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I work in a fashion exposed to thousands of startups worldwide, and can report that many of them do factually raise money without having pre-existing connectedn

I work in a fashion exposed to thousands of startups worldwide, and can report that many of them do factually raise money without having pre-existing connectedness to prestige investors. The only thing required to raise a seed round is to convince people who have money to give you money. There are a lot of people in the world with sufficient money to fund startups. Substantially all of them are on the same Internet you are. The trend in the industry has been to more openness on this question recently, in no small part driven by YC, which basically pioneered investing at scale in companies without requiring a social connection. Also, quick fact of life in entrepreneurship: there are many ways to skin the cat, but if you are hypothetically in a situation where the business needs connections, then the job is going and getting connections. If you e.g. take a random named person with checkwriting authority in Silicon Valley, and ask "How many people have social permission to introduce me to this person?", that answer is likely in the high hundreds to mid single-digit thousands. Substantially all of those people have an email address. Many of them respond to emails very quickly, particularly when they're interesting. This suggests that the immediate problem is less having elite connections and more organizing your life such that you send an uncomfortably large number of interesting emails.

ronilan 8y ago
It’s that regex joke paraphrased: You have a problem: you have no connections. You organize your life such that you send an uncomfortably large number of interesting emails. Now you have two problems. Jokes aside, life is short, don’t chase.
jackconnor 8y ago
Excellent advice, very well-said.
megy 8y ago
> The only thing required to raise a seed round is to convince people who have money to give you money. The thing is that to do that, you need access to those people. And to get access with a previous network is where it gets tricky. Lots of people want that money.
- aaavl2821 8y ago
  You can build a pretty strong network much more quickly than you'd think, esp in the Bay Area. Getting to know just one or two well connected people can give you access to dozens of potential investors. Getting to know those one or two people is also easier than you'd think. One thing you could do is make a list of a few startup founders who've raised money from ppl you'd like to get to know, and email those founders. Steve Blank has a great article on this, but just write an email that adds value to their lives [0]. One easy way to do this is find founders in a technical area similar to your domain, so you can connect over a shared professional / intellectual interest, and maybe you can teach them something valuable to their business [0] https://steveblank.com/2013/08/12/how-to-get-meetings-with-people-too-busy-to-see-you/ https://steveblank.com/2013/08/12/how-to-get-meetings-with-p...
- DoreenMichele 8y ago
  You need to be thinking about what's in it for them. Yes, you want money. But they don't invest out of the goodness of their heart. They want something out of it. Don't be the one of a bazillion people with their hand out. Be the one with something that interests them.
apsec112 8y ago
At least for well-known Silicon Valley investors, I think that model is wrong, or at best incomplete. It's easy to imagine "oh, there are hundreds of investors out there, all you need is one, just keep trying till you find somebody". However, these hundreds of people are so close socially that their opinions will be very strongly correlated. (See, eg., how everyone in VC-world got fascinated with chatbots at exactly the same time.) IME, a more accurate model is that VCs form an invisible private club, and to get investment you need a "club membership card". Otherwise, you'll find that when you (say) go to a conference, even if there are lots of VCs there, they won't take you seriously; they'll act polite and then forget to return your calls.
- ukulele 8y ago
  > these hundreds of people are so close socially that their opinions will be very strongly correlated Having raised a seed round myself, this is definitely not true. Opinions, approach, and attitude of individual investors varies WILDLY. For VC it is more standard, but for "rich person with money in silicon valley" it is not.
jwilliams 8y ago
> The only thing required to raise a seed round is to convince people who have money to give you money One of the huge issues I see is experienced (at least a subset "prestige") investors have the terms best suited to startups succeeding. I've seen less experienced investors have draconian (almost nonsense) terms -- crazy terms that probably hurt their investments considerably. However, these investors are less accustomed to managing risk in a technology startup. This is much, much less common in the SFBA ecosystem. However, if you look globally the startup investor maturity can be really poor.
- paulsutter 8y ago
  If you’re not willing to walk away, you’re going to pay retail. Good terms happen when you have multiple interested investors, bad terms happen when you don’t. That said, investment is difficult if you’re in a place that has few exits (anywhere but Silicon Valley or Beijing/Shanghai). Investors are motivated by the percent chance of an exit, and that chance is higher in the Bay Area than in most places. The chance for exit drops off a pretty steep curve as you go down the “top cities” list (I live in Seattle so apologies to the local scene).
  - jwilliams 8y ago
    > The chance for exit drops off a pretty steep curve as you go down the “top cities” list. Exactly. Which either means you're either: going to get a bad/mixed bag on terms -or- you need to raise in one of those cities as an outsider.
    - deleted 8y ago
      [deleted]
    - paulsutter 8y ago
      Raising as an outsider works just fine if you have traction. As if you don’t, why would you be trying to raise money?
- DoreenMichele 8y ago
pcmaffey 8y ago
Isn't it more efficient to just write to the `random named person with checkwriting authority`? I'm sure said person can see that you cold emailed the person now introducing you. And thus that intro is based on a very flimsy relationship. Or is it all just part of the social dance? There's got to be a better way.
- nostrademons 8y ago
  The problem is that responding to e-mails is usually a threshold game: you need to meet the threshold of interestingness. That threshold is higher if the recipient gets a lot of e-mails (as rich & prominent people usually do), and lower if the sender is someone the recipient knows well. If you are a founding CEO and you e-mail another founding CEO of a related but non-competing industry, there are lots of ways you can make yourself interesting enough to be worth having lunch with. Sharing market knowledge, sharing hiring tips, referring promising candidates that would've been better-suited for the other company, explaining your experiences with particular technology the other company is thinking of adopting, etc. If you then ask the other founder for an intro to their VCs, it's a relatively small ask, and you've already delivered value to them. That founder, in turn, is someone well-known to their investors, who has already delivered significant value to them. If an intro comes through them, it is far more likely to meet the threshold of interestingness than a cold-email from a random person seeking money, particularly when they get a lot of cold emails seeking money.
TuN2xT 8y ago
Aren't there brokers out there who do this? Scratch that - you need to be the evengelist for what you are selling. Believe in it on every mental level and sell it on every channel you can. If customers come, so will the investors.
nailer 8y ago
> in no small part driven by YC, which basically pioneered investing at scale in companies without requiring a social connection. Here in the UK - having participated in one of the leading (in terms of exits) accelerators - it's better to have a good accent. You meet the investor then talk about which college at Cambridge you went to. Or they stare at you like you're some kind of space alien.
- austinjp 8y ago
  Jeez that's depressing. Old school tie still in effect. Is anyone else running into this? Have to hope that this is a diminishing segment.

ronilan 8y ago

It’s that regex joke paraphrased: You have a problem: you have no connections. You organize your life such that you send an uncomfortably large number of interesting emails. Now you have two problems. Jokes aside, life is short, don’t chase.

jackconnor 8y ago

Excellent advice, very well-said.

megy 8y ago

> The only thing required to raise a seed round is to convince people who have money to give you money. The thing is that to do that, you need access to those people. And to get access with a previous network is where it gets tricky. Lots of people want that money.

aaavl2821 8y ago
You can build a pretty strong network much more quickly than you'd think, esp in the Bay Area. Getting to know just one or two well connected people can give you access to dozens of potential investors. Getting to know those one or two people is also easier than you'd think. One thing you could do is make a list of a few startup founders who've raised money from ppl you'd like to get to know, and email those founders. Steve Blank has a great article on this, but just write an email that adds value to their lives [0]. One easy way to do this is find founders in a technical area similar to your domain, so you can connect over a shared professional / intellectual interest, and maybe you can teach them something valuable to their business [0] https://steveblank.com/2013/08/12/how-to-get-meetings-with-people-too-busy-to-see-you/ https://steveblank.com/2013/08/12/how-to-get-meetings-with-p...
DoreenMichele 8y ago
You need to be thinking about what's in it for them. Yes, you want money. But they don't invest out of the goodness of their heart. They want something out of it. Don't be the one of a bazillion people with their hand out. Be the one with something that interests them.

apsec112 8y ago

At least for well-known Silicon Valley investors, I think that model is wrong, or at best incomplete. It's easy to imagine "oh, there are hundreds of investors out there, all you need is one, just keep trying till you find somebody". However, these hundreds of people are so close socially that their opinions will be very strongly correlated. (See, eg., how everyone in VC-world got fascinated with chatbots at exactly the same time.) IME, a more accurate model is that VCs form an invisible private club, and to get investment you need a "club membership card". Otherwise, you'll find that when you (say) go to a conference, even if there are lots of VCs there, they won't take you seriously; they'll act polite and then forget to return your calls.

ukulele 8y ago
> these hundreds of people are so close socially that their opinions will be very strongly correlated Having raised a seed round myself, this is definitely not true. Opinions, approach, and attitude of individual investors varies WILDLY. For VC it is more standard, but for "rich person with money in silicon valley" it is not.

jwilliams 8y ago

> The only thing required to raise a seed round is to convince people who have money to give you money One of the huge issues I see is experienced (at least a subset "prestige") investors have the terms best suited to startups succeeding. I've seen less experienced investors have draconian (almost nonsense) terms -- crazy terms that probably hurt their investments considerably. However, these investors are less accustomed to managing risk in a technology startup. This is much, much less common in the SFBA ecosystem. However, if you look globally the startup investor maturity can be really poor.

paulsutter 8y ago
If you’re not willing to walk away, you’re going to pay retail. Good terms happen when you have multiple interested investors, bad terms happen when you don’t. That said, investment is difficult if you’re in a place that has few exits (anywhere but Silicon Valley or Beijing/Shanghai). Investors are motivated by the percent chance of an exit, and that chance is higher in the Bay Area than in most places. The chance for exit drops off a pretty steep curve as you go down the “top cities” list (I live in Seattle so apologies to the local scene).
- jwilliams 8y ago
  > The chance for exit drops off a pretty steep curve as you go down the “top cities” list. Exactly. Which either means you're either: going to get a bad/mixed bag on terms -or- you need to raise in one of those cities as an outsider.
  - deleted 8y ago
    [deleted]
  - paulsutter 8y ago
    Raising as an outsider works just fine if you have traction. As if you don’t, why would you be trying to raise money?
DoreenMichele 8y ago

pcmaffey 8y ago

Isn't it more efficient to just write to the `random named person with checkwriting authority`? I'm sure said person can see that you cold emailed the person now introducing you. And thus that intro is based on a very flimsy relationship. Or is it all just part of the social dance? There's got to be a better way.

nostrademons 8y ago
The problem is that responding to e-mails is usually a threshold game: you need to meet the threshold of interestingness. That threshold is higher if the recipient gets a lot of e-mails (as rich & prominent people usually do), and lower if the sender is someone the recipient knows well. If you are a founding CEO and you e-mail another founding CEO of a related but non-competing industry, there are lots of ways you can make yourself interesting enough to be worth having lunch with. Sharing market knowledge, sharing hiring tips, referring promising candidates that would've been better-suited for the other company, explaining your experiences with particular technology the other company is thinking of adopting, etc. If you then ask the other founder for an intro to their VCs, it's a relatively small ask, and you've already delivered value to them. That founder, in turn, is someone well-known to their investors, who has already delivered significant value to them. If an intro comes through them, it is far more likely to meet the threshold of interestingness than a cold-email from a random person seeking money, particularly when they get a lot of cold emails seeking money.

TuN2xT 8y ago

Aren't there brokers out there who do this? Scratch that - you need to be the evengelist for what you are selling. Believe in it on every mental level and sell it on every channel you can. If customers come, so will the investors.

nailer 8y ago

> in no small part driven by YC, which basically pioneered investing at scale in companies without requiring a social connection. Here in the UK - having participated in one of the leading (in terms of exits) accelerators - it's better to have a good accent. You meet the investor then talk about which college at Cambridge you went to. Or they stare at you like you're some kind of space alien.

austinjp 8y ago
Jeez that's depressing. Old school tie still in effect. Is anyone else running into this? Have to hope that this is a diminishing segment.