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

~~~
pg
Can you give an example of advice I give about startups in _Hackers &
Painters_ that you consider to be mistaken?

~~~
ghc
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.

~~~
pg
Thanks for the kind words, but I think you may be attributing ideas to "How to
Make Wealth" that you picked up elsewhere at about the same time. Perhaps from
your peers building Facebook clones. The whole point of that essay is that
startups should make something people pay them for. E.g.

    
    
      What a company does, and has to do if it wants to continue 
      to exist, is earn money. And the way most companies make 
      money is by creating wealth.

~~~
ghc
I don't deny that I may have missed the point of "How to Make Wealth" when I
was younger, but I think it wasn't so hard to get the wrong things out of it:

\--

    
    
        So I think you should make users the test, just as
        acquirers do. Treat a startup as an optimization problem
        in which performance is measured by number of users.
    

\--

    
    
        Here, as so often, the best defense is a good offense.
        If you can develop technology that's simply too hard for 
        competitors to duplicate, you don't need to rely on
        other defenses. Start by picking a hard problem, and
        then at every decision point, take the harder choice.
    

\--

    
    
        The advantage of creating wealth, as a way to get rich,
        is not just that it's more legitimate (many of the other
        methods are now illegal) but that it's more straightforward.
        You just have to do something people want.
    
    

What those passages mean to an experienced entrepreneur and what they mean for
a college student living in a dorm around the time facebook was released might
be completely different (it was for me). Building something technically
difficult to replicate that people wanted didn't scream "find paying customers
yesterday", then build it. None of us paid for any of the software we used
(either b/c it was free or we had Kazaa), so the "user test" meant something
different to me than it does now. I think I was pretty convinced that the
"monetize later" model was the way to go until at least 2008.

So you might say my main critique is that I was too naive at 19, and needed
things spelled out for me. "How to make Weath" was just too subtle.

------
7Figures2Commas
> 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
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
People capable of building a quality product will not settle for " stock
options, connections, real life code examples, etc".

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mindcrime
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.

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

------
LekkoscPiwa
Is it how they fund raise in India?

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

~~~
LekkoscPiwa
Thank you for your replies. It's very similar to this, here in Poland. The
emerging markets have a lot of common characteristics. However, I didn't
expect risk taking aversion to be one of them. Maybe just an "American thing"
to be bold and take risks. Might be this that can't be replicated elsewhere
:-(

~~~
ankit_oberoi
umm.. I think its more to do with time. Someone sometime in your region will
fund that crazy start up, waiting to explode. Others will follow suit after
that.

