Executive Summary:
- Brad Flora (Brad Fora) from Y Combinator discussed startup fundraising and debunked common myths
- Existing resources like Paul Graham's essays and YC's guides provide practical advice on fundraising
- Key myths vs realities: fundraising is a grind, not glamorous; build a prototype first; impressive pitches are not needed; SAFE docs make early fundraising quick and cheap; investor rejection does not mean the startup is bad
Meeting Notes:
Introduction to startup fundraising
- Brad Flora (Brad Fora) is a group partner at Y Combinator (YC) who frequently speaks about startup fundraising
- Startup founders often ask about fundraising, as it is considered the second hardest part of starting a startup according to Paul Graham
Existing resources on fundraising
- Paul Graham has written extensively on fundraising, including:
- The "Fundraising Survival Guide"
- "How to Fund a Startup"
- Essays on understanding investor herd dynamics
- Jeff Ralston (YC's president) has posted:
- A comprehensive guide to raising seed rounds
- A video presentation at Startup School covering seed round fundraising
- YC has published practical guides covering specific aspects like:
- Building seed decks
- Picking investors
- Raising money online
Myths and realities of startup fundraising
- Myth 1: Fundraising is glamorous
- Reality: Fundraising is a grind of one-on-one meetings, not high-pressure pitches like on Shark Tank. It involves having many coffee meetings.
- Myth 2: You need to raise money before starting your startup
- Reality: Build a prototype and get initial users first, then raise money. Example: Solugen first built a small reactor, sold product to initial customers, and then raised funds.
- Myth 3: Your startup needs to be impressive to raise money
- Reality: Investors expect early startups to seem unimpressive. They get bored when founders try to impress them. Example: Retool just showed their early software without fancy pitches.
- Myth 4: Raising money is complicated, slow, and expensive
- Reality: SAFE documents make early fundraising quick and cheap. Example: Afterbio raised initial funds via SAFE before larger rounds.
- Myth 5: Raising money means losing control of your company
- Reality: SAFE gives founders more control than ever. No board seats or shares changing hands initially. Example: Zapier ran the company their way after raising via SAFE.
- Myth 6: You need a fancy network to raise money
- Reality: Investors care more about building something people want. Example: Podium had no Silicon Valley network but made a product companies wanted.
- Myth 7: Investor rejection means your startup is bad
- Reality: Even great startups face lots of rejection before succeeding. Examples: InVision, Whatnot faced rejections but became very successful later.
Conclusion
- There has never been a better time to start a startup
- Startup fundraising is more accessible than ever, thanks to tools like SAFE documents
- Founders should focus on building something people want, not impressing investors
- Rejection is a normal part of the process, not a sign of failure