, doesn't matter if it's $100k or 100MM. Fundraising is exhausting, it creates the deepest amount of imposter syndrome that builds with every meeting. The need to stay focus on what you're doing, how you got to where you are, and why you're doing it becomes a primary concern, having people around you who believe in you is key during this period, but even that often only treats the symptoms. This was an email I got from a VC a couple years back: http://john.je/tA3S http://john.je/tA3S - that wasn't a fun day. I think there is a lot of romance is building a scaled startup, but a lot of folks I know, even those who have had large exits say they'd preferred to have built a much smaller lifestyle business in a more organic manner. The real fact is, building and maintaining any business from zero is really difficult. Even though it can be incredibly rewarding, it's certainly very rarely much fun.

x0x0 8y ago
The email is interesting but maybe consider removing fred from it?
- wolco 8y ago
  Are you Fred?
  - x0x0 8y ago
    No. Is it that hard to comprehend that it's rude to share private correspondence without permission? Particularly from a VC that went above and beyond and shared reasons instead of "not a fit" or "maybe".
    - xseven 8y ago
      but then this just shows him in good light, no?

arikr 8y ago

This is a great post. I think one way to look at it is that the process of fundraising kind of sucks, and that it could be more efficient. I agree with this. Another way to look at it is that fundraising is one of the easiest parts of building a multi-billion dollar company (and if you're aiming to raise from VCs like A16Z, Sequoia, Greylock, then you need to be building a multi-billion dollar company). The "100% responsibility" mindset for fundraising would involve "owning" all of this difficulty. E.g. getting a deep understanding of the business of fundraising by talking to other founders who have raised recently (much more accessible than VCs, in general), accepting that it's a sales process, accepting that it's hard and that it'll suck, but that there'll be many much harder things. I guess I just react with some concern that readers of this post will take the wrong things away from a post like this. So I wanted to emphasize this perspective: It is hard. Like you note, it should be hard to convince strangers to give you a few million dollars. It would certainly be great if it was purely merit based. But for many (not all) companies, sales is a critical part of success of the business, and fundraising is another sales process - so it's a good approximation. And yes, that's not true of all businesses and it would be better if it was perfectly merit based. I think the most helpful takeaway for readers is that fundraising is hard, and that it should be approached with a mindset of "it's really hard so I'm going to figure out why people succeed and fail at fundraising so that I maximize my chances of success." If readers take away a victim mindset with respect to the difficulty, then they'll find it much harder to succeed in fundraising. I know this isn't really what people want to hear, but fundraising is hard, building a company is harder, you don't have to choose to start a startup.

AndrewKemendo 8y ago

Having done the same rounds on Sand Hill plus many up and down the business district of NYC and in Tysons Corner in DC, I will say that was still a flowery writeup - with a happy ending of a sizeable seed. I've come to the conclusion that 99% of startups raise money way too early - hence why it's such a terrible experience for most. Companies that are doing great business, don't need to pitch, and don't "go fundraising." Those companies seem to be actively sought out by money, and refuse checks more than they take them. That's probably 1/100 companies and the ones that should actually raise money. It's all about leverage.

crsv 8y ago

I want to take the high road in reading this, but it's hard to not take this in as some new form of humble brag. Affluent duo with super privileged private school educational pedigree land top tier entry level jobs @ big tech co and bootstrap for an incredibly modest 6 months before raising a relatively fat seed round from big VC firms IN 8 WEEKS and bemoan "how terrible the process was". Oh woe is fucking me.

tdb7893 8y ago
Other people have it harder than they do but that doesn't mean that the process want still very stressful and difficult for them.
matte_black 8y ago
It's probably not their fault. The reason we get articles like this is because present society encourages you to write about every little experience. If you don't, then it either didn't happen, or it didn't matter. I think they simply have no idea how hard raising money actually is. Pitching for 2 months and raising a fat seed sounds like a dream.
- jenthoven 8y ago
  This is Julia, the OC. You're totally right that we didn't realize how hard raising money actually is. A lot of other founders I've met also don't realize, which means they're disappointed and discouraged when they try. The point of this post is to encourage founders to keep going even when they're down. I almost stopped fundraising a month in because I was so down, and now I'm grateful that I didn't. Everyone has imposture syndrome when raising. I wrote this post to let founders know they're not alone and to not lose their self-confidence because of investor rejections.
  - matte_black 8y ago
    The irony here is that if I had been trying to raise money for about 6 months with no luck, and I read your article where you raised in just 8 weeks, I'd probably feel like a failure. I know someone that took 2 years of pitching and tweaking his company and bootstrapping before finally raising money. And by the way: In the end, his company failed, all the same.

waytogo 8y ago

> we closed a $1.7M seed round led by Kleiner Perkins [...] in a little over 8 weeks This is fast and it's hard to believe that it was a terrible experience. How would have been your post if you needed 8 months or didn't raise at all after one year?

EpicEng 8y ago
When you've been handed everything in life, eight weeks is an eternity to wait.
deleted 8y ago
[deleted]
paulddraper 8y ago
If 8 weeks of raising $1.7m is "terrible"...you've obviously only gotten to the fundraising step. Wait until you try to make a business make actual money. :)

Aqua 8y ago

I'm not an expert, but writing "My advice to founders: fake it." on a publicly accessible blog doesn't sound wise, it's like saying "I will almost certainly lie to my future investors during the interview". If I were the investor and came across this article when doing startup due diligence, that would have raised some serious concerns about the CEO and her company.

jenthoven 8y ago
My advice was not "lie to investors." My advice was to fake your confidence and certainty, even if you're not feeling confident or certain. Investors want to know that the CEO has courage and the ability to evangelize.
- lstodd 8y ago
  CEO is now "Courageous Evangelizing Officer"? My, my, what the world came to, etc, etc..
  - mmt 8y ago
    I don't see much, if any, novelty here, especially if one substitutes the synonym "Marketing" for "Evangelizing". I vaguely recall it being something of a trope in the software industry (perhaps not even limited to that) decades, if not longer, ago that CEOs were really CMOs.
mmt 8y ago
I was going to comment about this but wasn't quite sure what to make of it. However, I would not characterize what the article encourages as lying, but, rather, bluster is the word I'd choose. More importantly, my impression of the article (confirme by the sibling comment) is that this is being advocated because that is actually what the VCs want, to the point where they either asked for it explicitly or asked for a lack of the opposite (humility). Granted, there are specific suggestions to fabricate, literally fake, or pretend, but these need to be understood in context. > Nonetheless, investors want to hear a passionate origin tale. If you don’t have one, make one up. Does the factual accuracy of such a story make a bit of difference in terms of due diligence in the business sense, as opposed to, say, other history, such as education/skills/experience of the founders? > My advice to founders: fake it. Pretend you know exactly what the product will be in five years, even though you know your plan will change. This seems almost silly to criticize, taken in context. As with the rest of the paragraph, there's no advocacy for a founder to falsely claim anything credible. Rather, the advice is to claim, confidently, the incredible (which everyone involved already knows not to be true, because it can't be true). The point is the confidence, evangelism, and, well, bluster. To me, this actually paints the VCs in a bad light, rather than the OP founders. It's one thing to encourage a high degree of confidence (perhaps as a proxy for perseverence), but there's a danger of becoming too accustomed to believing seven impossible things before breakfast and thereby blurring the line between credible and incredible, as well as blurring the line between confident and over-confident. Of course, that doesn't matter if alternate funding decision techniques do no better at overall returns. It's easy to call out Theranos and Juicero as examples, but they just as easily could be nothing more than selection bias.

nanananananana 8y ago

We have been working in our startup full time for the last 18 months. We have a MVP. We have paying customers. We are working with cutting edge web development technologies. We failed to raise $100K. So I'm sorry, but this is not an advice for founders, this is just plain stupid humblebrag. You don't have to do this, seriously.

plantmanfive 8y ago
Why does the degree of success indicate how hard fundraising felt for the founders?

type0 8y ago

tl;dr fake it till you make it

kenneth 8y ago

I spent the bulk of this year fundraising, something which I was previously unfamiliar with (I've been in startups a few times, but there was always another "fundraising guy" who took that role. This time I rolled up my sleeve and helped with it.). We managed to get $12M+ and still going. The big surprise was that I loved it. Pretty much every bit of it. Everyone says it, but it'll never sink in until you experience it for yourself: fundraising is always an absurdly slow process where you get nowhere for months, until suddenly everything comes together last minute. For us, it took 4 months of mostly nos, until we got a big name to say yes and suddenly we went from 10% subscribed to 3x oversubscribed with investors calling us with a raging case of FOMO. This is always the process, in any deal I've ever been involved in, as investor or on the other side.

brink 8y ago

> "Humility is the opposite of confidence." Humility is not the opposite of confidence; uncertainty is. Humility is thoughtlessness of self.

paulddraper 8y ago

> Blatant unfairness: VCs rely on their network for meeting, evaluating, and closing deals with entrepreneurs. Founders need “warm intros” to the investors, which generally come from people they know because of luck, circumstance, and social circles rather than merit or professional aptitude. The result is that well-liked entrepreneurs with shitty business ideas get funding immediately while shrewd founders outside of the Club can’t get a foot in the door. It’s not fun to play a game that isn’t fair, even if you win. As much as that sucks to be on the bad end of...this is really common and really understandable. Ask yourself: Suppose you needed to hire someone to fix your lawn sprinklers, or hire an emply to work at your start up, or invest in a business. What role would personal connections and the trusted endorsements play? "Professional aptitude" is extraordinarily difficult to judge by other professions, and even more difficult in a reasonably brief amount of time. And character is a still more difficult judgement. Therefore, we rely on our own prior working relationships and recommendations of others. You can argue this is "unfair" and that everyone be treated at anonymous and unknown for sprinkler repair, early employment, and investment, but what you would call a "fair" strategy (by that standard), I would call a decidedly sub-optimal strategy.

lkrubner 8y ago
"Ask yourself: Suppose you needed to hire someone to fix your lawn sprinklers, or hire an emply to work at your start up, or invest in a business. What role would personal connections and the trusted endorsements play?" I've always been curious why people like you feel the need to write comments like this. What is the gender neutral phrase for mansplaining, or mansplaining done to a mostly male audience? Do you really think we don't understand all the various reasons why the system is unfair? We can all easily point out why the system is unfair, without having to remind ourselves of how the unfairness of the system perpetuates itself. The question we need to answer is, how to make this system more fair? Because we can all easily think of a few ways the system could be made more fair, if the will existed to make it more fair.
- paulddraper 8y ago
  Apologies for the potentially patronizing explanation. Contrary to your comment though, I've found lots of people who put "decisions businesses/rich people make" and "decisions I make" on different planes. Example: A business looking to save money on their workforce is inherently Bad. But me looking to save every dollar I can on consumer goods is inherently Good (and different). I've found lots of people think in this "separate universes" mentality.

ummonk 8y ago

Replace “investors” with “women” and “founders” with “men”, and you could accurately describe dating in the valley. Low hit rate, the need for warm intros, the need to fake it till you make it for confidence, ghosting, all part of the dating experience. Which makes me wonder - could male founders be more immunized to this experience due to practice from the dating arena?

xseven 8y ago

I messaged the CEO on LinkedIn to indicate interest in funding them. No response :(. A "No, thank you. We have bigger fish raise from" would've been nice.

graycat 8y ago

Best I've seen about what early stage information technology VCs want to see: (1) Product/service in and/or exploiting information technology with traction significant and growing rapidly. Traction can be number of paying customers, traffic to Web site (e.g., Comscore numbers) or, better, revenue, or best, earnings. (2) The market large enough to permit a company worth $1+ billion in five years, no longer than 10 years. (3) Something serious in a Buffett moat, that is, a way to beat, i.e., block, competitors. E.g., network effects, high switching costs, cases of lock in, technological advantage, e.g., secret sauce, a platform company that has advantages because others build on, depend on, the work of the company, etc. (4) Team of at least two that does well covering both business and technology. (5) Nothing obviously wrong, e.g., not depending on only one or just a few customers, no on-going co-founder disputes, no signs of being sloppy, no signs of criminality, no signs of drug or alcohol problems, no big problems with communications, no bad prior investor situations, etc. My guess from reading VC Web sites was that they would make a "seed" investment, say, $150,000, with (A) a highly qualified team, (B) some excellent, powerful, valuable secret sauce, work difficult to duplicate or equal, for (C) a service likely of interest to nearly everyone on the Internet, with (D) so far nothing comparable on the Internet, where (E) if successful, worth $0.5-1+ T. Nope. Instead, I conclude (A)-(E) flops and (1)-(5) is about it. Okay. Wish I'd known that. Indeed, in the last year or so there was a post by USV's Fred Wilson on his blog AVC.com of a company his firm had their eye on and off and on over some months pursued the company and finally talked them into taking the company's first equity investment. Lesson: If you really have what they want, then they will notice you and call you. Indeed, likely the best "warm introduction" is that the VCs have already discovered the product/service and really, in the word of Paul Graham, "love" it. A big surprise to me was the reaction of the information technology community to secret sauce technology: In my career, I've been used to seeing new technology carefully evaluated. I saw this in the beginning of my career in applied math and computing for mostly US national security around DC. E.g., I worked in the group that did the navigation satellites for the US Navy (GPS by the USAF was the second version; the Navy did the first version) and heard the stories of how the work was approved from just the basic physics, essentially back of the envelope. A long list of projects for US national security was funded just from proposals on paper that were carefully reviewed, e.g., the SR-71. My Ph.D. dissertation was carefully reviewed. My published papers were carefully reviewed. For US information technology VCs, I had to conclude that under no circumstances would they take seriously anything technical about the technology or any technical reviews of the technology and, indeed, quite solidly would absolutely refuse any reviewing of the technology at all. Period. No exceptions. Feet locked 5' deep in reinforced concrete, they simply will not, Not, NOT, NOT consider a technical review of technology. NSF, NIH, ONR, etc. will review technology, insist on it, but information technology VCs will, in a word, NOT. My understanding is that bio-medical VCs will review and take seriously reviews of the claimed new, powerful, valuable bio-medical technology. The information technology VCs commonly claim on their Web sites that they want leading edge technology; they neglect to say that they will never consider any such technology in funding decisions and, indeed, will NEVER review it or consider any reviews of it. It was a surprise to me! Okay by me; I just wish I'd known. The VC information technology Web sites were highly misleading. Okay -- gotta beware of that in business!!!! Being a determined entrepreneur ready to keep going after a few dozen "No" responses, the misleading VC Web sites cost me a LOT of important time, money, and effort. I was ripped off. But, this is cast in concrete, wrapped in cast iron, and protected with a layer of uranium -- never but NEVER will an information technology VC pay any attention at all to a theorem and proof in measure theory!!!! Not in this solar system!!! Sure, uh, the flip side of that situation is an opportunity!!!! Finally I reminded myself that in the US, coast to coast, from barns behind farm houses on 50 acres to cross road villages to ... the largest cities, entrepreneurs start and grow successful businesses without equity funding. How? Do well running 10 fast food restaurants -- pizza carryout, McDonald's, ... Chinese -- and can do well. Also, run a successful, local independent insurance agency that knows nearly everyone in town and, thus, has a fantastically good "loss ratio". Run the local, dominating electrical supply house, plumbing supply house, building materials house, or any of many cases of "big truck, little truck" businesses, that is, where buy with a big truck and sell with several little trucks. Commercial real estate. On and on. Can see a lot of examples on Main Street. I used to go to yacht clubs; saw some big boats and some well off people; never saw anyone who took equity funding. A guess: For nearly all the students at Ivy League colleges whose parents pay the tuition, the money was from running a successful family owned business without equity funding. For starting a business, information technology should be a big advantage: E.g., last I checked, the price, quantity one, retail, of the AMD FX-8350 processor, 64 bit addressing, 8 cores, 4.0 GHz standard clock speed, goes for less than $100 (commonly was $300+ -- the one I have looks terrific). For less than $2000, can put together a Web server that is, in the history of computing back 20 years, just astoundingly powerful. If can build a Web site that is popular enough to keep that server half busy 24 x 7 and run ads at the rates suggested in the Meeker KPCB reports, then should be able to get revenue $100,000+ a month. So, we're talking capex ballpark $2000. So, compare that with the capex for, say, just a grass mowing service -- riding mower, $10,000+, trailer for the mower, ~$5000, truck to pull the trailer, $30,000, etc. Or compare with the capex for a pizza carryout, an auto repair shop, and auto body shop. With revenue of $100,000 a month, why bother with a dinky seed round of $1.7 million with the term sheet, vesting schedule, loss of control, too many lawyers, BoD, C-corp, etc.? With revenue of $100,000 and the rest of (1)-(5), let the VCs call you while you have a dozen nice ways to tell them "No". Don't be cruel to them: They are only finance guys who likely have never written much code and got an MBA instead of a Master of Science! They are unable to review any very technical secret sauce. And likely what they can fund is highly constrained by agreements with their limited partners who supplied nearly all the money.

koolhead17 8y ago

This post is a fluf, more like marketing piece. If your pedigree is Google and you are able to raise in 8 weeks, feel blessed. It would be great to hear VC side of story as well like: * 4X return to LP's. * Show enough exits in 7-8 years fund cycle. * Always on the road for raising next fund. * Coordinating with portfolio founders or other bigger investors for follow on. * Managing on a limited management fees. * How every fund has it's own investment thesis and they keep getting emails from rookie founders.

nsmog767 8y ago

I thought this post had more humility and self-awareness than it's getting credit for. "The result is that well-liked entrepreneurs with shitty business ideas get funding immediately while shrewd founders outside of the Club can’t get a foot in the door. It’s not fun to play a game that isn’t fair, even if you win." Coming from someone who was successful, this is a pretty unbiased observation!