A $1M seed round's investor connections visually mapped.

http://www.quora.com/Brendan-Baker/Anatomy-of-Seed-An-Inside-Look-at-a-1M-Seed-Round

by mmaunder • 15 years ago

50 8 15 years ago

quora.com

ghshephard• 15 years ago

This was my highlight:

"Appmakr dealt with 170+ actors, including VCs, angels, seed funds, middlemen, corporates and even an angel group.

- They were rejected 130+ times, but raised $1M from 14 top investors."

Exhausting doesn't even beging to describe what having to even _pitch_ 130 people would be. Forget about being then rejected 130 times.

I have new respect for what founders have to go through to raise money. And I have new appreciation for the importance of what Yuri Milner's no cap convertible offering will have in freeing up founders' time and mental energy.

danielodio• 15 years ago

Tell me about it! - DROdio

evgen• 15 years ago

Interesting, but the conclusions contain a few vacuuous statements like the following:

- A large amount of your funds may originate from a few people. These are your super nodes. Support them and push them.

- A large number of intros may lead nowhere. Don't invest much in these intros.

How is one to know the former from the latter? Seems like a bit of post-hoc reasoning that is apparent when you look at the end state, but impossible to really figure out when you are in the middle of the process.

ryannielsen• 15 years ago

It seems like the takeaway is: Meet as many people as possible. With each contact, focus on getting new leads and gauging their expertise and interest. Always pursue their new leads, to grow your network.

Only when a contact seems uniquely suited to your needs and seems to have interest in your business should you then spend more time and energy trying to secure them as investors.

From my experience, it's often (but not always!) obvious who's best off just providing leads vs. who's a potential 'super node' and is worthwhile pursuing as an investor.

mmaunder• 15 years ago

You can tell as you're having conversations. The points you mentioned mirror my experience. One the one hand you'll have an investor who is well networked and introducing you to enthusiastic investors, someone who is interested in driving the process forward and who has made many investments and where amount isn't an issue. They're more interested in valuation and terms. In my experience they also add value before you even close. These folks are modest, extremely accomplished and wicked, wicked smart.

On the other you'll have someone who has made few investments, where the enthusiasm level is low and where there's a lot of nitpicking and low quality intros to people with little interest but who wear expensive wrist jewelry.

bbaker2• 15 years ago

Perfect. You communicated it much better than I could. Thanks.

bbaker2• 15 years ago

You've touched on a challenging question. Daniel and I spent some time trying to figure that out. Studying additional startups would help. Our guesses:

- The connections are able to and do make a large number of intros. The distribution was starkly bimodal - connectors with less than 3 intros yielded nothing, and those with over 10 intros yielded 940K. Will this hold across other startups? Not sure, but it's an interesting thing to think about.

- Several relationship characteristics influenced the downstream result: previous relationship, mode of contact, etc.

- There are many intangibles that founders can sense when they're meeting with people. Sensing their capacity and interest in a skill.

I don't think it's possible to know it exactly in the midst of the process, but focusing time and energy on the high potential connections is a good strategy.

As an aside, there's nothing wrong with post-hoc understanding that can help the next round/others in the same situation.

Good question, B

iamelgringo• 15 years ago

Just had coffee with Brendan (the author) this past week.

I've been making the rounds talking about what our plans are for Hackers & Founders the past few months. I've had dozens of meetings talking with VC's, angels and connectors in Silicon Valley in the past few months.

Two hours with Brendan gave me more to think about than several dozen investor meetings combined. He's sharp, insightful, and he has a phenomenal grasp of the big picture in Silicon Valley. He's going to do very, very well in this town.

A $1M seed round's investor connections visually mapped.

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