Ask HN: How do you raise seed money in SV? | Hacker News Reader

Ask HN: How do you raise seed money in SV?

14 pointsjackadamson9 comments

I'm new to the Bay Area and I don't have any connections or rich family or friends. I have interviewed a couple of times with Y Combinator but haven't made it in.

I'm bootstrapping a company but would like to accelerate its growth and be able to work on it full time.

Everyone is always talking about how freely capital flows around here but I don't see that. How can I raise seed money for my company?

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You need traction and/or a network of people that can vouch for you. The perceived ease of raising seed funding is confounded by YC, acceptance in which makes it drastically easier to quickly raise.

The reality is that capital does not flow so freely that you can take a couple meetings with just an idea and a prototype and walk away with a check.

Not being full-time probably doesn't help either.

Concentrate on traction. Things will make more sense when you have it.

3 Basics ways people raise money:

1. The most reasonable but least seen in SV. You build a basic business that has traction. With additional work you can see the business having even more traction. You need money to scale.

2. You went to Harvard undergrad and Stanford graduate, or similar. You worked at Google for 2 years. You want to try out something kinda crazy, cool, but have no idea how to turn it into a business. With all your accolades, investors put you at the front of the line. People are willing to toss you a couple 100k each for the chance that you kill yourself working on something that becomes big.

3. You were one of the previous 2 types and already sold a company. You are now a vetted entrepreneur. Raising money is trivial. There's dumb money in the Valley willing to bet on a horse that has already won a race. Get one influential investor and the rest come.

Similar story. Multiple failed YC interviews. I did raise significant angel money from outside of SV but I still failed with that company.

Firms like YC are designed with the nearly singular goal of attracting the next Google. The primary criteria for investment is essentially "how much like [Larry Page|Bill Gates|Mark Zuckerberg] are these founders?"

Unless you're a [Stanford|MIT|Harvard] Ph.D. student you're already off to a really bad start. If you didn't grow up in an upper middle class household you're probably going to stick out in various ways you're unaware of. http://www.ycombinator.com/partners/

Airbnb is the biggest YC success. They don't fit the mold and were one rather mundane story away from being rejected.

So ignore investors. Build a great product that users want and make it grow rapidly. Then you can pick and choose which money manager you want to accept financing from.

What I've done is scaled back my living expenses and built up enough revenue that I'm ramen profitable. It sure would have been easier if someone wrote me a check but at least now I'm completely unstoppable. It took me 1.5 years of solid effort to get into this position after my previous failure which I spent 2 years on. I'm about to release the first version of the best thing I've ever done.

If you're like me all you care about is writing code and creating great things anyway. Investors can often get in the way of that. The very best products all came out of genuine interest.

Let users alone be your judge.

this.

I would much rather bootstrap something than take outside money and loose the freedom of choice.

The hard part is - being ramen profitable in S.F. As an underpaid engineer at a startup I envy your position; but given that it took you 1.5 years to get there I feel like that sounds about right.

I am now inspired to dig in for the long hull and minimize my expenses so that my bootstrapped ideas can flourish. Having a girlfriend makes it nearly impossible to be ramen profitable - but I'm willing to try.

Thank you for writing this. People like you inspire me a lot ! I am struggling internally whether I should quit the job and start working on my idea. I still haven't quit. My background appear to be similar what you described. No HBS/GSB/MIT/YALE/PRINCETON ; no upper middle class family but on positive side I do have engineering degree and one thing I like most is research -->link -->build. I've quite good analytical ability. I hope I will get chance to create great product.

One question if you don't mind , are you working full time on your startup idea ? Also , you mentioned prior product on which you spent 2 years didn't make. Were you working full time on your idea then ? How did you support yourself ?

I am working full-time on my new thing. I had to take August off to take care of my firstborn. Then he had an ER visit followed by emergency surgery a few days ago. Now I'm about to dive back into the code.

Trust me when I say that startups are not scary compared with your 3 week old baby going into lifesaving surgery :-)

(He's recovering well. Fingers crossed.)

I lived off a meager savings for my previous startup initially and raised angel money from a rich guy that I worked for in the past. It was me and my buddy in a room for 2 years. We had some success but not enough, so I had to go back to a high paying corporate job for a while. Big lessons were learned the hard way.

At least: #5 and #8 and #10 and #11 and #12 and #14

http://www.paulgraham.com/startupmistakes.html

But the big missing one there is: Not Having Guidance.

It's very difficult to see you're making a fundamental mistake yourself. You really need outside expertise.

Thanks again. Congratulations on arrival of your newbornbaby and hope he recovers soon. Good luck with your start-up.

First, make sure you have a product with traction and uses cases of it being used. Make a nice slide deck.

Make a list of investors you want to target. Look them up on LinkedIn & Angelist. See if you have any shared connections and try to get some introductions. I have found that cold emailing never really leads to anything.

Next up, join a lot of meetup groups to do with your field, startups, entrepreneurship etc... and go to as many as you can. Meet other founders. Don't just talk about yourself. Find out what they do, ask them questions, take them out for a beer etc...find out who their investors are and try and get them to do intros.

It's all about networking. Get yourself out there, meet founders and get introductions to investors.

1) get connected, 2) get traction, 3) get both!

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