I'm a VC-backed founder. I've helped over 40 separate founders/teams raise big. AMA about stories 👇

@theterminalguy Thanks Simon. This is a great question, and I think more and more people need to see it as a conditional spectrum. I'll answer briefly first and then elaborate. The condition is you should raise when it's needed, and I'm assuming you're asking in the context of the first raise for any founder. Once these conditions are met, the spectrum is money vs. right partner. We need to find a balance between the funds raised and the right partner. Now I'll elaborate. It is essential to understand that raised funds DO NOT bring comfort, and in the early stages, the valuation is as good as a piece of paper about to be discarded. Investors act as anchors, and they're in the game for 100X returns. The way to hit those 100X returns is by doubling down on winners (most investors maintain their ownership in subsequent rounds) and increasing the number of potentially good bets (betting on more founders through small checks). Because in the early stages, the outcomes are theoretical without much proof, any investor will seek substantial ownership from you so that it's worth their time, and the help will not be building the business for you but instead nudges that keep you on track. How do you know you're ready? - Your product has signs of PMF, and things are going to the state where a bigger team will help you grow faster. You need funds to pay them. - You're entering a new market and need funds to validate. The idea is worth pursuing as it may potentially be a multi-billion dollar idea. In this case, the investor senses a missed opportunity if they do not back you, and their backing is just them diversifying their investments. - You're revenue positive, but the investor has a track record of working with brands like you and unlocking 100X growth. In this case, the investor usually has a great network, such as a Y-combinator. What is a suitable dilution? - In the spectrum of money and the right partner, you should always lean more towards the right partner, even if that means a smaller raise. Good investors also understand this, and they come at a price. But they more than compensate for it with subsequent raises or business growth nudges. So, always lean on good partners. - Now, good investors need decent skin in the game. Otherwise, they will not be bothered enough. - This skin in the game is also broadly defined by factors such as opportunity size, competition in that opportunity, and likelihood of success (founder quality, tech moat etc.) If you have an upper hand, you can squeeze more for less dilution. If you don't have a strong moat, you should go with more dilution. Fundraising is never to get into a comfort zone because now you have a name associated with you. It never makes things easy. The best outcome in most scenarios is no raise!

@viks_rum Thanks for this

@john_lim_my We were building for a new market, we had done the homework and many things aligned in terms of timing, our backgrounds, the domain, etc. We ended up getting a 4.6X commit in under a week. I have been able to replicate this with a few founders but as I said, it depends on a lot of factors. That said, for most founders, I have worked with, the first commit has usually come within the first 4-5 presentations, barring a couple.

@the_robogram Hey! I'm happy to help, and I do a fundraising course that looks at the entire cycle end-to-end. A new one is launching, and you're free to add your thoughts to the course planning survey: https://maven.com/forms/0b2a40 At one point, I was doing these calls free of cost. Conversations like these are very draining and time-intensive, and that is why I'm doing this AMA. If you have any questions, I can help with them directly. I've burnt my hand doing candid chats, and it leaves you burnt out. So, instead of engaging in candid conversations, I prefer only paid conversations where I bring insane value over to you in an hour-long call. This helps me filter the noise.

@uma_venugopal I would have loved to have worked in a founder's office role at a young startup somewhere for even six months so that I had more clarity on how VCs evaluate ideas. Course and blogs on these, or as was true in my case, working with late-stage VCs is a very different game altogether. It would have helped me fast-track things at my own startup.

@manas_tripathi Hey Manas! I've answered this question above as well in response to @theterminalguy. I'll add just one more. Building a business is equally hard, with or without funds. Funds are, instead, the more straightforward thing. Very few entrepreneurs who are likely to make it big and never manage to raise. There have been outliers like Airbnb, Starbucks etc but they are still a tiny tiny tiny fraction. You should find your own lane and give your everything to it. The outcome will either be a really successful company or an individual who will kick ass.

@manas_tripathi @theterminalguy @viks_rum Hi Vikram, Great to see you giving prompt response. One follow up question. Let’s say your team believe in your idea and have come forward to put their hands together to build for customers. Now you started building for your customers and investors will find you. But where the initial money come from? As you need them for the infra and other tools you use.

@manas_tripathi @theterminalguy @sagan_tech This is the dilemma of the ages. You could risk it all (also defined as the entrepreneurial risk and often phrased as burning the ship. It can backfire, ofcourse, but that is why not everyone is an entrepreneur. Alternatively, if you have the right history and track record, you can go the VC route. Even if they don't help you build, VC money can help you explore, but only if you're grounded and not looking at it as a luxury. Whatever funds you raise, you have to operate with extreme discipline and a mindset that you did not actually raise enough. VCs love funding teams that have a track record and who go out and try new things because every once in a while, a new big idea that seems unreal comes to fruition because somebody put their money behind you. Sometimes, people go for a third route. Friends and Family round where you get enough fuel to sustain. This is how most of the big companies in silicon valley emerged. On a closing note, more than often, it is the founder putting their hard-earned money. This is precisely why it's justified for the founders to also have an exceptional return.

@david_mcanulty This is easy First: Is the opportunity big enough? (The market is new and worth exploring, and if the market is well-defined, can another idea grow to over 200-300 Mi in ARR). This point will get you their attention. Second: Your background and vision. Once you have my attention, I will evaluate if you're the best person to solve it and if you have a vision and a clear-cut, actionable path to hit the same. Third: Your energy. This is the most important part. A lot of times, points one and two are useless, and the majority of the startups end up pivoting as they realize difficulties in scaling up. These points combined will get you in the room with the investor. Point 1 is mostly based on the investor's knowledge but can be influenced by how you lay the elevator pitch. Point 2 is consistent performance, peer feedback etc. and investors are really god at evaluating this without your knowledge too, many times.

@viks_rum Thanks for sharing. I appreciate it.

@fabiosalvadori Fabio, I think about these points slightly differently. VCs understand how teams are built and the hustle you're going through. In fact, it strengthens the pitch if you can tell them how you have achieved what you have without a team and why you need funds to scale further. That said, identifying candidates who are going to be your first hires is also equally critical. Investors are human beings, and most of them have worked with a lot of people who have done what you're doing. Trust them :) CAGR for 2030 is not ideal. It's 7 years down the line. Mentioning it does not harm you, but it doesn't answer anything either, and no investor is going to pay much weight to these predictions. That said if you're dealing with a market where the prediction is not easy because it's immature, you can have approximations and state the fact that these are approximations clearly. Investors again understand this and as much as people go bragging about templates and must have slides in your deck, no big raise follows a template necessarily.

@viks_rum Thank you so much, Vikram! Really really appreciated.

@sentry_co Andre! This is unrelated, so I'll keep it brief but to your question. We're sort of building an LLM of our own. There are pre-beta trials running right now, and Beta should be available for US customers in mid-September. If you're interested, head over to crucnhit.ai and sign up for the waitlist or else ping me on Linkedin and I'll be happy to help :)

@pkpio This has already been answered above in the question by @candi_forbes. Let me know if your query is still unanswered.

@balamurali This is a brilliant question, Balamurali. The early stage is all about building, and in SAAS, engineering should be the most of the effort. I would have 60-70% engineers, 10-20% designers and 10-20% GTM folks. GTM involves sales, marketing and content. Founders should do most of the marketing, lead-gen, product management, sales as well and customer support themselves. QA should be left to engineers, and so should customer support time and again (It helps devs understand how people feel about their product). Once PMF is hit, it makes sense to scale all other functions, but SAAS companies benefit disproportionately with an R&D edge.