Fundraising tips for first-time startup founders

http://www.mittal.vc/2013/08/18/9-critical-fundraising-tips-for-first-time-startup-founders/

by mittal • 13 years ago

40 19 13 years ago

ghc3• 13 years ago

I wasn't expecting much (most articles with titles like that are terrible), but this vastly exceeded my expectations. If I'd had advice like this when I worked on my first couple of startups, rather than the advice in Hackers and Painters, I think things would have turned out differently.

The first-time founders I mentor now have somewhat more realistic expectations than we did during the Web 2.0 startup craze circa 2005, but there are still far too many of them looking to build what comes easy (e.g. social network) instead of looking to build what makes money.

For my part, I'm done taking money unless there's a compelling reason. Right now I'm spending weekends building my next startup while doing my time at my last startup, now post-acquisition. It doesn't just feel better than chasing money, it feels right. If enough revenue comes in such that I need to quit and put my full time in, it will be a victory that tastes all the sweeter because this time I did it on my own terms.

pg3• 13 years ago

Can you give an example of advice I give about startups in Hackers & Painters that you consider to be mistaken?

ghc3• 13 years ago

Let me preface this by saying that when I was 19 and Hackers and Painters was just published, there was no book more subversive to the natural order of things. H&P changed my life so completely that less than a year after reading it I was standing in the YC office in Mountain View for a YC interview.

And even after subsequent rejection, deciding to change majors to CS, going back to school to seek of the advice of Olin Shivers, and actually getting a CS degree, I practically kept it by my bedside. There was nothing even close to as influential in my decision to move to Cambridge and get reinvolved with startups as soon as I graduated.

But while H&P is is great at showing people like me that you can succeed in business without an MBA, and in fact might be at an advantage, it might be too subversive in that sense as well. Later essays that weren't included in H&P tell a clearer story. Black Swan Farming and What We Look For In Founder and Why Smart People Have Bad Ideas are essays that might have affected my thinking back then.

I don't think anything could have changed my path away from startups; any book containing Why Nerds Are Unpopular and How to Make Wealth was destined to have a profound affect on my life. But while VC is somewhat demonized and stories are told about running out of money, I think there is a certain glorification of the process that translated in my brain to "build product -> seek seed funding (YC) -> get users -> get VC", when I might have been better served by something telling me in big, bold l etters that while all this is great, if you're just starting out, don't just make something people want, make something people want to pay you for.

I didn't learn the lesson fully (after all, everyone I knew was building facebook clones back then) until being part of my first exit at a startup where we took no money . It was so refreshing to fund the company off customers' payments that even for my latest side project I found ways to make people want to pay me for it before I had built anything.

So while I don't think Hackers & Painters gives any wrong advice, I think that you are such a good essayist that you unintentionally glorified the traditional VC-back ed startup process to someone as young as I was. If I'd read more about how to be a cockroach, and had someone tell me that my first company should focus on making so mething people will pay me for immediately, maybe I would have had a better chance of success at 19 instead of in my mid-twenties.

LekkoscPiwa2• 13 years ago

Is it how they fund raise in India?

neilxdsouza• 13 years ago

Investing in India is very nascent. I think You need to have a fully working company with customers to raise seed money.

We have planned 5 products in our suite, 1 of which is in production use and 3 in advanced prototype and it was not enough to get into an accelerator program.

Also not sure if angel investors here understand what is seed money. Currently in the US, seed money that YC offers is about 11k to 18k USD. The angel firm we were speaking to mentioned an amount of about INR 10 million (which is way above even the US amount as seed).

INR 0.5 mil would be enough as seed money here, but I think nobody wants to take this early stage risk here.

We have eventually got into an accelerator program at iim-a, but that is because we won a contest.

*Edit (grammar)

ankit_oberoi2• 13 years ago

Correct. The Investor mindset is a bit different and they look for more safer bets.

7Figures2Commas• 13 years ago

As for people, there are plenty of folks willing to work for free.

Advising founders to recruit unpaid volunteers is horrible advice. Not only do you tend to get what you pay for, "free" labor can prove to be anything but free once the lawyers get involved.

TheBiv• 13 years ago

Not to speak for the author...but, well, here it goes...

I read that point to specify that you don't have to pay them in money, rather there are other currencies that are out there that can be far greater than money; like stock options, connections, real life code examples, etc.

All of the points you mention about the pitfalls of "unpaid" persons can be seen with paid employees as well. It just seemed like he was saying that there are alternative currencies out there other than just money.

advicethrowaway• 13 years ago

People capable of building a quality product will not settle for " stock options, connections, real life code examples, etc".

acgourley3• 13 years ago

It's very hard to find a good team who can work for free or cheap. It's a founders job to do very hard things.

Oh and anyone working full time on sweat equity should be a founder and if you're not calling them a founder you shouldn't have them on your team at this point.

joncalhoun• 13 years ago

To the site owner - your site isn't readable on mobile. Hiding the floating element on mobile may be enough to make it readable.

mindcrime• 13 years ago

I love that the first bit of advice was

"consider NOT fundraising"

This mirrors my own thinking... delay fund-raising as long as possible, and bootstrap as far as you can. Best case: You never raise at all, and find that you achieve your goals based solely on organic growth. Less ideal case: You have to raise outside money eventually, but you have more leverage and therefore more favorable terms.

Fundraising tips for first-time startup founders

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