
A Fundraising Survival Guide - mqt
http://www.paulgraham.com/fundraising.html
======
gojomo
The very last sentence of the last footnote caught my eye:

 _Oddly enough, the best VCs tend to be the least VC-like._

I suspect that rather than being odd this is nearly tautological for any
profession -- "the best X tend to be the least X-like". Professional
stereotypes are set by the multitudes in the middle, not the highest-
performing outliers.

Further, atypical behavior can be both a cause and effect of excellence. Being
'different' helps them be 'better', but also by being 'better' they gain
freedom and confidence to deviate from norms.

(Of course, "the worst X tend to be not very X-like" is also true. But they're
more likely to at least try to emulate the average X.)

~~~
pg
I've been thinking about that. It's not true of all fields. It's true of
painters, but not mathematicians.

Maybe it depends on whether a field has a lot of fakers. Painting and VC both
do. Math has few to none (I can't judge well enough to say for sure).

~~~
cperciva
_It's true of painters, but not mathematicians._

I'm not sure about that. The words "homeless drug addict" don't exactly bring
"mathematician" to mind, but thats' exactly what Erdos was, and he certainly
qualified as one of the best mathematicians of the 20th century.

EDIT: Oops, it wasn't methamphetamine; it was dl-amphetamine and
methylphenidate. Somehow my brain squished those two together.

~~~
asdflkj
Erdos was a drug user, not a drug addict. He famously quit drugs for a month
just to show that he was not an addict. And though he was technically
homeless, he was not what most people imagine when they hear this word. He
merely preferred to spend his life traveling, and had many friends everywhere
(which comes with the territory if you're eminent).

His most salient characteristics--eccentricity and lack of concern for non-
mathematical things--are common to most mathematicians.

~~~
bootload
_"... Erdos was a drug user, not a drug addict. ..."_

There is no distinction.

------
tonystubblebine
As a fan and practitioner of bootstrapping I was interested in the part where
pg says that the delay caused by bootstrapping can be fatal to many kinds of
startups. Flipping that around, are there kinds of startups where the delay is
not fatal?

Taking Basecamp as an example, it was released probably decades after the
first project management software. Is bootstrapping best if you're going after
a mature class of software?

I think that might be the case. When I'd started I was looking at a completely
new class of software that didn't seem to have any entrants. Then Ning
repositioned with heavy backing and there was no way I could see to compete.
So we went into a vertical as a new approach to an existing and mature field.
That's when all the bootstrapping pieces came into place. Six months of side
jobs built a product that we could build services around which lead to twelve
months of ramen-profitability. Now we're in post-ramen-profitability and
growing. It's definitely slower and that's let competitors enter with similar
approaches but none that could own an entire market the way Ning could.

On the flip side, if we were venture backed we still might not have been able
to compete and this story might be about how we'd wasted several million
dollars.

~~~
davidw
Depends on the economics of what you're doing:

\- Winner take all markets with strong positive network externalities have bit
first mover advantages: eBay.

\- Products requiring large investments probably require investments: if you
trade time for money, you might be really late to market compared with a firm
that got money.

\- Products where it's easy to start competing and carve out a nice probably
don't require much in terms of investments.

~~~
skmurphy
eBay was far from the first on-line auction site. In particular OnSale was
founded a year earlier was running on-line auctions in May of 1995 six months
before eBay was founded.

~~~
netcan
First mover doesn't necessarily mean absolutely first. "Early mover" is
probably a better term. Either way, it tends to apply to the first (or one of
the first) to cross a certain hurdle.

~~~
skmurphy
eBay was not in the first 10. First/Early mover is a very mixed bag with most
of the example of "first/early" turning out to be "one that we remember now."
Some other counter-examples: Palm (something like 47th PDA, well after the
Newton for example), iPhone, MP3 player (iPod), Google, Microsoft (e.g. Excel,
IE, Word, Powerpoint,...). See also NSF study
<http://www.nsf.gov/statistics/nsf04305/pdf/tab11a.pdf> (hat tip to
<http://particletree.com/notebook/first-mover-advantage/> )

~~~
netcan
First/Early mover, is (I think) a more useful concept from the market
perceptive then the technology perspective.

eBay was the winner that emerged from the first tussle and as said above it
was the first to hit a certain size. You might not want to call it a first
mover but that is a semantic discussion. From the perspective of the market,
it was.

The iphone certainly is a late entrant any way you slice the market. Late
mover doesn't necessarily mean loser though.

Palm was a late entrant. I think what you get in that case is that the market
had a few false starts. In that case, moving early would have been a mistake
as the market didn't take off.

You could argue that the ipod was a first mover from a marketing perspective.
The idea is that the product (in the minds of users) is so different that it
is essentially a different market. grey area

But some areas definitely favour early movers. Interestingly, I don't think
viaweb was one of them. You have a very large choice of online shop building
software these days. There is not too much advantage in choosing the same
software as everyone else. But I guess that wouldn't have been obvious at that
point. Things could have rolled out differently though 'Web malls' could have
happened. In that case, being in early would have been a big deal.

Cheers for the link. Is there analysis that goes with it?

~~~
skmurphy
The short analysis: first/early is a factor but not dominant. Each of the
examples I cited would be "first/early" in the popular perspective. iPhone may
end up re-defining the category the way that Palm and iPod did: from a
marketing perspective "whole product" is a more useful target than
"first/early mover."

------
jnovek
I have a problem that I've seen mentioned on HN before, but I've never seen
anyone with a good, "Here's what I did..." solution. I'm pretty certain that
I'm not the only HN reader with this particular issue.

Imagine (I'm not saying that I actually HAVE any of these things, but
imagine!) that I have a product, a beta with a community of active users, and
a good team of co-founders who are developing the product on nights and
weekends. Say I've even got some guesses about a marketing strategy and a
revenue stream. Overall, a good collection of stuff to present to a potential
investor of "seed" capital.

The only problem is, I have a day job. And (for now) I need a day job to eat.

If dealing with investors is really a full-time job as this article suggests,
and should only be done in a startup city, as other PG articles suggest, how
do I POSSIBLY afford to hunt down and meet with potential investors without
starving to death? I suspect that "Can we meet after I get off work?" isn't a
great confidence boost for a potential investor.

~~~
jon_dahl
_Here's what i did._ I was a consultant before I started raising money, so I
could carve out a chunk of my time for fundraising before any money came in.
When the money came in, I jumped over full-time. If you're not independent
yet, maybe you could shift towards contract work for the next 2+ months?

Also consider raising from friends and family first. This money can has the
potential to come quickly if it's going to come at all. BUT don't do this
unless your relationships won't be affected by the worst-case scenario (100%
loss due to your obvious incompetence).

And I know your second paragraph is hypothetical, but if you have a product,
active users, and co-founders, then you probably have time to talk to
investors. Answer emails at night, and schedule meetings around lunch or
personal days. Saying that fundraising is a full-time job is a bit
exaggerated, at least for angel investment; I've been raising for 6 months now
with some success, and it's maybe been a 20% of my time.

------
jonmc12
Excellent article about working with investors, but I'm not sure bootstrapping
got a fair shake. 2 other ways to Bootstrap: 1) Getting a customer to pay up
for a product up front. This is different from consulting, and this is not
investment because you are not selling equity. 2) Building a niche product,
with a market that is cheap to reach, and using cashflow to evolve product.

Case 1, the pain is equal to the number of customers you have to talk to to
find this one or more that will fund your development. Subtract pain if you
have good or opportunistic connections; subtract pain if you are a superb
salesman; also subtract pain if you have experience in this exact product
field before.

Case 2, the pain is in attracting the initial set of customers. Subtract pain
if you have a lot of friends who will buy the product; subtract pain if you
are natural evangelist (like PT Barnum) or have PR experience; subtract pain
if the market is already ready to accept a product that you can build cheaply.

------
jfno67
The point that caught my eye is the "ramen profitable" one. We are at this
point now, the amount is quite bigger, but we are 2 founders in their 30's
with children so this is a lot of ramen. Also the wifes appreciate variety so
"ramen profitable" for us is more like 10K/month. Our problem with financing
now with this is that to built those revenue we had to sacrifice much of our
vision and just concentrate on execution. Now we have a startup that needs
about 4 days of work a month and generate some money. But it is not a sexy
company. All the answer to basic VC questions for it are bad or not good
enough. Like no barriers to entry, the competition is huge, etc...

So we could go back to the vision project and start that "great idea" we had,
but instead we often find ourselves trying to make the current product
generate more revenues.

I think that may be responsible with the problem PG sees with bootstrapping.
"The mere fact that bootstrapped startups tend to be famous on that account
should set off alarm bells." I think there are a lot of successful
bootstrapped startup that are just not successful enough to be famous in any
way. Ours is heading that way.

------
aswanson
_So the inefficient market you get because there are so few players is
exacerbated by the fact that they act less than independently. The result is a
system like some kind of primitive, multi-celled sea creature, where you
irritate one extremity and the whole thing contracts violently._

Eerily similar to the high school dating scene I remember.

------
tc7
"If you factor out the "bootstrapped" companies that were actually funded by
their founders through savings or a day job, the remainder either (a) got
really lucky, which is hard to do on demand, or (b) began life as consulting
companies and gradually transformed themselves into product companies."

I had to read the paragraph a few times, so I may be misunderstanding it, but
why do we factor out bootstrapping through savings or a day job? Is that not
'real' bootstrapping?

~~~
cperciva
_why do we factor out bootstrapping through savings or a day job? Is that not
'real' bootstrapping?_

I'd say that those have more in common with angel funding -- the money is
coming from an external source which has lots of it. Bootstrapping, in
contrast, suggests that the company is being funded out of _the company's_
revenues.

But it's a rather blurry line: What do you call a company which operates for N
months out of the founders' savings and is self-funding beyond that point? The
answer has to depend on N -- at T=0 a "bootstrapped" company has nothing to
sell, so there must always be _some_ initial period when a company if funded
by external sources.

~~~
netcan
Doesn't bootstrapping also imply operating on founders' credit?

------
rokhayakebe
To cut that pain in half you can start to treat your startup/idea as if it
were a well established business. Think of all the items one company will go
through during diligence and make it a habit to implement the proper process
accordingly.

If your investor walks in and see that you have well run back end they will be
impressed and they will not fool around with you. That will also give them
some relief.

So from the get-go make sure you incorporate properly, hire an accountant
firm, or use software and make sure someone records and categorizes every
single expense (yeah add 25c for that Koolaid too), develop a great business
relationship with your customers (mostly for startups that charge), document
your technology ( I do not know much about this one), write short bi-weekly or
monthly report about your traffic, write short reports about your sales
etc....

You do not have millions in revenue to treat your business like it is, and if
you do treat it as if, it is very likely to end up making that much.

------
vaksel
there is probably a startup idea here. Everyone probably emails all VCs at the
same time, so why not speed up the process?

Can have Entrepreneurs sign up, upload their business plan/youtube
presentation. Then VCs will be able to login using a special verified VC
account(that way Entrepreneurs will know that only VCs will see their
presentations). And then be able to see the uploaded presentations and contact
entrepreneurs for an in person interview.

Throw in a bunch of filter options for each party. A few web2.0 mashups for
maps/scribd pdfs etc and bam instant millions.

To make money can charge either Entrepreneurs by telling them you are charging
them in order to filter out the weak startups: "If you don't believe in your
idea to pay $___ in promoting it to investors, what makes you think its good
enough for investors to put in real money?" Or you can charge the VCs($____ to
see each business plan or a monthly payment) or make it a non-profit
organization and have a bunch of VCs donate to it.

~~~
gscott
There are a ton of those out there, <http://www.gobignetwork.com/> is one
another is <http://www.fundingpost.com/>.

There are too many people out there trying to do the "start up" thing trying
to get attention from too few people.

To put the number of "start ups" out there in perspective, 900 signed up for
the Techcrunch 50 conference (<http://www.techcrunch50.com/2008/blog/>) and in
order to sign up you cannot be launched yet and you must be able to launch on
the conference date. So that means that 900 start ups signed up, each ready to
start on a single day.

------
abiek
"Not everyone has Sam's deal-making ability. I myself don't. But if you don't,
you can let the numbers speak for you."

PG you have hundreds of people applying to make a deal with you (through YC)
and once you agree to make a deal--a decision that takes you 20 minutes--you
are rarely rejected. Plus, when you are rejected the people who reject you
usually fail. I appreciate the modesty but by no means do you seem like a poor
deal maker.

I feel that no matter one's starting point they should work on there deal
making ability so they can have more then just the numbers. You need the steak
and the sizzle.

Just as startup founders in order to make a good product need to be
persistent, intelligent and understand the technology; in order to make good
deals the founders still need to be persistent and intelligent but also need
to understand the components of what it takes to find and close deals.

So how can startup founders learn to be good deal makers?

~~~
pg
I meant ability to convince people to do what one wants.

~~~
netcan
I appreciate the distinction (& the modesty) but I think that YC is
exceptionally sold. It seems to be a pretty good machine for getting people to
do what you want them too. Does YC convince people to start companies? ..move
cities? ..change game plan in a way that is as significant or more significant
(to them) then signing a deal is to a VC?

But I get what you mean. That knack for projecting momentum is rare.

------
biohacker42
If investors always need a little more information and none of them understand
the product, then doesn't it make sens to have funds?

Funds where investors would pool their money and where very smart people with
very deep knowledge about he market make the investment decisions. Isn't that
what VC funds are?

So if VC funds are supposed to be led by people who _know_ what to invest in,
but it seems none actually do, not even Y combinator, then isn't there
something else that pg did not mention?

Could it be that simple, pure, dumb luck plays such a large role in each and
every startup that _educated_ guessing what to invest in is impossible?

And doesn't that mean that the most rational investment strategy is the one of
the index fund? Invest in everything, most will fail, a few will succeed.

So does that make all _investors_ just market inefficiencies?

------
sonink
I think pg nails it when he says that talking to tons of investors takes up
lots of time, and given the extremely low probability of a deal going through
it comes out as extremely hard.

One of the reasons that exacerbate this problem is the presence of 'wannabe'
angels in the investing community. These will typically be folks who worked
long and hard in a big company or possibly got rich as an early employee and
now fantasize about doing angel investments. Obviously the ambiguity of the
whole process is too much for them to ever go through an investment.

IMHO the fund raising process is all about waisting as less time on the folks
who will not invest and figuring out the potential investors.

Possibly pg should elaborate more about how founders can predict the
'successful' investors and skip the bad ones.

------
prakash
Money quote: _Startups live or die on morale._

~~~
boucher
Actually, I think you wouldn't be far off the mark by saying that one of Y
Combinator's most important contribution to its companies is morale. Tuesday
night dinners really turned us around when we were feeling particularly
demoralized.

------
cperciva
In footnote [2]: _No VC will admit they're influenced buzz. Some genuinely
aren't. But there are few who can say they're not influenced by confidence._

I think this wants s/influenced buzz/influenced by buzz/.

~~~
apu
Another copy-edit near the end of point 2 (halfway through the page):

"Investors rarely grasp this, but a much of what they're responding to"

(there shouldn't be an 'a' before 'much')

~~~
pg
Ok, fixed both, thanks.

------
as
"Deals fall through."

At Justin.tv, Emmett has a framed picture of pg with this caption.

------
nostrademons
_Consulting is the only option you can count on._

I'm curious - what's wrong with the old-fashioned "having a job and living way
beneath your means"? The average grad student lives on about $15-20k/year, and
often does so in a startup hub with its inflated cost of living. The average
entry-level programmer can make $60-80k/year. Why not work for a year, live
like a grad student, and then use the accumulated savings to fund 2-3 years of
full-time development?

~~~
LogicHoleFlaw
This is what I'm doing. I don't mind living cheaply. I do like the feeling of
watching my runway lengthen with every paycheck.

------
2bStealthy
I read this essay. Then I re-read it. This is a superb effort to analyze the
funding experience for startups!

For the last 4-years we lived this, down to moving into a consulting role to
survive. If funding ever arrives, we will thrive.

We are lucky to have 2 founders - I focus on fund-raising, business
development, IP, and operations. The other focuses on the technology and
product development. My keeping him out of morale-threatening situations, we
have a kick-ass product. I learned not to take the multitude of rejections
personally. The ignorance of the product and market conspires to keep most
investors away.

The one addition I would add is this: Those investors who do "get it" and are
supportive in both dollars and participation should be treated the highest-
level of respect. We are extremely lucky to have a stable of such investors!

There is a great forum at <http://thefunded.com/> where entrepreneurs can
share their funding experience, terms sheets, and good leads. Also, those VCs
who like to rope-a-dope entrepreneurs are highlighted there so we can avoid
them.

I highly recommend this essay be linked there!

------
lisper
I disagree with one point:

"They do seem to expect an answer to the [question of how much money you are
trying to raise]. But I don't think you should just tell them a number."

It's very useful to have a number in mind, and it's very helpful for an
investor to know what that number is. If I only have $50k to invest and you're
trying to raise $10M then talking to you is probably wasting both of our time.
(The reverse is true too. If I'm running a $100M fund and you only need $25k
to get to your next milestone it's not a good match no matter how promising
your company is.)

It's helpful to think of the question as, "How much money can you make
effective use of at the moment" or "How much do you want to raise before you
stop putting immediate effort into raising money" or "How much do you need to
get you to your next significant milestone (and what is that milestone)?"

~~~
MaysonL
Of course, the question should also go the other way: "If you're going to
invest, how much are you willing to put up?

~~~
lisper
Absolutely.

------
henryyates
Interesting strategy on how much money to ask for. He says: “We advise
startups to tell investors there are several different routes they could take
depending on how much they raised. As little as $50k could pay for food and
rent for the founders for a year. A couple hundred thousand would let them get
office space and hire some smart people they know from school. A couple
million would let them really blow this thing out. The message (and not just
the message, but the fact) should be: we’re going to succeed no matter what.
Raising more money just lets us do it faster.”

The challenge here is having several funding plans up your sleeve that show
different growth rates and also stack up together. To be credible, the plans
should show that if an investor puts less money in, the business will not grow
as fast and will also have a lower chance of success. The key is putting the
lower growth scenario together without putting the investor off and at the
same time not making the larger investment easy to pass on because the lower
growth scenario looks like a good investment. Why put more money in at the
highest risk point when the start up can show good progress with a lower
investment?

For me, the difficulty here is that I know if we have less money the chances
of our success are greatly reduced. The reason for this is you don’t know what
you don’t know and more money allows you to find out, flex your plans and find
a successful strategy. Credibly telling an investor that if they give you less
money, you are still equally confident of success albeit on a smaller scale,
is a challenging balancing act.

~~~
everlatty
Look,one model can take care of different growth/funding scenarios, no need
for laborious replications. I spent a pretty amount of hours building both my
solutions and product financial model (really, my forte). Just frustrating
attracting angel investors to such a business model that has proven
(competitively) to generate lots of revenue. Being on the finance side, I tend
to have a disdain for middle tier VCs. Sorry for some of the angels who don't
understand, that's more acceptable. But VCs, many don't know what they want:
liquidity or high market valuation. I hope my first points answer your thesis:
"The challenge here is having several funding plans up your sleeve that show
different growth rates and also stack up together."

------
richardw
I like bootstrapping. I think it teaches you to run a business that will bring
in revenue and profit, because it's your money. I think it allows you the
option of scaling up, or down, as you feel is appropriate. There's much less
of a "burn rate". There are fewer surprises when things take longer than you
thought they would - that can give you a second chance when V1 sucks too
badly.

But yeah, I'd take money if I needed to - when the only thing between me and
success is ability to grow.

------
clearair
This is the Best Article I have read on the subject.

I've bootrapped (Consulting) a start-up for 9 years... We were
early...otherwise it would not have worked.

Now we are shifting gears and productizing. Our new product is less than 12
months old and is already 20% of revenue.

We were a young management team (25) so consulting allowed us to cut our teeth
and learn all the topics mentioned...poor advisors, account every expense,
learn what net income really means, and how to manage cash flows...

There is nothing magical to starting a business it's just _really_ hard. As
one of our Angel's says "Nothing to it, just alot of hard work!"

I have comprimsed alot, haven't started a family, don't own a house, still
sub-market income.

My advice: Scope the your vision relative to your ability to take risk. If
your wife will only let you run for 24 months don't try to create google.

------
Lloyd
As a lawyer, I laughed and laughed about the lawyer not being able to admit
"he'd screwed up". It's such a common problem and start-up founders are well
advised to carefully vet not only their own advisors but also the VC's or
Angel's ones. The truth is that many, many advisors are inexperienced (no one
knows all of the answers in a world where human knowledge doubles every few
years) but it is the advisor's failure to admit a lack of experience or
knowledge which is potentially fatal to YOU.

Congratulations on the great article, Graham. I've read tones of this sort of
stuff over the years and I believe that your article is the closest to an
honest, sensible guide to fundraising I've ever seen. It should be mandatory
reading for all would-be startup founders.

Please, please keep up the good work!

------
prakash
on an average how long do YC companies take to raise the next round (could be
series A, or another larger angel round) of funding after the YC funding?

~~~
webwright
I don't think anyone has done this math... PG said to be prepared for 6-9
months for Series A. Angel seems to be 1-3 months and Series A seems to be
closer to 4-6 for YC companies. I talk to plenty of non-YC founders who raise
money for 6-12 months. Blech.

I think only 20ish of the 80 "graduating" companies have gotten Series A, and
most of the rest (who are alive) got angel.

------
EBB
As someone who worked for investors (and VC wana be's), I really like this
quote: \" Though a rejection doesn't necessarily tell you anything about your
startup, it does suggest your pitch could be improved. Figure out what's not
working and change it. Don't just think "investors are stupid." Often they
are, but figure out precisely where you lose them. \"

Regarding novice investors, sophisticated invesotors sometimes bring a lot
more to the table than just money. Or at least they are not going to make life
difficult later on. The caveate is they are not easy to get to. All the best E

------
edeiviscu
So what I'd like to know is, what does Paul Graham think about the current
financial / credit markets crisis. Does the current crisis change any of his
views as expressed on this and previous essays? For example the "Mind the Gap"
essay comes to mind about generating wealth. With academics such as Nouriel
Roubini (Dr. Gloom) predicting a systemic financial meltdown worldwide but
mostly in the U.S., how can anyone remain optimistic about the future
particularly with regard to fund raising for startups and wealth generation?

Eddie

------
ph0rque
> [Investors] think they need a little more information to make up their
> minds. They don't get that there are 10 other investors who also want a
> little more information, and that the process of talking to them all can
> bring a startup to a standstill for months.

I wish there was a way to know the 90% of information that an investor might
ask you ahead of time, and be ready by having those questions answered.

------
tripgarden
This article is the most honest and accurate I've read and describes the
mindset and habits of fundraisers and investors perfectly. As a serial
entrepreneur and founder of several small startups in China, I have had some
experience with fundraising too... and your insights are true even here in the
Middle Kingdom.

------
USP
Great content. Long, but very helpful. Anyway, just thought I'd let you know
I've referenced your article in a post on my blog - 9 Fundraising Survival
Tips For Startups (
[http://urbansurvivalproject.blogspot.com/2008/09/9-fundraisi...](http://urbansurvivalproject.blogspot.com/2008/09/9-fundraising-
survival-tips-for.html) )

------
jerreldcrider
As a person in their second start-up company I know that funding is the
biggest problem. Your paper helped me understand my effort I have ahead of me.
And made me more determined that ever for my idea and company plus it gave me
some more ideas. Thanks

Jerrel Crider Graphic Arts Teacher jerreldcrider@yahoo.com

------
prakash
If you have been in sales, some portion of the fundraising process wouldn't
sound as intimidating.

------
pongle
Interesting, the article makes me want to write something entitled: "How
fundraising is similar to selling a house, and why." (at least in the UK)

The timescales, rejection rates, legal layers and lack of trust between the
participants seems very similar.

------
netcan
I think PG has said this before. There is incompatability between: A. VCs are
'funds' (IE they need to invest a big amounts) B. Partners only invest 1-2
times per year C. Startups are (or can be) cheap

One of them has to give. Seems like its C.

~~~
sabat
I have to suspect that B is less fact than it is VC posturing. To my
knowledge, a partner who only invested once or twice per year would soon lose
his position. His job is to make money for the firm, and if he's not investing
very much, he's not going to make money.

While I have no reason to doubt the indubitable PG, I have a feeling that Mr.
Hornik is fibbing or is in a unique position to under-deliver for August
Capital.

Let's put it this way: if very very few startups ever get funding, how do you
explain Podshow and Meebo getting so much money with such unproven/unreliable
revenue models? Don't tell me it was "pure chance". I think it is/was because
VC is more readily available than Mr. Hornik's self-important attitude would
imply.

~~~
netcan
I don't know much about VC structures. How much they need to invest per year.
How many partners, etc.

But I assume that even if the numbers are off, the principle stands: They
invest in few companies per year, so they need to invest large amounts.

Maybe VCs (or the ones currently around) don't need to be investing in
software startups any more. The classic model is that VCs fund risky
industries that need a lot of startup cash (like sailing to India to buy
spices). If that's not software anymore, maybe they need to get out. At least
out of some software areas.

Actually, I was surprised at the numbers he was talking about: 50k, 200k..

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dsidman
A fabulous article! As someone who has raised $11.5 million from 148 angel
investors (including this week's raise where $2.5M came together in a single
night), I can attest to the truth of every word here.

~~~
Esfandiar
Wow!!! All from angels. Can you post the link to your company here? I would
love to know more. Thanks.

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dmoney
_[3] One VC who read this essay wrote:

"We try to avoid companies that got bootstrapped with consulting. It creates
very bad behaviors/instincts that are hard to erase from a company’s
culture."_

What are those?

~~~
pigmata
I found this comment pretty odd. We HAVE to bootstrap/do consulting just to
GET STARTED already! Doing consulting gigs requires us to stay current and in
the loop and helps us learn to deal with customers. Staying in the corporate
world didn't grant the flexibility we needed. But, yes, client work can be
very distracting and takes up a lot of time. But hey, we have to SURVIVE.

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mariasipka
Absolutely mind blowing! You've made my day. Your quotes are plastered over
our white boards. Keep sharing your wisdom. We need to read more articles like
this.

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electric
Question for anyone who has dealt with angels:

Is it normal for angels to take 600 hours to complete a deal -- from first
meeting to signing on?

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aarondelcohen
Paul:

In a word this is exceptional work. You are swiftly becoming a hero to me and
at some point you will see how much you've inspired me.

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krzysztof_c
I have read it. I also watched Sam Altman. I would never think it will come to
this! This iPhone "thing" is the greatest invigilation system ever created. I
saw communism first hand, I saw people prosecuted. This is much worse. ... and
guess what, we all LOVE IT !!!

... unbelievable !

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gregboutin
really enjoyed reading this essay, Paul, thanks for bringing it to the world.
Couldn't be more true... Will mention it on my blog.

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ericwan
Man, I wanna vote this up for the 2nd time.

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jerreldcrider
Thanks your paper gave me new ideas.

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noor420
So PG, you read 800 applications and invite 100 for interview. Then you invest
in only 1 or 2?

I hope this is not the case with other VCs.

~~~
pg
Those aren't our numbers. Those are David Hornik's. We accept a much higher
proportion.

~~~
noor420
I see, my bad, didn't read properly.

