Ask HN: Would people pay for this service? | Hacker News Reader

Ask HN: Would people pay for this service?

29 pointsjgrahamc24 comments

I realized the other day that I have an experience that not many people do: I've worked for five start-ups, founded two, raised money for four. Of the five, one went public, one was an asset sale/close the door, one was bought out, one is alive and well, and one is new.

I also worked for the top VC firm (Accel Partners) and I've raised money from Greylock, USVP, Mayfield, Accel, ... and I've talked to all the others.

At Accel I sat through presentation after presentation by entrepreneurs. I've seen the good, the bad and the truly weird.

Now imagine the following service. You are a start-up looking for a series A investment (something >$1m). Suppose I consulted for you on how you present yourselves to VCs in exchange for a consulting fee in $ and a small equity position (perhaps as a stock option). The fee would only be payable once series A closed. No series A, no fee. No cash up front.

Is this useful? What help would people like?

I've been running an HN meetup called Hackers and Founders meetup ( http://hackersandfounders.com ) in Silicon Valley for over a year and a half. I've seen hundreds of hackers/founders come and go in the last 20 months. I've also seen a number of people trying to sell consulting services to them.

My best guess is that it would be an 80/20 split. 80% of the members of Hackers and Founders would shy away from what you're offering. If you've been in the Valley for any length of time, and do basic networking, you're going to get to know people with ties to investors. Off the top of my head, I could think of 20 people that I'd go to for advice and introductions if I were looking for investor money right now, and they'd point me in the right direction. Most of my members might talk to you, but they'd be pretty leery of selling a stake in their corporation before they know you. I've found that the early stage founders I hang out with at Hackers and Founders tend to mistrust 2 types of people: 1) Pure business guys looking for technical co founders and 2) Money guys offering to help them out in exchange for a piece of the pie.

I could be wrong, but I'd think that the 20% of founders that would be most eager to take you up on your offer would be the most desperate of the bunch. I think that by pitching yourself primarily as a guy who helps people get through the funding pipeline, you're going to be selecting for the wrong type of founders. I can imagine that founders who aren't in the Valley might be more eager to take you up on your services, as well. There's a much bigger separation between founder and investor in other parts of the country and world, and those people need quite a bit more help in the funding department.

What has really helped the guys at Hackers and Founders are people who are available to be a friend throughout the process. Generally when the founders pursue the funding process, they turn to their friends who helped them early on, and if those friends have enough experience, those friends become board members (and at times get equity).

One of my members in particular has been phenomenal at that. He has a resume similar to yours, and he just hangs out with early stage founders for love of the game. He talks freely, shares his experiences and advice freely, takes people out to coffee all the time, and when founders are looking for fund raising advice, he's the first person they turn to.

What's in it for him, is that he gets to interact with hundreds of entrepreneurs and he can pick and choose the best of them to hook up with and work along side of. But, the teams that he signs up with trust him implicitly, because they've been getting advice from them for a while.

If you have other questions, feel free to ping me. I'd be happy to talk about it.

Based on your posts here and your blog, if I look at what I would want to use that expertise for in my company it would be something different. You have an experience in tech and entrepreneurship that is one in a thousand, and that shouldn't be wasted on helping companies doing powerpoints. I would much rather want you as a boardmember/advisor. This would give a company two distinct advantages:

1) An extremely knowledgeable person who has been there before with which to talk on complicated issues. Experience in startups is rare as you point out. When it is coupled with deep tech knowledge it's even rarer.

2) Your name on the businessplan/presentation. Namedropping seems to be a major thing with investors. Unfortunately.

Also, companies that are out raising money often aren't good customers as patio11 points out. Besides there's no repeat business, meaning that you'll have to constantly be on the lookout for new customers. Equity payment is great, but it's a lottery ticket. I don't know your personal situation of course, but if you need bread on the table it's probably going to be hard.

But I'm sure lots of companies would pay in either equity/cash to have you onboard as an advisor. I know I would.

I'd be happy to do those things for people if they really think I can help them.

I think the people who would most benefit from your help (startups who are likely to fund and want to improve their relative position) are going to see "small equity position" and think "Awww dang, that is going to cause us a million and one legal headaches and is an asterix we will have to revisit in every funding round from here to doomsday -- pass" and the people who are likely to be the clients from heck ("Our deck isn't quite ready yet, but we have a napkin!!") are going to see "FREE!" and jump at it. And then whine at you when they are, predictably, not successful at getting funded, despite "YOU HAVING AN EQUITY STAKE!!1"

Basically, it is the classic adverse selection problem that is eliminated by charging people money.

I'm not concerned about your second point because my first step would be to walk away from people who are not likely to get funded at all.

The first one is interesting, my guess is that this could be handle just as a normal advisor position where a stock option is given. I've seen this done lots of times with external advisory boards and it doesn't normally cause trouble.

On reflection: what am I doing shooting my mouth off on this. I know so little about stock options in the US I could probably misspell Series A. If your impression is that advisors getting them is normal practice over there, I trust your expertise.

No, you're not wrong. Exceptional equity grants are a pain in the ass, unless you've already set up the legal infrastructure to do them.

In Silicon Valley we'd politely refer to you as a Lamprey and at least at my events you'd be banned from attending.

I have two bits of advise that I tell all the startups I work with:

- Never give equity for one-off work

- Never work with fundraising assistants

Your background just isn't that unique here in the valley.

The Angels here give you money and will gladly help you with your pitch and intros when the time comes to do series A.

I'd suggest focusing on long term value. If you're valuable to a startup over the long haul (2+ years) then you can justify being an advisor and getting a .1-.25 percent grant. Throw in the pitch consulting for free. It's the least interesting part of building a company.

I'm not sure about your monetization strategy, but I'm positive there would be customers for this.

In 1999 I spent a lot of time helping out some investors I knew by providing technical expertise after they'd gotten burnt by people proposing things that had a lot of ocean boiling numbers and hand wavy technologies. In doing that, I saw a lot of what you saw with regards to terrible and weird presentations, but I also saw some groups that looked like they had a ton of promise but were terrible and communicating the point.

That being said, you may want to consider also providing services to some of the smaller funds out there as a bullshit detector. I think by and large investors are MUCH more technologically savvy these days, but I still get the feeling that there is a fair amount of money outside of SF/NYC/Boston/London that lacks confidence for some of the more interesting technology companies.

This is making me wonder, could this work from the other end? Would a VC be willing to have you as a head hunter and pay you in equity for successful referrals?

It would still be your job to coach startups towards successful presentations but the money is coming from the VC end and not the entrepreneur.

I've worked with someone offering a similar service in the UK. We didn't continue the engagement as the business was at the wrong stage of development for his involvement, but if we were in the right stage then I think his help would have been very valuable.

Maybe it'll be worth talking to him - http://www.tecmentor.co.uk/ .

I wouldn't do it, because living in the bay area, it's not too difficult to find people that have gone through the fundraising process and ask them for advice.

That being said there are a lot of desperate people out there that are willing to pay for this kind of information. You'll probably get the same kind of people who are willing to pay lots of money to pitch to investors.

From what I know about the startup culture in the UK, I think it could work well there.

Aren't there things like this already? I think more along the lines of consulting fees rather than equity, though, which makes them seem dubious to me. Equity for results seems fair to me.

Somehow though it doesn't seem very innovative... maybe there's something else that can be done in that space that's more creative (ala YC and its new model).

It's not clear to me that innovation is important. What is important is stressing the things that matter to VCs in the presentation you are giving to them. These are often not the things that actually matter to the entrepreneur.

For example, technical people tend to get really excited about telling the VCs about the technical aspects of their idea/product, VCs often get more excited when you tell them why the team of people you have assembled are the best to solve the problem you are addressing.

> It's not clear to me that innovation is important.

May be - you surely know the space better than I do.

If you look up 'venture capital coaching' on Google, this is on the first page:

http://myfirstround.com/

Other sites are quite similar and look just as dubious. Maybe the people behind them actually know what they're doing, but to me it just looks like a market with a lot of ... "cruft" in it, which might lead to it being something of a market for lemons, with people thinking it wisest to steer clear of the whole thing.

By the way, as someone who did a lot of Tcl for a while, I'd be curious if you ever post any 'war story' type stuff from Electric Cloud.

I worked with John Ousterhout at Scriptics/Ajuba and Electric Cloud. What sort of war story would you like to hear?

Any

It sounds to me like a basic consulting service, albeit one in which you'd accept a small equity in place of part of the consulting fee.

So, I guess I'd say, yes, people do pay for consulting. The question is, what type of people/startups will you attract with the equity offer.

Do you have an extraordinary ability to take a company on 1 trajectory and steepen and accelerate it upward?

Can you spot a winner, or spot something you can make a winner?

Go and approach some companies and people that appeal to You.

I know I would. Can we talk? http://beepl.com

Send me an email.

Do you do biotech?

I'd be happy to help, but my real experience has been in software and hardware and although I think I could help I must admit to not being an expert in that area.

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