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Ask HN: is it better to let investors find you?
10 points by startupdream on Oct 25, 2010 | hide | past | web | favorite | 4 comments
I was wondering, if you have founded a startup, and it starts getting traction and good press etc. Would it be better for investors to approach you rather than vice versa! Wouldn't you have a bit more control over the deal? Sorry if this is a stupid question, I'm a newbie to this internet hype :)



If you mean just sitting on your ass, no.

On the other hand if you meant going to parties and events where you actively talk to potential investors or using PR and marketing to build buzz about your company. Then not engaging in a hard sell and instead letting them say they are interested, yes.


No, and here's why.

It's not going to happen. Your not going to get investors coming to you. It just doesn't work that way. One of the first things an investor is going to ask you is who else are you working with, talking to or looking to take investments from? If your answer is no one, you came to us. That's a HUGE red flag, especially with the barrier to investors evaporating before our very eyes. RE:(incubators, anglelist, etc)

The only way investors will come to you is if you:

1. Have had a successful exit at another startup you've founded. In which case you probably have a decent group of investors you worked with before so not going to back to them would be counter productive.

2. Your traction/PR is HUGE. (In which case, you should be focusing on becoming profitable. Why take investment if you've already achieved EPIC traction?) I'd also argue it's unlikely you got to this point w/o some kind of outside investment. If you did then you don't need investors.


"You're not going to get investors coming to you."

My experience has been the opposite of this.

Traditional VC firms have "Associates" (1-2 years out of grad school) and "Principals" (5+ years out) who work for the partners. Often, there will be 3 or more associates/principals for each partner.

One of the main responsibilities these people have is to find new deals, which they do by reading TechCrunch, Mashable, and, yes, Hacker News. Once they get a hot-lead, they hand over to one of the partners to try to close.

I have limited first-hand experience with raising money, but of the 4 people I personally know who have raised VC rounds, 3 of them were approached by investors and not the other way around.

(As with anything start-up related, sample sizes are so small that it is hard to extrapolate.)


Thats interesting...

Almost everyone I've talked with were actively seeking financing when they closed their seed rounds.

I don't have any numbers, but I'd be willing to bet less than 1% of all startups are ever featured on TechCrunch, Mashable, or any other large industry publication prior to funding. I wouldn't rely on that to generate investor interest.

Posting your company on HN is about as close to looking for investors without "looking for investors"




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