create a startup. There will be stresses. Startups are not easy. You need somebody who is supportive, but will tell you when you’re full of shit, and tell you when you made a mistake, and then work with you on it. Somebody who is not offensive to you but helpful. Your company needs to be meaningful to their fund. Meaning, it is a big enough bullet for them where they are going to care. If you’re small in comparison to the fund, then they won’t really care if you go out of business. If you are a big chunk of their fund and go on to raise B and C investments, then they really care and absolutely want to see your company succeed. Try to find someone from the start who is going to care if you win. It is going to be as meaningful to them as is it is to you. Getting to Venture Capitalists: if you can’t find a warm introduction to a fund, then you probably don’t deserve to pitch them. I can’t think of a time when we funded something that came in cold. I don’t know if it has ever happened. Try and get to a reference from somebody the fund respects. Whenever possible start the relationship early. The earlier they know you and can see what you said you were going to build, and then watch you do some of it and create more metrics and learn, adapt, and improve. You can then go back and say in confidence and say, ‘You’ve known me for a while now, now I am ready for the series A. I am starting to talk to firms. Because you have been following me for a while, I am talking to you first; but I am going to be out there.’ That is infinitely better than going at them cold when they know nothing about your business. You as a person also begin to know to them. The better they get to know you as an entrepreneur, the more they have trust in you. By doing this, it becomes easier for the investors to make that investment. A lot of this stuff is about removing risk for the investors. Anything that can remove some of the risk gets you in the ‘probably want to do it’ column instead of the ‘that seems scary/too many other companies I should focus on’ column. How much to raise: 18 months plus in cash. Assume you need enough to create some amazing progress and show some real metrics on your business. And then a bunch of cushion to fundraise because fundraising takes time. Series A is hard right now. So many companies need Seed Financing so it is harder to raise series A. Just assume it is going to take a little more time. Whatever you can raise for that cushion will help. And the same thing applies to series B; it will be a little bit harder. When you raise series A, raise enough to make it to series B plus cushion to show phenomenal results. Things will always take longer and cost more than original budgeting. Assume anywhere from 20–30 percent dilution. It changes based on how much you are raising and how far along you are. Which investors are coming in. Sometimes it is worth it to take that extra dilution. In fact, it is very often worth it to take the extra dilution to work with the investors you want to work with. Five extra points of dilution at the end of the day to get the partner that will help you build is an easy trade off. Your model should be realistic if not pessimistic. The worst thing is when the model is just not real or way too optimistic. You know you’re not going to hit it. We know you’re not going to hit it. Be realistic with yourself and the investors. This goes back to that intellectual honesty thing. We can tell when it is real or when you are blowing it up. Show that you are going to stay scrappy when you get series A funding. Don’t raise too much money at a too high valuation. It is a mistake commonly made. It’s better to take a lower valuation that you will zoom past than to hope everything will work out perfectly. We approach these investments in a reasonable way. We don’t want too much dilution for you because we want you to be super motivated. We want you to understand that if you’re at too high valuation, you could get in trouble with it. Getting a Yes Wake the investors up. Make the partners in the room as passionate about the business as you are. Really act like you’re trying to recruit them into the company. Don’t make things to complicated. Simplify. We see too many pitches during the day, and sometimes it gets hard to remember the ones we saw