

Ask HN: How do you raise seed money in SV? - jackadamson

I&#x27;m new to the Bay Area and I don&#x27;t have any connections or rich family or friends. I have interviewed a couple of times with Y Combinator but haven&#x27;t made it in.<p>I&#x27;m bootstrapping a company but would like to accelerate its growth and be able to work on it full time.<p>Everyone is always talking about how freely capital flows around here but I don&#x27;t see that. How can I raise seed money for my company?
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tptacek
You need traction and/or a network of people that can vouch for you. The
perceived ease of raising seed funding is confounded by YC, acceptance in
which makes it drastically easier to quickly raise.

The reality is that capital does _not_ flow so freely that you can take a
couple meetings with just an idea and a prototype and walk away with a check.

Not being full-time probably doesn't help either.

Concentrate on traction. Things will make more sense when you have it.

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Sindrome
3 Basics ways people raise money:

1\. The most reasonable but least seen in SV. You build a basic business that
has traction. With additional work you can see the business having even more
traction. You need money to scale.

2\. You went to Harvard undergrad and Stanford graduate, or similar. You
worked at Google for 2 years. You want to try out something kinda crazy, cool,
but have no idea how to turn it into a business. With all your accolades,
investors put you at the front of the line. People are willing to toss you a
couple 100k each for the chance that you kill yourself working on something
that becomes big.

3\. You were one of the previous 2 types and already sold a company. You are
now a vetted entrepreneur. Raising money is trivial. There's dumb money in the
Valley willing to bet on a horse that has already won a race. Get one
influential investor and the rest come.

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staunch
Similar story. Multiple failed YC interviews. I did raise significant angel
money from outside of SV but I still failed with that company.

Firms like YC are designed with the nearly singular goal of attracting the
next Google. The primary criteria for investment is essentially "how much like
[Larry Page|Bill Gates|Mark Zuckerberg] are these founders?"

Unless you're a [Stanford|MIT|Harvard] Ph.D. student you're already off to a
really bad start. If you didn't grow up in an upper middle class household
you're probably going to stick out in various ways you're unaware of.
[http://www.ycombinator.com/partners/](http://www.ycombinator.com/partners/)

Airbnb is the biggest YC success. They don't fit the mold and were one rather
mundane story away from being rejected.

So ignore investors. Build a great product that users want and make it grow
rapidly. Then you can pick and choose which money manager you want to accept
financing from.

What I've done is scaled back my living expenses and built up enough revenue
that I'm ramen profitable. It sure would have been easier if someone wrote me
a check but at least now I'm completely unstoppable. It took me 1.5 years of
solid effort to get into this position after my previous failure which I spent
2 years on. I'm about to release the first version of the best thing I've ever
done.

If you're like me all you care about is writing code and creating great things
anyway. Investors can often get in the way of that. The very best products all
came out of genuine interest.

Let users alone be your judge.

~~~
sunonmars
Thank you for writing this. People like you inspire me a lot ! I am struggling
internally whether I should quit the job and start working on my idea. I still
haven't quit. My background appear to be similar what you described. No
HBS/GSB/MIT/YALE/PRINCETON ; no upper middle class family but on positive side
I do have engineering degree and one thing I like most is research -->link
-->build. I've quite good analytical ability. I hope I will get chance to
create great product.

One question if you don't mind , are you working full time on your startup
idea ? Also , you mentioned prior product on which you spent 2 years didn't
make. Were you working full time on your idea then ? How did you support
yourself ?

~~~
staunch
I am working full-time on my new thing. I had to take August off to take care
of my firstborn. Then he had an ER visit followed by emergency surgery a few
days ago. Now I'm about to dive back into the code.

Trust me when I say that startups are not scary compared with your 3 week old
baby going into lifesaving surgery :-)

(He's recovering well. Fingers crossed.)

I lived off a meager savings for my previous startup initially and raised
angel money from a rich guy that I worked for in the past. It was me and my
buddy in a room for 2 years. We had some success but not enough, so I had to
go back to a high paying corporate job for a while. Big lessons were learned
the hard way.

At least: #5 and #8 and #10 and #11 and #12 and #14

[http://www.paulgraham.com/startupmistakes.html](http://www.paulgraham.com/startupmistakes.html)

But the big missing one there is: Not Having Guidance.

It's very difficult to see you're making a fundamental mistake yourself. You
really need outside expertise.

~~~
sunonmars
Thanks again. Congratulations on arrival of your newbornbaby and hope he
recovers soon. Good luck with your start-up.

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amarcus
First, make sure you have a product with traction and uses cases of it being
used. Make a nice slide deck.

Make a list of investors you want to target. Look them up on LinkedIn &
Angelist. See if you have any shared connections and try to get some
introductions. I have found that cold emailing never really leads to anything.

Next up, join a lot of meetup groups to do with your field, startups,
entrepreneurship etc... and go to as many as you can. Meet other founders.
Don't just talk about yourself. Find out what they do, ask them questions,
take them out for a beer etc...find out who their investors are and try and
get them to do intros.

It's all about networking. Get yourself out there, meet founders and get
introductions to investors.

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rajacombinator
1) get connected, 2) get traction, 3) get both!

