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Comment by tomasien | Hacker News Reader

This article makes some great points, but if you had to identify 1 point they made in the article that really pointed to "how they raised $1m" it's this: they had 120 introductions to angels and VC's.

Holy. Shit. I've had maybe 4 in the year since I started out, and I've raised money from all 4. 120? Obviously all the points they make are GREAT, I really do like this article, but there are lots of people with good products, pitches, revenues, etc. and they can't raise $1mm because they don't know 120 investors.

Am I wrong? Does everyone have a network of a 120 investors?

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I raised my first round without knowing any VCs, and it took a long time while talking to dozens of VCs. I will give some perspective of someone who made it through the gauntlet:

First, it requires considerable persistence (and obnoxiousness) to get meetings with dozens of VCs if you do not know them. I did not have that level of obnoxiousness, I worked with someone that did. This is a significant barrier.

Second, if you actually have a hardcore technology startup, you are essentially screwed. Only a few VCs will consider investing in significantly new technology. Despite what they say, there are only a minority of VCs worth talking to that will invest in fundamentally new technology despite the marketing. On the other hand, those VCs that do are quality VCs in most regards.

Third, if you lack the connections then bootstrapping is a very good option if at all possible. The further along you are, the greater the options available. Even if it seems more difficult in the short-term, it is usually less difficult in the long-term.

As a broader observation, from what little I've seen most startup pitches fail because they are horrible, both at the pitch level and idea level. My pitch was horrible but my mastery of a compelling idea enabled me to find VC funding.

Fair point. But as someone who went to 3/4 of these meetings with the author, I can say with some certainty that the 120 number is an exaggeration. Total intros was probably in the 40s, and total calls and meetings were maybe 20. We ended up with around 10 new investors in the last round.

Batting 1000 (4 investments from 4 intros) is unique. If your product and pitch is that good, then congrats! I think for most startups with good performance metrics, expecting 1/5 of your pitches to convert is a good benchmark.

tomasien, the thing is you are not two MBA's working primarily on pushing the business forward, while they only have someone technical 'lined up at the start of our raise...but he was not full-time when we were going around and making our pitches.' (my emphasis)

Because in that kind of situation, it's a lot easier to see how they would get 120 introductions.

Incidentally, on the amount raised: I think 500,000 would be more reasonable, but remember that they ended up with about 10 investors. Perhaps one or several of these investors had a standard of how much they wanted to invest, which pushed the total this high.

In fact, given the fact that they're two MBA's needing to purchase ALL their technical work, I would say that a million dollars (or close to it) is, well, something they'll need. Not to say it can't be done with less, but it is pretty easy to imagine how they can spend the money, and in their situation it's probably healthy to invest in enough hard, practical, shipping CTO-type people to dilute the 'idea pool'. Look at what happened with the guy who was hired with two business guys: http://news.ycombinator.com/item?id=3966301

The poster said: "Out of 3 founders, none is technical" and "During meetings, I always feel like a killjoy by attempting to be realistic and focused and reserved about the brand new idea they come up with every other week and that I need to get started on right when the meeting ends."

And someone else responded: "Three founders and one engineer that creates products?

Move on as fast as you can. Is not that you can't partner with some idea guy but three of them is too unbalanced. Doing anything takes an enormous amount of work, you can't change the idea every week(well, yes you can if you can reuse what you had already done, or if changing means less work or satisfying your customers much better, but usually you should not)."

I thought that was a particularly great point in that thread! So, in order to avoid this "unbalance", these two MBA's really need a sizeable tech team to dilute the 'idea pool'.

To me, the amount raised is MAYBE 2x-2.5x what they need given that they're two MBA's. Honestly, this is not a crazy cushion if there are unexpected setbacks or if they just want to make a sizeable investment up-front in content, etc, so they can prove their business model for a Series-A, make good, big sales, etc all off of this seed-round.

They downplay their previous startup experience, but perhaps it was enough to convince investors that they know how to spend this seed money effectively.

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