Simon Willison's Weblog: funding

What are the key points accelerators such as Y-Combinator drill into their startups?

2014-02-07T18:36:00+00:00

My answer to What are the key points accelerators such as Y-Combinator drill into their startups? on Quora

Build something people want. This is so important that YC have it printed on the T-Shirts they hand out to each batch.

They also teach the importance of launching something and getting real feedback. The entire three month YC process is based around the need to launch and demonstrate traction in order to raise money from investors.

Paul Graham's essays cover many of the lessons that YC teaches startups.

Tags: entrepreneurship, funding, startups, y-combinator, quora

Do accelerators (which do not take up equity) accept not-for-profit ventures into their programs? If yes, which are some of the best ones?

2014-01-28T13:41:00+00:00

My answer to Do accelerators (which do not take up equity) accept not-for-profit ventures into their programs? If yes, which are some of the best ones? on Quora

Y Combinator recently started funding non-profits: http://ycombinator.com/np.html

Tags: entrepreneurship, funding, startups, y-combinator, quora, 500startups

How much equity does YCombinator get on average?

2014-01-21T16:24:00+00:00

My answer to How much equity does YCombinator get on average? on Quora

They almost always take 7% - they get diluted down in further rounds.

Tags: funding, startups, y-combinator, quora

What are some examples of startups funded simply for the strength and uniqueness of its founders rather than for any particular idea?

2013-12-15T13:52:00+00:00

My answer to What are some examples of startups funded simply for the strength and uniqueness of its founders rather than for any particular idea? on Quora

A good portion of YC companies fit this definition - it's common for YC to fund the team and then work with them to help them either fix their initial idea or find a better one.

Tags: entrepreneurship, funding, startups, quora

Is it fair for someone who calls themselves a "seed" investor to require traction?

2013-12-10T13:39:00+00:00

My answer to Is it fair for someone who calls themselves a "seed" investor to require traction? on Quora

It's completely fair. If you're building a web-based startup these days, you should be able to demonstrate initial traction on an idea with very little up-front investment - a couple of months of your time and a few hundred dollars in hosting costs, perhaps. Being able to do that is an excellent indicator that you're a good bet for a seed investor. If you are unable to do that, you're a much higher risk for investment.

Remember: you're competing for investment with many other startups. If they've managed to demonstrate traction using limited resources and you haven't, you'll find it a lot harder to raise money compared to them.

Tags: funding, startups, quora

Which Y Combinator companies focus on finance?

2013-12-09T18:50:00+00:00

My answer to Which Y Combinator companies focus on finance? on Quora

TrustEgg (YCW11) help people open trust funds for their kids: TrustEgg Allows Anyone To Set Up A Trust For Their Kids | TechCrunch

Tags: funding, startups, y-combinator, quora

How does one actually find Angel investors, when our business/startup is taking off and we need to grow fast?

2013-11-26T15:31:00+00:00

My answer to How does one actually find Angel investors, when our business/startup is taking off and we need to grow fast? on Quora

The best way to approach angels is via introductions. To get introductions, you need connections to people who are known and trusted by angels.

Getting your first introduction isn't easy, but it's possible. The good news is that once you have that first connection you'll find reaching additional angels much, much easier - if your deal looks good the angels themselves will introduce you to each other.

But how do you get that first intro? First, look at your existing network and see if you know anyone who has founded a company and raised money themselves. They may be willing to introduce you to their own investors, which is a great starting point.

Next, consider networking events. If your network isn't very strong, you need to start building relationships with people who might be impressed with your product and could potentially introduce you to investors. Events are a great place to do this.

There are also pitching events, which offer the opportunity to pitch to investors and the press en-masse. If you can't get introductions another way these might help you get in front of people who can help connect you to the right people.

Also consider targetting individual investors. You can use tools like AngelList and Crunchbase to find investors who have put money in to companies in a similar space to yours. If you see someone who looks like an ideal match for you, find out if you have any shared connections (e.g. using LinkedIn) or even send them a highly personalized cold email.

Tags: funding, startups, quora

Do all incubators / accelerators welcome their startups getting funding?

2013-11-24T14:41:00+00:00

My answer to Do all incubators / accelerators welcome their startups getting funding? on Quora

Yes. The goal of incubators and accelerators is to obtain a small amount of low-cost equity in promising companies and then help them grow and reach their potential.

For almost all companies, that means raising more outside finance.

Since startup company valuations almost always increase when they raise more money, any time a company raises represents an increase in the value of the equity held by the accelerator.

Accelerators often use "amount of money raised by our companies" as an indicator if how well they are doing - in combination with "total valuation of our companies". Check out this recent YC story for example: http://techcrunch.com/2013/10/25...

Tags: funding, startups, quora

If a startup has raised 10M, how much is it worth?

2013-11-21T11:16:00+00:00

My answer to If a startup has raised 10M, how much is it worth? on Quora

That depends on how much equity they sold for that $10 million.

If they sold a 20% stake in their company for $10 million, their company's post-money valuation is $60 million.

Why $60m? Because they sold 20% of the company for $10m, indicating that 100% of the company is worth $50m (this is called their pre-money valuation). BUT... they also get to add that $10m in cash they just raised to their balance sheet, so the total valuation of the company (the post-money valuation) is $60m.

Often when a company raises money they will announce the amount raised but NOT the new valuation - this is particularly common with early-stage startups. You can't figure out the valuation from the amount they raised on its own.

Tags: funding, quora

In which case have you seen a non-tech sole founder rise to build a sustainable great company without a tech co-founder? How can this work? What are the steps/advice you would give to the non-tech founder?

2013-11-20T15:45:00+00:00

My answer to In which case have you seen a non-tech sole founder rise to build a sustainable great company without a tech co-founder? How can this work? What are the steps/advice you would give to the non-tech founder? on Quora

ZeroCater is my absolute favourite example of this. The solo founder, Arram Sabeti, started the company by running it manually using a spreadsheet. He only got a technical co-founder involved at the point when just running billing was taking him over 20 hours of manual work a week.

Here's a great write-up of his experience: From Selling Scoops Of Ice Cream To Founding ZeroCater | TechCrunch

Tags: entrepreneurship, funding, startups, quora

I'm a developer, I've an idea, how to look for funding?

2013-11-20T15:30:00+00:00

My answer to I'm a developer, I've an idea, how to look for funding? on Quora

If you only need $10,000-$15,000 you should be looking at funding it yourself - professional investors very rarely get involved for that size of raise, and you probably wouldn't want them to - giving up equity in exchange for so little money is usually a bad idea.

The exception is startup accelerators, which are often set up for exactly this kind of investment. Y Combinator, Techstars and so on would be worth considering.

Tags: entrepreneurship, funding, ideas, startups, quora, ios

Can top VCs hire almost any employee they want for their portfolio companies?

2013-11-07T15:50:00+00:00

My answer to Can top VCs hire almost any employee they want for their portfolio companies? on Quora

There's little a VC can do to convince someone to go and work for one of their portfolio companies that the company couldn't do itself. They might hear about good candidates through their networks, but that candidate will still have plenty of other opportunities to chose from.

VCs are often better positioned than their portfolio companies in helping to find candidates for senior executive roles, simply because early-stage companies are unlikely to have already made the kind of connections they'll need to fill those roles.

It's still up to the company to convince, evaluate and close the hire.

Tags: entrepreneurship, funding, startups, quora

Is it worth it to give up equity in a seed stage company for something other than money? E.g. access to multiple consultants/mentors, as well as regional angel and vc groups?

2013-11-06T14:34:00+00:00

My answer to Is it worth it to give up equity in a seed stage company for something other than money? E.g. access to multiple consultants/mentors, as well as regional angel and vc groups? on Quora

Yes, but not very much equity. It's reasonably common to give small (less than 1%) stock grants to members of your advisory board for example.

And of course you should be making stock option grants to your employees.

Tags: entrepreneurship, funding, startups, quora

How do I explain my patchy job history to a VC when pitching investment?

2013-10-25T15:22:00+00:00

My answer to How do I explain my patchy job history to a VC when pitching investment? on Quora

I wouldn't worry about it. Entrepreneurs often have patchy job histories. A VC is much more likely to understand "I took a few months off to work on a startup idea" than a regular employer.

Tags: funding, quora

What should the CEO's salary be in a startup seeking seed capital? Is there an average number?

2013-10-22T09:30:00+00:00

My answer to What should the CEO's salary be in a startup seeking seed capital? Is there an average number? on Quora

If you haven't yet raised any capital, how can you pay a CEO salary at all?

If you're asking about what you should tell your seed stage investors your salary will be, just go for something sensible that allows for an OK standard of living in your area. Your investors don't want you to be distracted by living in abject poverty so they won't mind you paying yourself something reasonable.

There's no harm in discussing your salary with them - they might even suggest pushing it up a little. It very much depends on how much you are raising, your personal situation (family, mortgage etc?) and where you are located.

Tags: entrepreneurship, funding, startups, quora

How many cups of coffee can a venture capitalist drink in one work day?

2013-10-20T17:42:00+00:00

My answer to How many cups of coffee can a venture capitalist drink in one work day? on Quora

When we were raising our seed round we quickly realised that lining up four "coffee" meetings with potential investors in a single day wasn't going to be sustainable... so we switched to tea and other lower-caffeine drinks. At one meeting I even had a hot chocolate.

I know one investor who sticks to green tea.

Tags: funding, quora

What prevents founders from taking blown up salaries?

2013-10-19T17:11:00+00:00

My answer to What prevents founders from taking blown up salaries? on Quora

When the money runs out, the startup dies. If a founder takes a high salary they are reducing the runway of the company, and dramatically increasing its chance of failure. Good founders will take the lowest salary they can make work for them.

In response to your updated question: in the very specific scenario you describe where a dishonest founder manages to raise a large amount of money while maintaining enough control to be able to set their own salary, there is nothing to stop then from paying themselves a super high salary for a few years. This sometimes happens. But the startup world is small and runs on reputation, so they would find it difficult to fool investors like that again.

If they paid themselves a high salary but their company performed really well and the investors were happy with their return, then maybe they were worth the salary they set for themselves!

Tags: entrepreneurship, funding, startups, quora

I have an offer from an angel, but just landed a 5 minute meeting with a big time VC. Do I try use the offer from the angel to my advantage, if so, how?

2013-10-13T09:07:00+00:00

My answer to I have an offer from an angel, but just landed a 5 minute meeting with a big time VC. Do I try use the offer from the angel to my advantage, if so, how? on Quora

An offer is worth a lot more than a five minute meeting - and VCs are much more likely to take you seriously if you've already convinced someone else to invest.

Have you read Paul Graham's recent (Sept 2013) guide to fundraising? If not, go and read it and do what he says to do :) http://paulgraham.com/fr.html

Tags: entrepreneurship, funding, startups, quora

If one were to bring the concept of Twitter to a VC today, would it be invested in, or turned away?

2013-10-10T13:24:00+00:00

My answer to If one were to bring the concept of Twitter to a VC today, would it be invested in, or turned away? on Quora

If someone brought just the concept without any form of actual implementation (of something that is pretty easy to prototype) I don't think they would get very far.

Tags: funding, startups, twitter, quora

What are some creative ways to pitch a new initiative to my team without slides?

2013-10-02T17:03:00+00:00

My answer to What are some creative ways to pitch a new initiative to my team without slides? on Quora

Use a whiteboard.

Tags: business, funding, marketing, speaking, startups, quora, pitching

What systems/software are absolutely worth purchasing for a solidly funded e-commerce startup?

2013-09-22T17:37:00+00:00

My answer to What systems/software are absolutely worth purchasing for a solidly funded e-commerce startup? on Quora

I'd use a small fraction of that budget for relevant SaaS subscriptions - things like www.kissmetrics.com or www.mixpanel.com for user analytics, www.moz.com or www.ginzametrics.com for SEO reporting, or www.geckoboard.com for building a custom dashboard.

The great thing about SaaS is that you can stop paying for it if it doesn't work out, rather than burning a ton of money upfront and the realising the software doesn't work for your needs.

Tags: funding, project-management, startups, quora, management, ecommerce

How does a VC decide to make an investment?

2013-08-09T13:01:00+00:00

My answer to How does a VC decide to make an investment? on Quora

I suggest reading Paul Graham's latest essay, How to Convince Investors.

Tags: funding, paul-graham, quora

Does Google Ventures invest in native iOS applications?

2013-08-05T13:54:00+00:00

My answer to Does Google Ventures invest in native iOS applications? on Quora

Easy way to find out: take a look at the list of companies they've already funded: Google Ventures - Companies

(This is an excellent technique for evaluating any investor, not just Google Ventures)

Tags: funding, quora

What's an idea worth?

2013-07-29T14:02:00+00:00

My answer to What's an idea worth? on Quora

I like Derek Siver's model proposed here: http://sivers.org/multiply

To make a business, you need to multiply an idea by its execution. A really great idea is worth $20.

No execution is worth $1. So if your idea is truly great it's worth 20 x 1 = $20.

If you can pull off just a good execution ($100,000) then congratulations, you have a combination worth $2,000,000.

Tags: business, entrepreneurship, funding, ideas, startups, technology, quora

At seed funding stage, how can a Startup protect itself from losing the majority?

2013-07-24T16:15:00+00:00

My answer to At seed funding stage, how can a Startup protect itself from losing the majority? on Quora

Firstly, don't sell a majority stake in your company. Secondly, hire competent legal advice to make sure you fully understand the terms of your investment and don't get caught out through misunderstanding board voting rights, preferred vs common stock, liquidation preferences etc.

Tags: entrepreneurship, funding, startups, quora

How do you impress a venture capitalist so much that he invites you from another country for a meetup?

2013-07-21T15:05:00+00:00

My answer to How do you impress a venture capitalist so much that he invites you from another country for a meetup? on Quora

Don't make a big deal about the fact that you are travelling from another country. Try to get a few of them interested enough to want a meeting, then make a bigger trip out of it.

Tags: entrepreneurship, funding, startups, quora

Is there software that can help me keep track of contacts and referrals while I am building my seed round?

2013-07-21T10:00:00+00:00

My answer to Is there software that can help me keep track of contacts and referrals while I am building my seed round? on Quora

We used Highrise from 37signals for this when we raised our seed round and it worked perfectly. You can forward or BCC it emails, use it for tasks and reminders, tag contacts in it and use the mobile app for when you are at fundraising networking events (we used that to great effect at Y Combinator demo day).

Tags: funding, startups, quora

What is the inital costs for a tech startup? Do you have any checklist or spreadsheet?

2013-07-16T10:41:00+00:00

My answer to What is the inital costs for a tech startup? Do you have any checklist or spreadsheet? on Quora

Initial costs can be incredibly low - a few bucks for a domain name, $40/month or so for VPS hosting. Things only start to get expensive when either you need to scale up to multiple servers (which means you're doing well) or when you start to pay salaries.

Tags: funding, startups, quora, leanstartups

Is it viable to say to an investor that you will quit your job and work full-time on a startup, if you get the funding?

2012-12-25T15:50:00+00:00

My answer to Is it viable to say to an investor that you will quit your job and work full-time on a startup, if you get the funding? on Quora

This will reflect badly on you. Why should an investor risk their money on your company if you aren't even willing to take the risk of quitting your job for it?

Tags: entrepreneurship, funding, startups, quora, careers

What are the best tech conferences & meetups to attend as an investor?

2012-12-19T18:56:00+00:00

My answer to What are the best tech conferences & meetups to attend as an investor? on Quora

We have a good list of upcoming Startup related events on Lanyrd here: Startup conferences and events - including both iCal and RSS feeds and the ability to sign up and receive email updates. New events are being added by our community all the time.

Tags: conferences, funding, investing, quora