Seed Stage Fundraising
8 suggestions to help founders navigate the seed stage dance floor
It’s YC Demo Day week, which means 100’s of YC founders are pitching 1000’s of VCs. It’s a highly controlled setting where everyone can show off their best. Like a dance floor. A lucky few are the ones who everyone wants to dance with.
This time of year is also when founders hear a lot of advice about fundraising do’s and don’ts. Much of it is likely conflicting.
VC advice to founders about fundraising tends to make the VC giving the advice look good. Founder advice about fundraising tends to make the founder look good. My advice: take it all with a grain of salt.1
With a healthy heap of salt, here are a few suggestions for all founders — in YC and not in YC — who are raising their seed round:
The seed stage is very noisy. Canva got rejected by 100+ seed VCs. Stories like this are common. Picking at the seed stage is hard. Don’t take rejection personally.
Treat feedback from VCs who pass on your round as noise, not signal.
Look for true believers. Don’t spend precious time trying to convince the skeptics.
A VC’s stated strategy can be vague. What’s their actual strategic north star? Ask: “what’s the best investment you’ve ever made?” A VC wants more of that, please.
VCs prefer to invest in lines, not dots. Good VCs will note your predictions. In the future, expect them to note if you did what you said you were going to do.2
The best founders are able to keep making progress while they are fundraising, even though fundraising is distracting. Tuning out the noise helps.
As a founder, you are probably really good at something. A VC is also probably really good at something. Are these strengths complimentary?
The amount of value an investor adds in the getting-to-know process is highly correlated with the amount of value they will add after they invest.
Hope everyone enjoys the dance floor!
Also, sometimes advice can change. For many years YC advised founders not to talk to Series A investors between the seed round and the Series A round. Then, one day, they decided the right advice was, in fact, to talk to VCs before the A found.
VCs and founders have this in common: they both want to work with people who do what they say they are going to do. It’s a rare trait.