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For anyone reading this advice. The number 1 reason why Matt’s fundraising process went as well as it did is because he has a world-class personal track record.

For anyone reading this advice. The number 1 reason why Matt’s fundraising process went as well as it did is because he has a world-class personal track record. This dwarfs all other reasons by a long way. Quite frankly Matt would have been able to raise with complete air (assuming that his cofounders have similar personal track records). That’s not to take anything away from Matt. He’s clearly an accomplished individual and his advice is still sound. But he hasn’t included the glaringly obvious reason why he got funded - he was a professor in CS at Harvard and has had a string of prestigious roles in industry.

baxtr 4y ago
He is Ex-Google and Ex-Apple… so I guess it’s way easier for him to raise than for other people.
ilrwbwrkhv 4y ago
Yes and he was also part of the boys club by knowing a bunch of VCs. Who you know is more important than what you are building in the modern game of venture capital.
- Swizec 4y ago
  > Who you know is more important Networking is all about who knows you, not who you know.
  - ksec 4y ago
    >Networking is all about who knows you, not who you know. Need to steal that. And is this a reason why Twitter, Social Media, and self branding on the internet are so important? Since it is all who knows you?
    - Swizec 4y ago
      Yes and the luck surface area. Your amount-of-luck is the surface area of a rectangle. A side is the interestingness of what you do, B side is how many know about it. The bigger the rectangle, the more opportunities you get. https://swizec.com/blog/your-luck-and-opportunity-surface-area/ https://swizec.com/blog/your-luck-and-opportunity-surface-ar... This is how you get opportunities when you aren’t even in the room. Someone says ”Oh yeah I know <ksec>, they’re doing cool things X in the area you just mentioned an interest in”. Or ”Oh yeah for problem Y, you should ping <ksec>, they’re the expert”
      - AlchemistCamp 4y ago
        Missing credit to the original creator of both the term “luck surface area” and the chart: https://www.codusoperandi.com/posts/increasing-your-luck-surface-area https://www.codusoperandi.com/posts/increasing-your-luck-sur... The idea was also expanded upon by one of his friends in a mental models book here: https://www.amazon.com/gp/product/0525533583/ https://www.amazon.com/gp/product/0525533583/
        ksec 4y ago
        Thank You. Swizec and AlchemistCamp. Will have to find time to read it all.
    - yeasurebut 4y ago
  - scarface74 4y ago
    It’s also about “pattern matching”…. https://www.holloway.com/g/venture-capital/sections/pattern-matching https://www.holloway.com/g/venture-capital/sections/pattern-... https://www.adamantventures.com/blog-post/the-problem-with-pattern-matching https://www.adamantventures.com/blog-post/the-problem-with-p...
danr4 4y ago
Absolutely true. I'll add that THREE paragraphs start with "calling my VC friends", which factors in heavily on how "easy" it was to raise.
- FranksTV 4y ago
  This is some "the rest of the owl" material for sure.
  - junofan 4y ago
    It should hopefully be obvious that you should befriend rich people if you think you will need access to capital in the future.
  - davidhunter 4y ago
    How to raise a seed round: 1. Become a professor in CS at Harvard. Achieve big career successes in prestigious technology companies. Build a network of SV founders and VCs. 2. Raise the f*king seed round.
    - quickthrower2 4y ago
      Or…, and possibly easier: make that much money yourself and seed yourself
- champagnepapi 4y ago
  yeah I don't really have any VC friends :( nor a prestigious pedigree :( Guessing both are big factors in how easy it is to raise funds as a first time founder.
bcantrill 4y ago
Absolutely agreed -- without knowing the specifics of the idea, this is the world's easiest raise. I'll add a few other tailwind factors here: 1. He didn't raise that much money. I know this sounds obscene (isn't $5M a lot of money?!), but to a VC, this is a small bet. In particular: this is a bet small enough that a single VC can just... do it -- they don't need the firm to buy in. (Or that buy-in is perfunctory.) 2. He's not a solo founder -- and his founders have startup experience. This might be a push, but if one of his co-founders was a previous startup founder and that company had a successful exit, that co-founder can raise on literally anything -- especially from the VC for whom they made money. 3. This sector is still hot. We don't know much about what he's making, but "it relies heavily on AI" (and, um, it's the TLD), which -- unlike web3 -- has remained (for the moment, anyway) white-hot. 4. The environment is (paradoxically!) great for this kind of startup. I know this sounds absurd because the environment has gotten worse (and he's certainly right that the valuation would have been higher a few months ago!), but because we are coming off of very frothy times, there is tons of dry powder out there: VC firms have raised massive funds, many of them targeting early stage (Seed/Series A). Those firms have to put that capital to use, and the ones that are queasiest about the macro prospects (for good reason!) want to go as early as they possibly can (i.e., first capital in) because that gives the macro factors the longest possible time to sort themselves out. 5. They have deal heat. In part because they have all of these other tailwinds, they got a additional huge tailwind in that multiple firms are vying for a deal. This is every entrepreneur's fantasy, and it results in the kind of behavior he sees: VCs absolutely tripping over themselves to be helpful. This is absolutely the exception, and highlights just how much all these other factors have lined up. The title of this piece is what he wishes he had known, but it's not really clear what the true lessons are. That it's easier if you've actually built something? That your pitch deck gets around? Perhaps fixie.ai will just live a charmed life where everything is easy (and hey, more power to them), but if they are like most, the blog entry to read will be the one two to three years from now: "What I wish I had known about how hard a Series A is relative to a Seed."
- gumby 4y ago
  > The title of this piece is what he wishes he had known, but it's not really clear what the true lessons are. he restates the lesson at the end: he thought that raising money would be like a grant submission, not realizing that it would be more collaborative (after all you're gonna have the investors along for a while, unlike a grant agency). There were a few other small lessons too (e.g. your deck will be passed around, which used to be a no-no in the "old days")
spaceman_2020 4y ago
I was trying to gauge some interest for a seed round as well a few months back. For someone with my background, most investors want to see a prototype with some users, at the very least. It’s actually worked out better for me since it’s made me realize that I don’t need that much funding that soon. Working on the prototype and getting some users has also given me far more clarity about the product and customer acquisition strategy.
zcombynator 4y ago
Growth is the most convincing metric. If you have growth, you will get funding. So how to get growth? Build something users want/like. How to know what they want/like? Talk to them. Build. Talk. Build. Talk.
- mbesto 4y ago
  Sure, but this isn't mutually exclusive.
- etothepii 4y ago
  Someone's been watching the partner lounge / Dalton & Michael explain.
jiveturkey 4y ago
> number 1 reason [...] a world-class personal track record. > That’s not to take anything away from Matt. Why would that take anything away from Matt? That's tremendous. Anyway I'd disagree. The number 1 factor is luck. I like this video https://www.youtube.com/watch?v=3LopI4YeC4I https://www.youtube.com/watch?v=3LopI4YeC4I but there are plenty like it. Luck accumulates/aggregates/concentrates. I don't know if they cover it that way in that video.
mdwelsh 4y ago
OP here. Thanks for the kind words. I certainly didn't feel like this was an easy raise, but then again it's the only time I've done this and my comparison points were other first-time founders who raised 2x what we did with less than we had done. Yes, these are all pretty senior, well-established folks, not kids straight out of college. The main point of my article was the surprise around the extent of the VC network and the helpful interactions with them. Before going through this process, VC was a black box to me. Now, a lot less so. A few folks below have pointed out that I must have had an extensive VC network to draw on. Not quite. I knew 3-4 VCs casually from having worked at a couple of other startups. None of them invested in us by the way. It certainly didn't hurt to get their advice. Now, of course, I have a rolodex full of dozens I could potentially call up at some point, which is useful. I can see how founders who have done it before likely find it a lot easier to get the ball (and the checks) rolling.
- ipaddr 4y ago
  When you said: "my first stop was to call up some VC friends of mine" I wasn't surprised you were funded without a product not knowing your history and current role.
smackeyacky 4y ago
That and "being able to call up a few VC friends of mine" also means he is a lot better connected than 99% of startup founders. This just reinforces the idea that raising VC is more about your background than it is about your ideas or ability to execute.
- threeseed 4y ago
  You don't need to worry about this because VCs on Twitter have said many times that they are happy to accept cold emails and DMs. Of course from recent experience they don't actually respond so there's that.
- spoonjim 4y ago
  If you are a former Harvard CS professor and engineering director at Google then you don't need to know any VCs. They will take your call.
- deleted 4y ago
  [deleted]
- vecter 4y ago
  > This just reinforces the idea that raising VC is more about your background than it is about your ideas or ability to execute. At the seed or pre-seed stage that Matt was at, what else would it based on? If you have no product or barely an MVP, you're almost certainly not near product-market fit and you probably have close to zero traction. As an investor, you have practically no signal to go off of at that point. Ideas aren't worth much at that stage, so ability to execute is key. And given that there's been so little done, the best signal for someone's ability to execute should be their background.
clpm4j 4y ago
If there's an actual business, then the VCs will evaluate and choose whether to bet on that. If there's no business, then the VCs will evaluate the founders and choose whether to bet on them. A real (successful) business AND extremely impressive founders don't have to reach out to VCs because they're already beating a path towards them.
spoonjim 4y ago
LOL exactly. A Harvard CS professor who had also worked in industry wouldn't even need to share the deck or idea to raise $5m. John Carmack just raised $20m for his AGI startup and doubt he had to share any plans or decks either, and guarantee you that Carmack was oversubscribed.
Kiro 4y ago
Matt was even portrayed in The Social Network.

baxtr 4y ago

He is Ex-Google and Ex-Apple… so I guess it’s way easier for him to raise than for other people.

ilrwbwrkhv 4y ago

Yes and he was also part of the boys club by knowing a bunch of VCs. Who you know is more important than what you are building in the modern game of venture capital.

Swizec 4y ago
> Who you know is more important Networking is all about who knows you, not who you know.
- ksec 4y ago
  >Networking is all about who knows you, not who you know. Need to steal that. And is this a reason why Twitter, Social Media, and self branding on the internet are so important? Since it is all who knows you?
  - Swizec 4y ago
    Yes and the luck surface area. Your amount-of-luck is the surface area of a rectangle. A side is the interestingness of what you do, B side is how many know about it. The bigger the rectangle, the more opportunities you get. https://swizec.com/blog/your-luck-and-opportunity-surface-area/ https://swizec.com/blog/your-luck-and-opportunity-surface-ar... This is how you get opportunities when you aren’t even in the room. Someone says ”Oh yeah I know <ksec>, they’re doing cool things X in the area you just mentioned an interest in”. Or ”Oh yeah for problem Y, you should ping <ksec>, they’re the expert”
    - AlchemistCamp 4y ago
      Missing credit to the original creator of both the term “luck surface area” and the chart: https://www.codusoperandi.com/posts/increasing-your-luck-surface-area https://www.codusoperandi.com/posts/increasing-your-luck-sur... The idea was also expanded upon by one of his friends in a mental models book here: https://www.amazon.com/gp/product/0525533583/ https://www.amazon.com/gp/product/0525533583/
      - ksec 4y ago
        Thank You. Swizec and AlchemistCamp. Will have to find time to read it all.
  - yeasurebut 4y ago
- scarface74 4y ago
  It’s also about “pattern matching”…. https://www.holloway.com/g/venture-capital/sections/pattern-matching https://www.holloway.com/g/venture-capital/sections/pattern-... https://www.adamantventures.com/blog-post/the-problem-with-pattern-matching https://www.adamantventures.com/blog-post/the-problem-with-p...

danr4 4y ago

Absolutely true. I'll add that THREE paragraphs start with "calling my VC friends", which factors in heavily on how "easy" it was to raise.

FranksTV 4y ago
This is some "the rest of the owl" material for sure.
- junofan 4y ago
  It should hopefully be obvious that you should befriend rich people if you think you will need access to capital in the future.
- davidhunter 4y ago
  How to raise a seed round: 1. Become a professor in CS at Harvard. Achieve big career successes in prestigious technology companies. Build a network of SV founders and VCs. 2. Raise the f*king seed round.
  - quickthrower2 4y ago
    Or…, and possibly easier: make that much money yourself and seed yourself
champagnepapi 4y ago
yeah I don't really have any VC friends :( nor a prestigious pedigree :( Guessing both are big factors in how easy it is to raise funds as a first time founder.

bcantrill 4y ago

Absolutely agreed -- without knowing the specifics of the idea, this is the world's easiest raise. I'll add a few other tailwind factors here: 1. He didn't raise that much money. I know this sounds obscene (isn't $5M a lot of money?!), but to a VC, this is a small bet. In particular: this is a bet small enough that a single VC can just... do it -- they don't need the firm to buy in. (Or that buy-in is perfunctory.) 2. He's not a solo founder -- and his founders have startup experience. This might be a push, but if one of his co-founders was a previous startup founder and that company had a successful exit, that co-founder can raise on literally anything -- especially from the VC for whom they made money. 3. This sector is still hot. We don't know much about what he's making, but "it relies heavily on AI" (and, um, it's the TLD), which -- unlike web3 -- has remained (for the moment, anyway) white-hot. 4. The environment is (paradoxically!) great for this kind of startup. I know this sounds absurd because the environment has gotten worse (and he's certainly right that the valuation would have been higher a few months ago!), but because we are coming off of very frothy times, there is tons of dry powder out there: VC firms have raised massive funds, many of them targeting early stage (Seed/Series A). Those firms have to put that capital to use, and the ones that are queasiest about the macro prospects (for good reason!) want to go as early as they possibly can (i.e., first capital in) because that gives the macro factors the longest possible time to sort themselves out. 5. They have deal heat. In part because they have all of these other tailwinds, they got a additional huge tailwind in that multiple firms are vying for a deal. This is every entrepreneur's fantasy, and it results in the kind of behavior he sees: VCs absolutely tripping over themselves to be helpful. This is absolutely the exception, and highlights just how much all these other factors have lined up. The title of this piece is what he wishes he had known, but it's not really clear what the true lessons are. That it's easier if you've actually built something? That your pitch deck gets around? Perhaps fixie.ai will just live a charmed life where everything is easy (and hey, more power to them), but if they are like most, the blog entry to read will be the one two to three years from now: "What I wish I had known about how hard a Series A is relative to a Seed."

gumby 4y ago
> The title of this piece is what he wishes he had known, but it's not really clear what the true lessons are. he restates the lesson at the end: he thought that raising money would be like a grant submission, not realizing that it would be more collaborative (after all you're gonna have the investors along for a while, unlike a grant agency). There were a few other small lessons too (e.g. your deck will be passed around, which used to be a no-no in the "old days")

spaceman_2020 4y ago

I was trying to gauge some interest for a seed round as well a few months back. For someone with my background, most investors want to see a prototype with some users, at the very least. It’s actually worked out better for me since it’s made me realize that I don’t need that much funding that soon. Working on the prototype and getting some users has also given me far more clarity about the product and customer acquisition strategy.

zcombynator 4y ago

Growth is the most convincing metric. If you have growth, you will get funding. So how to get growth? Build something users want/like. How to know what they want/like? Talk to them. Build. Talk. Build. Talk.

mbesto 4y ago
Sure, but this isn't mutually exclusive.
etothepii 4y ago
Someone's been watching the partner lounge / Dalton & Michael explain.

jiveturkey 4y ago

> number 1 reason [...] a world-class personal track record. > That’s not to take anything away from Matt. Why would that take anything away from Matt? That's tremendous. Anyway I'd disagree. The number 1 factor is luck. I like this video https://www.youtube.com/watch?v=3LopI4YeC4I https://www.youtube.com/watch?v=3LopI4YeC4I but there are plenty like it. Luck accumulates/aggregates/concentrates. I don't know if they cover it that way in that video.

mdwelsh 4y ago

OP here. Thanks for the kind words. I certainly didn't feel like this was an easy raise, but then again it's the only time I've done this and my comparison points were other first-time founders who raised 2x what we did with less than we had done. Yes, these are all pretty senior, well-established folks, not kids straight out of college. The main point of my article was the surprise around the extent of the VC network and the helpful interactions with them. Before going through this process, VC was a black box to me. Now, a lot less so. A few folks below have pointed out that I must have had an extensive VC network to draw on. Not quite. I knew 3-4 VCs casually from having worked at a couple of other startups. None of them invested in us by the way. It certainly didn't hurt to get their advice. Now, of course, I have a rolodex full of dozens I could potentially call up at some point, which is useful. I can see how founders who have done it before likely find it a lot easier to get the ball (and the checks) rolling.

ipaddr 4y ago
When you said: "my first stop was to call up some VC friends of mine" I wasn't surprised you were funded without a product not knowing your history and current role.

smackeyacky 4y ago

That and "being able to call up a few VC friends of mine" also means he is a lot better connected than 99% of startup founders. This just reinforces the idea that raising VC is more about your background than it is about your ideas or ability to execute.

threeseed 4y ago
You don't need to worry about this because VCs on Twitter have said many times that they are happy to accept cold emails and DMs. Of course from recent experience they don't actually respond so there's that.
spoonjim 4y ago
If you are a former Harvard CS professor and engineering director at Google then you don't need to know any VCs. They will take your call.
deleted 4y ago
[deleted]
vecter 4y ago
> This just reinforces the idea that raising VC is more about your background than it is about your ideas or ability to execute. At the seed or pre-seed stage that Matt was at, what else would it based on? If you have no product or barely an MVP, you're almost certainly not near product-market fit and you probably have close to zero traction. As an investor, you have practically no signal to go off of at that point. Ideas aren't worth much at that stage, so ability to execute is key. And given that there's been so little done, the best signal for someone's ability to execute should be their background.

clpm4j 4y ago

If there's an actual business, then the VCs will evaluate and choose whether to bet on that. If there's no business, then the VCs will evaluate the founders and choose whether to bet on them. A real (successful) business AND extremely impressive founders don't have to reach out to VCs because they're already beating a path towards them.

spoonjim 4y ago

LOL exactly. A Harvard CS professor who had also worked in industry wouldn't even need to share the deck or idea to raise $5m. John Carmack just raised $20m for his AGI startup and doubt he had to share any plans or decks either, and guarantee you that Carmack was oversubscribed.

Kiro 4y ago

Matt was even portrayed in The Social Network.