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VC assumption - more capital accelerates best companies to greater success. Unfortunately, the data says otherwise
Eric Paley
7,893 posts
Eric Paley
@epaley
Aspiring to build the most aligned VC for founders at seed stage @fcollective. Seed VC @TheTradeDesk, @Uber, @Cruise, @Airtable, @Whoop, @Embarkvet etc.
- When getting ready to pitch VCs, founders often jump right into assembling a slide deck. I think this is a mistake. I’d suggest that you start by writing twenty headlines that sum up your startup, and only then build the slides. Here’s why: 1/11
- Even for strong startups, fundraising is a marathon that requires near constant attention for 8-12 weeks. The process is punishing, and riskier than you might imagine. You need to prep for it as seriously as you would a race. /1
- A few startups founded during the depths of economic recession in 2008-2009: 💳 Square 🚖 Uber #⃣ Slack 🖥️ The Trade Desk 🌩️ Cloudflare ☎️ Twilio 📖 MongoDB 📍 Pinterest 🎓 2U Keep building.
- A portfolio CEO recently asked for advice about an unsolicited offer from a good VC: Facts: 💳 $20M/year run rate & doubling annually 🏦 Has $10M (most of the capital it’s ever raised) in the bank 💰 VC offer is $25M on a $150M pre-money valuation What should they do? /1
- It’s possible to sell a startup for $1B and make less than someone who sells theirs for $100M. Exit value is a vanity metric.
- 🗣️ Don't Waste a VC Pitch Arguing 🗣️ Some of the best startup pitches sound crazy, & VCs are often skeptical. But I want to caution founders not to fall into “debate mode,” & to stay focused on the sale. Here’s how a pitch goes off the rails, & how to get it back on track: /1
- Two Laws Of Startup Physics Fifteen years into my venture capital career, I’ve come to believe there are two undeniable laws of startup physics: Capital compounds both positive and negative formulas. All positive formulas compound at diminishing rates of return. 1/55
- The most common exit opportunity is not a multi-billion dollar IPO but a $50M-$100M acquisition. If you’ve raised a modest amount of money, that can be a transformative outcome. If you’ve maximized VC at each stage, many, if not all, of those opportunities will be closed.
- Startups don’t just “run out of money.” They wait too long to address problems while they had money. Failure doesn’t usually happen “to” startups. Problems are rationalized until it’s too late. Too much money multiplies this problem.
- Stock options are a key lure of working at a startup. But explaining them, and particularly their value, is a challenge for a few reasons: 🤩 Expectations management 🎲 Valuing risk is hard 💱 Financial complexity Here are some thoughts on communicating options. /1
- My grandfather, George Feldman, "Grampy" turned 112 today - The 2nd oldest man in the United States and the 5th oldest man in the world. This afternoon we got news that he passed away. It's with great sadness and great appreciation, for the life he lived, that I share this news.
- On Making Your Startup Inevitable /1
- Startups don’t just “run out of money.” They wait too long to address problems while they have money. Failure doesn’t usually happen “to” startups. It happens when founders rationalize problems until it’s too late. Startups need to proactively tackle their biggest problems.
