These posts should come with a disclaimer: If you don't have a) significant traction or b) "elite" connections, then it's unreasonable to expect to raise a seed round in Silicon Valley at all.
The author has Yale and YC connections, among the most "elite" there are. It's virtually certain he could not have raised funding without these connections. If you don't have a similar background (i.e. 99.9% of people), then the advice is more harmful than helpful.
From the Atrium Scale web site:
"The Scale Program is a 1:1 mentorship program that helps founders craft their Series A pitch and get exclusive intros to our network of investors and partners."
The business model of organizations like YC and "Atrium Scale" is to sell access to their "elite" networks.
They perpetuate Silicon Valley elitism for profit. They help a lucky few chosen founders and damage the entire ecosystem for everyone else.
The best advice for anyone that is not a lucky member of these private clubs is to just build a regular business and ignore Silicon Valley entirely. Once you have significant traction, you can raise money with 100% certainty. Greed is the ultimate motivator for most investors.
I think there's a lot of truth to what you're saying, and also a fair amount of angst that's pointed the wrong direction. I've never worked with Atrium, but yc was pretty much the ultimate leveling mechanism for founders with no connections.
Yes they get you access to elite networks, but they _also_ level the playing field so founders don't get exploited the way they used to.
And, they're obviously doing well because of it, but I don't think they're perpetuating the elitism. If anything they've lit a fire under other investors asses to get them to start making more objective decisions about funding. There are a bunch of really good seed funds now that are really easy to get ahold of.
+1 to joining an accelerator and having them parade you. That's how we were able to raise.
Of course, getting into accelerators isn't easy either. As far as I can tell, early stage fundraising for the non-elite is basically random (I consider myself lucky).
No reason to direct hate at YC, they're a good way to get injected into the silicon valley ecosystem and connections from outside, and they accept people well outside the ecosystem.
"Levels the playing field" is a good descriptor for them
> Sometimes an investor who hasn’t invested will offer to intro you to another investor.
> Don’t take it!
> The signal you are sending is bad; if you were a good investment, the first investor would have invested.
I just completed a $750k seed round and this is the only thing I don't agree with. Some investors simply don't want to be in certain spaces, even if it is a good investment. Would you invest in a car when you knew nothing about that car or cars in general?
>With the cost of rolling out an MVP (minimum viable product) lowering every year, many startups think you need a prototype in order to raise a seed round.
I might argue that it’s the opposite. We hit peak MVP, there is too much competition, all the Low hanging fruit is gone, and we’re going to have to go back to the days where we raised seed capital off of a business plan because you can build much in today’s market as an MVP. The app days are gone.
Oh please. This is like the (apocryphal) saying everything that can be invented has been invented [1]. It's easy to look backwards and in hindsight say app MVPs were easy and obvious. For most ideas you should be able to distill some quantum of utility into an MVP even now.
> Commitments go both ways: don’t back out from investors — or feel guilty if investors back out from your seed round — after the following 4 steps have been completed
This sentence does not make sense to me as written. Based on the first clause, I assume it's supposed to mean that neither party can back out. But I just don't see this meaning in the two clauses that follow. Is the first clause ("don't back out from investors") telling investors what to do, or telling the founders what to do?
Telling founders what to do. Don't back out on a handshake deal, and if an investor backs out on a handshake deal it's not your problem, but don't do business with that person again.
Hello HN! Atrium CEO Justin Kan here. Happy to answer any questions about the article or help coach you through the process live in our next Atrium Scale program.
Hi Justin, good explainer article. Would recommend diving into the value prop and process of what Atrium Scale offers (and gets in turn). Transparency wins.
Also, most founders raising Series A have been around the block at least once. This article seems more targeted towards first-timers.
Thanks for the article. I'm a co-founder in San Diego. We're being asked for traction, when we have a team and a pretty good prototype out with beta users.
My question - it seems like we should be targeting pre-seed money, as the seed guys seem to be acting like VCs for an A round. Is that normal for Silicon Valley, or that specific to San Diego?
I would need a lot more context to answer this question properly. There's no hard and fast rule for when a "pre-seed" becomes a "seed" or "A". These are just labels. The biggest difference is whether you are raising a round of SAFEs or a priced-round. The legal and business consequences of raising SAFEs are more casual than a priced-round, where investors (regardless of location) take things more seriously. Hope this helps and good luck on your company!
Thanks for the good read - question @Justin: you mention that you can essentially set milestones to work towards your seed valuation. Is that a starting point? Do investors usually have strong input here to guide the discussion of "how much should I raise?"
We have just raised an angel round, and we have money to go on for another 8-10 months. We are considering raising a larger seed round in the Fall.
What we do is b2b (digitizing real estate assets, leveraging the blockchain - we sell it to real estate companies, not to homeowners directly), we will have a hard time coming up with the right cap for the seed round.
Great article. I would just add that using a service like DocSend will give you a great visibility into which slides your investors spend the most time on, hence allowing you to fine-tune your messaging over time.
I really value Mark and love his writing, but this article seems a bit one-sided. He's essentially telling founders that if they are not publicly sharing their traction, acquisition channels, unit economics and market insights, that they are doing it wrong. Couple of reasons why I disagree:
- You lose control of your messaging from the PR point of view. Perhaps you said in your deck you'll expand to XYZ by a certain date, and now that you're 6 months late and want to get some PR, why open up yourself to people putting a negative spin on your story?
- You expose yourself to risk of getting copied by well-funded startups looking to pivot. Will you manage to win anyway? Perhaps. But if you could choose, do you really want expose yourself to all that risk?
- Last but not least, here's an investor essentially confirming that investors cannot be trusted to keep your deck confidential. Just in case you ever wondered...
For everyone who disagrees with these points, please share your deck in your comments :)
These are dreadful reasons. The first is silly, for the second you shouldn't share that stuff with investors without having a conversation, and the third is a problem whatever the transmission system (unethical people aren't going to be stopped that easily).
Especially since Docsend supposedly let you download PDFs if you log in.
I rarely open docsend docs and never on cold pitches. Using other tracking links is an automatic fail. You already can imagine why.
I do like having the deck in my inbox so that when the pitch changes I can see what they once did. Lots of founders will do multiple companies and abandon failures early, and I want to be able to see what they pitched me on six months ago.
I don't think you necessarily need to put all of that stuff in the deck (and certainly not proprietary data) but you are effectively sending people a shortened URL for your stuff that will die in a few weeks.
> you shouldn't share that stuff with investors without having a conversation
> I rarely open docsend docs and never on cold pitches
Therein lies the conundrum: we are both right and wrong, depending on the context.
Scenario A: you just completed a hackathon and have no connections or existing investors to help you reach other investors => in this case you should reduce the barrier of distribution in any way possible.
Scenario B: you are running a seed funded startup and have enough traction to raise the A round => you will be getting warm introductions, and investors will be opening your links.
Most founders fall somewhere in between those two scenarios, starting at the Scenario A at the beginning of their careers, and slowly making their way towards the Scenario B. The nice thing about using DocSend is that it will tell you exactly if you're ready for it => just look at the open rate of your links.
> I do like having the deck in my inbox so that when the pitch changes I can see what they once did. Lots of founders will do multiple companies and abandon failures early, and I want to be able to see what they pitched me on six months ago.
This is what I meant with one-sided. Nobody disputes the value of that information to the investor. From the founder's perspective, however, you get this set of options:
1. the slide deck you were pitching 1/2/3 years ago materialized exactly how you predicted => congratulations, you're in Scenario B, and investors will be reading your deck no matter how you present it to them.
2. your old slide deck was overly optimistic, and you either underperformed, pivoted, or abandoned your startup altogether. Do you really want everyone out there to have this dirt on you?
You are deliberately misconstruing the things I said. One of those comments is about the disposition of content of the deck, not whether to share it.
In the last para - “dirt” is inane. I know you pitched something but can’t figure out what it was at all looks as bad as you pitched something and there is still information. But neither look good. Instead you are increasing friction in the hopes of redacting possible dirt years from now?
How is sharing a hyperlink more friction than copying and forwarding around an actual document? Personally, I'd always want to share and send a link rather than the document itself.
When my employer set up an online document sharing/review/comment system, everyone eagerly adopted it because the alternatives (like SharePoint or emailed documents) are cumbersome. I think sharing a hyperlink to a web page is about as easy and low-friction as it gets. Anything else is higher friction and requires "downloading" and "opening" with special software on special platforms.
I would be interested to understand the difference in these points of view. Are you perhaps referring to friction doing something else other than plainly viewing or sharing the document? I have not used DocSend.
The author has Yale and YC connections, among the most "elite" there are. It's virtually certain he could not have raised funding without these connections. If you don't have a similar background (i.e. 99.9% of people), then the advice is more harmful than helpful.
From the Atrium Scale web site:
"The Scale Program is a 1:1 mentorship program that helps founders craft their Series A pitch and get exclusive intros to our network of investors and partners."
The business model of organizations like YC and "Atrium Scale" is to sell access to their "elite" networks.
They perpetuate Silicon Valley elitism for profit. They help a lucky few chosen founders and damage the entire ecosystem for everyone else.
The best advice for anyone that is not a lucky member of these private clubs is to just build a regular business and ignore Silicon Valley entirely. Once you have significant traction, you can raise money with 100% certainty. Greed is the ultimate motivator for most investors.