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(I'm a VC) 1. build something worth investing in 2. make sure people know about it (tell your friends, don't work in a silo, etc.) 3. have the right friends

(I'm a VC) 1. build something worth investing in 2. make sure people know about it (tell your friends, don't work in a silo, etc.) 3. have the right friends (i.e. be plugged into the community, be friends with other founders, be in a place like San Francisco, etc.) and loop them in to what you're doing 4. if all of the above happens, I will likely hear about you from someone I trust Almost all of my investments come from a trusted referral. Also helps: join YC or something similar (few are as good, though)

nashashmi 7y ago
I don't like bullet point number three. It implies you only should do number one if you have bullet point number three.
- 0_____0 7y ago
  How do you build a company on technology that nobody knows about?
  - totalZero 7y ago
    Ask government contractors.
- Aeolun 7y ago
  Unfortunately it also seems to be true. No point in building anything for your own satisfaction (if your goal is investment).
- muzani 7y ago
  It helps a lot. I remember a speech by someone in YC, where the only thing you do early on is improve the product and talk to users. After that things like mentors, hiring, strategy, growth, etc, helps. But there's a reason that bullet point 1 is 1.
bob33212 7y ago
Is this because you get a lot of bogus pitches from strangers or that you don't believe in the validity of the Business Model Canvas and corresponding metrics or something else?
- omarhaneef 7y ago
  This is the right question. Can’t speak for op, but if you decide to invest at any level it’s like a firehose with dozens, or hundreds of pitches coming at you. You may not have time to read them all let alone apply any reasonable diligence. AI photo recognition drones that there are dozens of but we do it with a solar blockchain! Um... maybe? What are the sales? Who do you sell to? (Note: almost always pre sales) Now imagine the smartest person you know recommends a company. They give you a 7 second hook: yes, photo sharing has been done before but these guys have a contact with the CIA because the pictures cannot be modified without giving it away etc. suddenly you’re interested because they did the work.
- kenneth 7y ago
  Some of it is just filtering… I'm constantly bombarded with pitches, the vast majority of which range from bogus to just not ready. The things that come in from trusted recommendation are usually of a much higher quality bar, which makes it worth the effort to spend serious time investigating. I still read (or at least skim) every pitch that comes in, even the cold email stuff. But the quality in general is just so much lower, and the pitches just not that compelling, so I rarely follow up on it. Context and timing of the first contact is important and can make a huge difference to the level of consideration.
mstade 7y ago
So essentially: build a product or service and move it and yourself to San Francisco?
- gumby 7y ago
  Probably not. The point is to be "a big fish in a small pond". SF and Silicon Valley are both very big ponds, so if you're not there take advantage of the fact, playing to your strengths. One option is "be in the local pool" (a Netherlands investor is probably more interested in companies she can simply visit and where she speaks the same language of the people there). Be talked about in the local startup & tech community. Talk about the actual results you're getting ("we're getting 10s of organic signups and Twilio recommends us to their customers -- without them even talking to us"). The other option is "be in the nerd community pool": if your SAAS is aimed at "metering microservices to manage service cost" (have no idea if that example is really a "thing") then make sure the founders are usefully active on the important microservices blogs, write some authoritative articles for the sites, contribute non-trivial code (even if it's something you need have have in place anyway for your solution to be useful) to some relevant GitHub repos in the area.
- kenneth 7y ago
  Moving to SF is not at all necessary (I don't even live in SF). But it certainly helps. If you can build the right network without being in SF, all the better. But if you're struggling with that, perhaps moving to SF will help.
threedots 7y ago
This is such an objectionable attitude and more or less nakedly entrenches existing privilege and social structure. For all those founders out there, just keep grinding and ignore self serving VC nonsense: good businesses are a heck of a lot rarer than people with money and if you've got one they'll swarm to you like rats to a sewer and then you can pick whichever one you like or none.
- rriepe 7y ago
  The post was asking how to find investors, not how you would do it in some ideal world. If you don't want to be disappointed by the wizard, don't look behind the curtain.
  - threedots 7y ago
    Don't believe the hype. VCs pretend you need to work and angle your way into meeting them and it's just a lie in my experience. I (founder of pretty modest start up) get unsolicited emails from VCs literally almost every day - many of whom unironically insist on warm intros themselves. VCs want you to believe this narrative because it means you start from a much weaker negotiating position and it restricts deal flow to entrenched firms.
    - eaenki 7y ago
      This hasn’t been the case in my experience. I previously started a company in crypto in early 2017(so as hot as it gets), gained traction, and received literally just one organic VC inquiry. Ditto with my current insurtech company. I’m curious, how do they find you? I would imagine something like that would happen if some other prestigious firm invested previously and it shows up on crunchbase
      - threedots 7y ago
        I don't have a great answer for you. Usually they just hear about us or (less often) read about us. We do have a bit of previous so it's possible people know about us from things we've done before (though to be clear it's nothing super crazy). And while we don't spend much time with VCs, if we can possibly help it, we do spend a bunch of time with other founders, many of whom are VC funded.
nif2ee 7y ago
If they did all these things they wouldn't even think to reach out to you in the first place.
- kenneth 7y ago
  They shouldn't be reaching out to me, they should put themselves in a position where people like me find them. It's much more valuable to work on the latter long term.
permatech 7y ago
Comments like this explain SoftBank
cortesoft 7y ago
How do you go about 'having the right friends'?
- exterrestrial 7y ago
  Have the right parents who send you to the right private school where you fit in with the right crowd.
  - x0x0 7y ago
    Fyi, none of this applied to my cofounder or I. Both of us grew up lower middle class (family incomes under $60k/year) and went to public grade schools, high schools, and colleges. We met the people who are our angels by excelling in our careers. Eg founders of companies damn sure remember their top 3 sales reps.
    - jammygit 7y ago
      My family income was under 1/3 that and I left school to pay the bills
- Aeolun 7y ago
  Make as many as possible? Some of them are bound to be the right ones.
- kenneth 7y ago
  Building your network just takes time and effort. You're indirectly connected to everybody (6 degrees of Kevin Bacon and all that), it's just about what kinds of relationships you invest in. Do it for long enough and it pushes you in a specific direction, and you'll end up being friends with the right people. (And sure, being already rich or connected or going to the right school gives you a head start, but it is in no way a prerequisite. Life isn't fair, some have it easier than others.)

nashashmi 7y ago

I don't like bullet point number three. It implies you only should do number one if you have bullet point number three.

0_____0 7y ago
How do you build a company on technology that nobody knows about?
- totalZero 7y ago
  Ask government contractors.
Aeolun 7y ago
Unfortunately it also seems to be true. No point in building anything for your own satisfaction (if your goal is investment).
muzani 7y ago
It helps a lot. I remember a speech by someone in YC, where the only thing you do early on is improve the product and talk to users. After that things like mentors, hiring, strategy, growth, etc, helps. But there's a reason that bullet point 1 is 1.

bob33212 7y ago

Is this because you get a lot of bogus pitches from strangers or that you don't believe in the validity of the Business Model Canvas and corresponding metrics or something else?

omarhaneef 7y ago
This is the right question. Can’t speak for op, but if you decide to invest at any level it’s like a firehose with dozens, or hundreds of pitches coming at you. You may not have time to read them all let alone apply any reasonable diligence. AI photo recognition drones that there are dozens of but we do it with a solar blockchain! Um... maybe? What are the sales? Who do you sell to? (Note: almost always pre sales) Now imagine the smartest person you know recommends a company. They give you a 7 second hook: yes, photo sharing has been done before but these guys have a contact with the CIA because the pictures cannot be modified without giving it away etc. suddenly you’re interested because they did the work.
kenneth 7y ago
Some of it is just filtering… I'm constantly bombarded with pitches, the vast majority of which range from bogus to just not ready. The things that come in from trusted recommendation are usually of a much higher quality bar, which makes it worth the effort to spend serious time investigating. I still read (or at least skim) every pitch that comes in, even the cold email stuff. But the quality in general is just so much lower, and the pitches just not that compelling, so I rarely follow up on it. Context and timing of the first contact is important and can make a huge difference to the level of consideration.

mstade 7y ago

So essentially: build a product or service and move it and yourself to San Francisco?

gumby 7y ago
Probably not. The point is to be "a big fish in a small pond". SF and Silicon Valley are both very big ponds, so if you're not there take advantage of the fact, playing to your strengths. One option is "be in the local pool" (a Netherlands investor is probably more interested in companies she can simply visit and where she speaks the same language of the people there). Be talked about in the local startup & tech community. Talk about the actual results you're getting ("we're getting 10s of organic signups and Twilio recommends us to their customers -- without them even talking to us"). The other option is "be in the nerd community pool": if your SAAS is aimed at "metering microservices to manage service cost" (have no idea if that example is really a "thing") then make sure the founders are usefully active on the important microservices blogs, write some authoritative articles for the sites, contribute non-trivial code (even if it's something you need have have in place anyway for your solution to be useful) to some relevant GitHub repos in the area.
kenneth 7y ago
Moving to SF is not at all necessary (I don't even live in SF). But it certainly helps. If you can build the right network without being in SF, all the better. But if you're struggling with that, perhaps moving to SF will help.

threedots 7y ago

This is such an objectionable attitude and more or less nakedly entrenches existing privilege and social structure. For all those founders out there, just keep grinding and ignore self serving VC nonsense: good businesses are a heck of a lot rarer than people with money and if you've got one they'll swarm to you like rats to a sewer and then you can pick whichever one you like or none.

rriepe 7y ago
The post was asking how to find investors, not how you would do it in some ideal world. If you don't want to be disappointed by the wizard, don't look behind the curtain.
- threedots 7y ago
  Don't believe the hype. VCs pretend you need to work and angle your way into meeting them and it's just a lie in my experience. I (founder of pretty modest start up) get unsolicited emails from VCs literally almost every day - many of whom unironically insist on warm intros themselves. VCs want you to believe this narrative because it means you start from a much weaker negotiating position and it restricts deal flow to entrenched firms.
  - eaenki 7y ago
    This hasn’t been the case in my experience. I previously started a company in crypto in early 2017(so as hot as it gets), gained traction, and received literally just one organic VC inquiry. Ditto with my current insurtech company. I’m curious, how do they find you? I would imagine something like that would happen if some other prestigious firm invested previously and it shows up on crunchbase
    - threedots 7y ago
      I don't have a great answer for you. Usually they just hear about us or (less often) read about us. We do have a bit of previous so it's possible people know about us from things we've done before (though to be clear it's nothing super crazy). And while we don't spend much time with VCs, if we can possibly help it, we do spend a bunch of time with other founders, many of whom are VC funded.

nif2ee 7y ago

If they did all these things they wouldn't even think to reach out to you in the first place.

kenneth 7y ago
They shouldn't be reaching out to me, they should put themselves in a position where people like me find them. It's much more valuable to work on the latter long term.

permatech 7y ago

Comments like this explain SoftBank

cortesoft 7y ago

How do you go about 'having the right friends'?

exterrestrial 7y ago
Have the right parents who send you to the right private school where you fit in with the right crowd.
- x0x0 7y ago
  Fyi, none of this applied to my cofounder or I. Both of us grew up lower middle class (family incomes under $60k/year) and went to public grade schools, high schools, and colleges. We met the people who are our angels by excelling in our careers. Eg founders of companies damn sure remember their top 3 sales reps.
  - jammygit 7y ago
    My family income was under 1/3 that and I left school to pay the bills
Aeolun 7y ago
Make as many as possible? Some of them are bound to be the right ones.
kenneth 7y ago
Building your network just takes time and effort. You're indirectly connected to everybody (6 degrees of Kevin Bacon and all that), it's just about what kinds of relationships you invest in. Do it for long enough and it pushes you in a specific direction, and you'll end up being friends with the right people. (And sure, being already rich or connected or going to the right school gives you a head start, but it is in no way a prerequisite. Life isn't fair, some have it easier than others.)