00:02hi everyone thank you for having me so
00:05I'm gonna do more than just talk about
00:07investor meetings I also want to talk
00:09about who the investors are that you're
00:12gonna be raising money from maybe one
00:15day and what motivates them because in
00:18order to have a good meeting you need to
00:20know what you're doing and how to
00:23achieve that goal so when we think about
00:26investor meetings there's a question of
00:28when you need them who you need them
00:30with how to actually get the meetings
00:33and actually how to do the meetings this
00:36might seem weird but a meeting isn't
00:39just walking into a room and sitting
00:40across the table from someone staring
00:42into each other's eyes you need to
00:45actually talk you need to make points
00:47and you need to know what points to make
00:49and kirstie just ran you through the
00:51debt the the mechanics of what
00:53fundraising actually means but in order
00:55to actually get the money from somebody
00:57you usually have to know they are track
01:01them down find them convince them to
01:04meet with you convince them to give you
01:06money and then get the money in the bank
01:08so there's a lot of steps that come up
01:09ahead of time so this is going this this
01:14talk is kind of your magical plan to
01:16automatically raise money if you follow
01:19these tips no one will ever say no to
01:22you if they do it's your fault all right
01:27so the first thing is figuring out when
01:31you actually need to raise money right
01:34not every business needs money MailChimp
01:36famously has never raised a dollar an
01:39outside financing and is worth billions
01:42so before you think about whether or not
01:45you or or before you think about meeting
01:48with investors to raise money you first
01:49need to answer the question of if you
01:52actually need to raise money and there's
01:54a bunch of different steps in this you
01:56can raise money when you're just at the
01:58idea stage you can raise money if you
02:01just have a prototype you can raise
02:03money when you have users in fact it
02:06gets easier and easier as you have each
02:08of these things because they're
02:09demonstrations of progress but you need
02:13money when you actually need it to grow
02:16your business and figuring out whether
02:18or not you need money to grow your
02:20business is a very particular decision
02:23about your company so if you think about
02:26this think about raising money as a
02:29continuum right if you have nothing and
02:32no understanding of how you would spend
02:37don't try to raise money it's a waste of
02:40time instead focus on building your
02:42product and building your company if you
02:44get a little further along you have your
02:47idea or your prototype you start to see
02:49oh if I actually had a little more money
02:51I'd be able to do X Y & Z which would
02:54make me go faster now flip yourself into
02:56the mind of the investor and think about
02:58okay well if I'm an investor why am i
03:01giving this person money I have to have
03:04a reason right and the reason is because
03:06I expect it to be very very very large
03:08one day and I also expect them to be
03:10able to use this money appropriately
03:13there are some uses that are good for
03:15money and some uses that I would say are
03:17bad the first thing people always say
03:20about why they need to raise money is
03:21they need to hire employees this is very
03:25attractive because companies love to
03:28talk about how many employees they have
03:30it's a great metric when you don't have
03:33revenue or actual progress but the truth
03:36is because you are building startups
03:38which hopefully leverage software you
03:42need to hire far fewer people than you
03:44think you do and in fact hiring is the
03:47single best way to kill your company if
03:50you don't need to do it because people
03:52cost money and so if you are already
03:55hiring you already need money whether or
03:58not your idea is any good whether or not
04:00your idea is growing so think very
04:02careful about carefully about whether or
04:05not the blocker between you and the next
04:08step of growth is actually hiring the
04:10next thing people love to say is well we
04:12need to do user acquisition we need to
04:14spend money on Google Ads
04:15this is usually a very bad way to grow
04:19your business especially early you start
04:22spending money on Google ads and you
04:24start looking at your user numbers and
04:27numbers are growing up so we need to
04:28pour more money into it and what many
04:30people don't think especially if it's
04:32their first startup is whether or not
04:34they're acquiring people profitably
04:36customers profitably and whether or not
04:38they're doing that profitably on a
04:40timeline that allows them to recycle
04:42capital and keep growing so before you
04:44start spending money on user acquisition
04:45it probably makes sense to start
04:48acquiring people for free get users who
04:51love your product to tell their friends
04:53about how much they love the product and
04:55then you get them for free and you don't
04:56need to raise money then some of you
04:59will need customer service if your
05:01customers are getting angry because
05:03you're not doing enough to make them
05:05happy you're not answering their
05:07questions that's actually a pretty good
05:08reason to raise money and is actually
05:10one of the first limiting factors that a
05:12lot of companies hit and the reason this
05:14is a good one is because you as founders
05:17will be able to deal with customer
05:19service for quite a long time and you'll
05:22only stop being able to do that when you
05:25have enough users and customers that you
05:27get overwhelmed and what's interesting
05:30is that if someone's using a product
05:32that is free their expectation of
05:34customer service is much lower which
05:36means you can handle a lot more and if
05:38they're paying you your customer service
05:40that level has to be higher but you're
05:42making more money so you can afford to
05:45hire more people to do customer service
05:47before you actually have to look for
05:49outside capital now part of the reason
05:51I'm saying and warning so actively
05:54against fundraising before you're ready
05:55is the earlier you raise money the more
05:58diluted that capital is right people
06:01aren't going to give you a 5 a 3 million
06:03dollar valuation a 5 million dollar
06:05valuation a 10 million dollar valuation
06:06unless you have something to show them
06:08so every dollar raised is more of your
06:11equity in your eventual multi-billion
06:14dollar business that you're giving away
06:15you don't want to do that if you don't
06:17have to let's talk a little bit about
06:21the types of investors in your
06:22neighborhood first we have friends and
06:26family then there are accelerators there
06:31there are seed funds there are VC funds
06:34and there's crowdfunding there are so
06:36many different ways to raise money in so
06:39many different places
06:40from which to raise it but the important
06:43thing in figuring out who these
06:45investors are how to get meetings with
06:47them and how to convince them that they
06:49should actually give you money is
06:50understanding a little bit about them
06:52what motivates them and how to get in
06:55touch with them so first let's talk
06:59about accelerators accelerators are
07:04basically investors that have education
07:07programs attached to them YC is an
07:10accelerator right we take you in for
07:12three months we work with companies we
07:15try to make them better and better and
07:16better and better and better by teaching
07:18them what we know and helping them avoid
07:19mistakes and then we launch them out
07:21into the world in demo day and give them
07:23a community on the other side now there
07:26are thousands of accelerators all over
07:29the world we see applications from all
07:31over the world and I think the number of
07:32accelerators is proliferating faster
07:35than the number of startups and this
07:39terrifies me because most of the people
07:41who are advising companies in
07:43accelerators have no idea what they're
07:45they've never worked at a startup
07:47they've never started a startup
07:48they've never funded a start-up outside
07:50of the accelerator you got to ask
07:52yourself why on earth should I take
07:55advice from this person who's never done
07:57any of the things that they're telling
07:59me I should do never gotten never seen
08:02any of these things work and actually
08:04what you notice is most accelerators
08:06actually hurt companies so be very
08:09careful about going to an accelerator
08:11none of you need an accelerator to
08:13succeed as a company if the accelerator
08:16is helpful that's great but if not it
08:19damages your company because of the word
08:22accelerate if you do an accelerator come
08:25out the other side and you were the same
08:28or worse than you were when you started
08:30it didn't accelerate you very well did
08:32it and every other investor that looks
08:34at you will look at you and think huh
08:40what's it actually going to take to the
08:42accelerate this company it's probably
08:44not money there must be something wrong
08:45with the founders and it might not be
08:47you it might have been the accelerator
08:49right that hurt you so be careful and
08:52think very carefully and look at the
08:54record that those accelerators have next
08:57up friends and family this is probably
09:00the most common source of funding for
09:02early-stage startups at the earliest
09:04earliest stages friends and family are
09:07moms dads rich uncle's Grammy and
09:11pop-pop people who have hopefully a
09:14little bit of extra money that they can
09:16give you because it feels good let's be
09:19honest your friends and family don't
09:21usually think you're going to build the
09:23next Google right they love you they
09:28remember when you were in diapers and
09:30they're basically giving you money
09:32because you have conviction that you can
09:35do something and they want to support
09:37you and be nice don't take advantage of
09:40that niceness only take money from
09:43friends and family if you know that they
09:46can afford to lose every single dollar
09:49that they give you because let's be
09:51honest you're probably gonna lose every
09:54single dollar they give you let that
09:56sink in most startups that raise venture
09:59capital do not produce a return so be
10:02very thoughtful about whether or not you
10:04take money from friends and family and
10:06don't make the terms really really
10:08onerous don't raise $50,000 from your
10:12grandma at a 50 million dollar valuation
10:16it doesn't make any sense you're
10:19probably gonna get the inheritance
10:20anyway so it just doesn't work but
10:24seriously if you artificially set a very
10:26high price at this point in your life
10:28you can probably set the price because
10:30again they're being nice but that makes
10:32every other fundraising you do
10:33increasingly difficult because the price
10:35is so high when you do want money from a
10:39friend or a family member
10:40treat it like a real meeting treat them
10:43as if they're real investors be
10:45respectful of their time going with an
10:47actual pitch and an actual understanding
10:49of what you're doing not just can you
10:51please give me money now thank you right
10:54don't do that really treat this as a as
10:56an important thing because it'll help
10:58train you for the next stage of raising
11:01money which is usually angels angels are
11:04basically rich people with a little too
11:07their hands they invest mostly as a
11:10sport all right have you ever noticed on
11:15Twitter angels will often say oh my
11:18billion dollar company this my billion
11:20dollar company that it's basically
11:21trophy hunting right you have no idea
11:23how much money they invested in those
11:25companies or whether or not they
11:25actually made money or whether or not
11:27the money that they made is meaningful
11:29to them but they really like to invest
11:33in new companies and there's actually a
11:34lot of reasons it's actually not just
11:36about trophy hunting there's a lot of
11:37angels who invest because they really
11:39want to see new technologies exist or
11:41because when they were new founders
11:43someone gave them a chance and they want
11:46angels are usually pretty easy to get in
11:49front of because they well professional
11:51angels are easy to get in front of all
11:52they want to do is invest in exciting
11:54new interesting companies and spend time
11:56with founders who make them feel
11:58interested right and who teach them
12:00things so email them and if they seem
12:04you can usually network to them pretty
12:06quickly especially if they're local
12:08whatever city you're in pretty much
12:10around the world has at least a few
12:14Angels the one last thing I would say
12:16about angels is that you should be
12:18careful of angel groups forget what
12:23they're called but there are basically
12:24these groups of angels that like to get
12:26together for meals and grilled new
12:29founders and then not invest and it's
12:33the sport of ripping people apart
12:35because they're successful investors or
12:37something and they just want to show you
12:39how good they are so before you take
12:41money from or before you go chase an
12:43angel down do some research ahead of
12:46time to figure out whether or not they
12:48actively invest that's the signal have
12:50they made an investment in the last six
12:52months 12 months five years ten years
12:54they haven't made an investment in a
12:56year - they're probably not investing
12:59actively so it's probably not a good
13:01idea to waste your time chasing them
13:02down next up the cow
13:08stack is seed funds seed funds are kind
13:11of super professional angels who have
13:13raised some amount of the outside
13:15capital that they are investing they're
13:17usually investing on behalf of angels
13:20who maybe don't have enough money to be
13:22lp's in really big funds
13:24these are usually newer but professional
13:28investors who are trying to learn the
13:31they're often great they're often recent
13:34founders they're probably pretty
13:37aggressive about finding good deals they
13:39have quick processes because they know
13:41they have to move quickly do research on
13:44them their whole job is to meet new
13:46founders who they want to talk to and
13:48invest in so email them cold emails to
13:52these people are fine if you can get a
13:53warm email great but you should just
13:55reach out to seed funds their entire job
13:57is meeting with you to see if they can
13:59invest in you and remember that they are
14:01investing for a return so that they can
14:04raise their next fund so they're not
14:06interested in things that are just going
14:08to produce a small return they're not
14:10interested in lifestyle businesses which
14:12an angel might be interested in
14:13investing in if there's cash flow they
14:15need you to return capital then there's
14:19the VC funds these are obviously the the
14:22big deal in fundraising VC funds run the
14:26gamut their VC funds that invest
14:28million-dollar checks and their VC funds
14:31that invest billion-dollar checks
14:33know what you need for your stage of
14:36capital they all have or almost all have
14:39multiple LPS which are limited partners
14:41will give them money and say hey we need
14:43you to produce X percent return on an
14:46annual basis it's called an IRR target
14:48and these people these LPS are looking
14:51across all the venture funds in the
14:53world and saying where can i allocate
14:55money and then they're looking at all of
14:57the different alternative asset managers
15:00and saying where can i allocate money
15:01and then they're looking across all of
15:03investable assets and saying where can i
15:04allocate money and so if i'm a VC
15:07partner if I'm a GP I have to think not
15:09only do I have to be one of the better
15:12I have to return more at a better risk
15:15than anything else this investor could
15:18put money into for me to get that LP
15:20capital so when they're looking
15:22you they don't just need you to return
15:24five or 10x they're looking at every
15:26single investment saying will this
15:28investment return my entire fund so as
15:32you're thinking about how to meet with
15:33these people right you got to think
15:35oh shoot when I walk into that meeting I
15:37can't just pitch a small vision of what
15:39I'm doing I got to do something big here
15:41now VC is when they invest usually have
15:44a pretty specific structure of what they
15:47do and how they make decisions you might
15:50be with a partner at first and then two
15:52partners and five partners and then the
15:54whole general partnership if you're
15:55raising something like a Series A but
15:57the earlier stages most of the bigger VC
16:00funds can make a decision off a meeting
16:02meeting with one single partner so if
16:05you're all thinking about sort of that
16:06first check probably don't even think
16:09about these guys this comes later in the
16:11process when you're ready to raise a lot
16:13of money the last kind of investor that
16:20I can think of is crowdfunding websites
16:23these are a little bit of a strange
16:25thing to think about when it comes to
16:27say a meeting or getting in front of
16:29them because they split this
16:31crowdfunding that can be done via
16:33syndicate where there's one person who's
16:35kind of like an angel who has a bunch of
16:38money from other people to say hey we're
16:40gonna invest in this thing and then
16:41everyone follows them along they were
16:43kind of like professional investors do
16:45where you'll meet with them talk to them
16:48then they'll say hey we're gonna back
16:49you can we put you on there's private
16:51syndicates in public and public
16:53syndicates you do not have to meet with
16:55every member of a syndicate in order to
16:57raise money on a crowdfunding site and
16:59there's also the option on any
17:01crowdfunding sites to simply list your
17:02company subject to a few checks to make
17:05sure you're not committing fraud where
17:07they'll just put you up and then people
17:08will send money your way without you
17:11ever meeting anyone this is a good way
17:14to raise money if you can't figure out
17:18another way to do it or there's no
17:21investors near you or you don't want to
17:25be bothered with the time it's usually
17:26not a good way to raise lots and lots
17:28and lots of money because one is usually
17:31not there and to it if you have all
17:36individual tiny little investors on your
17:39cap table they become a nightmare to
17:40manage so think carefully about this
17:42option and think about what it will do
17:45for you and what it can do to you so a
17:50couple of these investors as I mentioned
17:52are susceptible or open to receiving
17:55cold emails actually everyone is
17:58receptive to cold emails I think I
18:00respond to pretty much every cold email
18:02I get if I can but there's good ones and
18:05bad ones so here's a bad cold email dear
18:08sir or madam I have noticed in my
18:11research on the Internet that you are an
18:13investor in technology companies I'd
18:15like to introduce you to an opportunity
18:17to make money in this new and exciting
18:19field may I come to your office for an
18:22hour to present you with this
18:24sincerely Aaron I would not take a
18:28meeting with this person I have no idea
18:30what they do they don't seem to have
18:32done any work to understand what I'm
18:33interested in Who I am what I've done in
18:36the past and they're asking for an hour
18:38of my time in person that's a lot of
18:41time remember that professional
18:43investors sure there they meet with
18:46people all day long but the only thing
18:47that limits them is their time and so
18:50they want to give that to the people who
18:51matter most so how do you think about
18:55sending a good cold email the answer is
18:59by doing research most investors are
19:01very happy to tweet about things that
19:04interest them companies they've invested
19:06in they write blogs about ideas that
19:09they have in companies that they want to
19:11see exist they have prolific profiles
19:13online based on the companies that
19:14they've started in the past you should
19:17go and research every single investor
19:19that you want to talk to and figure out
19:21a way to get in front of them with a
19:24custom introduction that is relevant to
19:27them and to you so here's one you could
19:30send to adora Oh Dora I'm building a
19:34marketplace for home cleaners I have a
19:36novel approach to this all of the
19:38cleaners or robots we've launched and
19:41are just starting to grow so let's stop
19:44for a second if you've done research on
19:46a Dora you know that she built a
19:48marketplace for home services so
19:50you know that this is relevant to her
19:51you also might know she thinks robots
19:53are cool so that's another good hook you
19:57tell her the stage that you're at
19:59launched and are just starting to grow
20:02now launched is great because it proves
20:04that you're actually doing things
20:05starting to grow is intriguing because
20:08it makes me want to ask how much are you
20:10starting to grow how fast well how are
20:12you measuring growth how do these things
20:14work then I think you'd be a great
20:17investor for us because of your
20:19experience with homejoy
20:20I think we've solved unit economics and
20:23reliability can we discuss this for 15
20:26happy email if that's better for you
20:27sincerely Aaron so let's think of all
20:30the different things here that are good
20:32you've only asked for fifteen minutes of
20:34time that's easy and can be done by the
20:36phone you also offered to do it over
20:38email if a Dora happens to be busy or is
20:41traveling she can just deal with the
20:43first set of questions over email I love
20:45to do this I always go to email first
20:47and if someone really gives good email
20:50responses and is thoughtful and asks
20:52good questions I'm much more inclined to
20:54meet them and be happy when I'm meeting
20:56them walk into the meeting with a
20:57positive understanding of what they're
20:59doing and context to understand the
21:01entire conversation right that's a
21:03that's a prepared mind for what you're
21:05thinking of doing you reference her past
21:09and you'll know if you watch some of
21:12Edoras lectures and videos online that
21:14she thinks a lot about unit economics
21:16and reliability so you know that these
21:19things are important and you're saying
21:20we've solved these two key critical
21:22issues that are important to you this is
21:24a slam dunk right this is a cold email
21:27that is likely to get a response whether
21:28or not you know the person you're
21:31emailing because it's so specific it's
21:34the same thing by the way if you are
21:36sending lots of email to people you
21:39don't necessarily know to try to
21:41convince them to use your service
21:42there's a big difference between
21:44spamming people right and sending them a
21:47relevant email about a relevant service
21:49that they will find interesting don't
21:51spam investors it doesn't work they're
21:53immune to it investors are not usually
21:56sitting around waiting for an email from
21:58someone they've never met introducing
22:00them to an investment opportunity what
22:03for is the company that no one else
22:06knows that is secretly amazing that
22:10nobody else has talked to yet that has
22:12no connections that is the company that
22:14if you find it and is actually as good
22:17as it seems that's the one that makes
22:19you all of the money so an investor who
22:22gets a cold email this good is already
22:24starting to think oh crap this is my
22:27Google and no one else knows about it I
22:30better move fast meet them figure out
22:32what's going on give them a bunch of
22:34money and then help them IPO that's the
22:37response you want to get out of someone
22:39in fact that that's what you want to
22:40walk out of every meeting with an
22:42investor who's excited to move on to the
22:44next steps now as you move through
22:47meetings with investors there are a
22:49whole bunch of different meeting types
22:50that you'll have to navigate and
22:53different investors do different kinds
22:54of these meetings so let me list them
22:56and then I'll walk through a little bit
22:57more about what they are first up
22:59there's the intro meeting all investors
23:01do intro meetings except the
23:02crowdfunding sites then there's a
23:04follow-up meeting pretty much all
23:06investors do this except some angels who
23:08might decide to invest in you after that
23:10first meeting then you've got the
23:12decision meeting this is really only
23:14professional investors this will be a
23:16meeting with multiple partners or with
23:19that one partner but to really dig in
23:21and make sure that they want to do the
23:23deal after well depending on how
23:28competitive your fund raises which is a
23:30whole other set of things there's
23:32diligence a diligence meeting might be
23:35with you might be with your team might
23:39sometimes it's handled by the VC
23:40themselves or the investor themselves
23:42and sometimes it's handled by someone on
23:44their team and then finally if it all
23:47goes according to plan you get fancy
23:49dinners fancy dinners are the goal not
23:53not raising money for your company
23:55getting to eat for free
23:58different investors will use fancy
24:00dinners differently sometimes it's used
24:03to sell you on an offer that they've
24:05made where they really want to get to
24:06know you better and show you how great
24:08they are and then usually after that
24:10everything's done you can finagle a
24:12closing dinner out of someone it all
24:16seriousness the the reason that I put
24:18this on here is that every investor that
24:20you take onto your cap table is going to
24:22be with you for the life of your company
24:24you need to make sure the people you're
24:26taking money from aren't jerks if you
24:30can't sit through an hour dinner with
24:32someone you should think very carefully
24:35about whether or not you want to take
24:36their money this is a little less
24:39relevant at very early stages with small
24:41cheque size for small cheque sizes from
24:43angels but anyone who's giving you a
24:44material amount of money you need to
24:47think very carefully about whether or
24:48not you want them there all right what
24:54you need for each of these meetings
24:56changes the intro meeting is really
24:58simple all you really need is a clear
25:01explanation of your idea that's actually
25:05the base level of everything a super
25:08clear this is the elevator pitch right
25:10the reason this is important is because
25:14research shows that people make
25:17decisions about what they want to do in
25:19an interview sometimes in the first 30
25:21seconds of a meeting right you can't
25:24necessarily get to yes in 30 seconds but
25:26you can often get to know and if someone
25:28comes in and cannot explain what they do
25:30that's a really bad sign so make sure
25:32you really understand what it is that
25:34you want to say and how you want to
25:36explain it if you have a demo of what
25:38you've built that's awesome investors
25:41love to engage with real products and
25:43see and not only do they want to see
25:46that because they love playing with
25:47things this is evidence that you are
25:48doing the things that you were saying
25:50you're gonna do the entire purpose of
25:52meeting with investors is to show them
25:55that you are inevitably going to be
25:57gigantic and progress is critical to
25:59that I would also recommend having a
26:02reasonably clean shirt does it have to
26:05be spotless I understand what it's like
26:08to be a founder but don't show up
26:10looking like you just rolled out of bed
26:12all rumpled you can get away with that
26:14sometimes but again people unfortunately
26:17judge based on first impressions if you
26:20walk into the room looking like you
26:22don't give a crap about the meeting the
26:23investor isn't gonna give a crap about
26:25the meeting if you get past the intro
26:29you're gonna get to a follow-up meeting
26:30again except for the Angels that invest
26:32off the first meeting follow-ups start
26:35to dig a little more deeply into your
26:37business so you need to understand your
26:39metrics now in some cases this will be
26:41the metrics that your business already
26:43has and in other cases it'll be the
26:46metrics that your company will have in
26:47the future so if you're building a
26:49consumer business but you haven't
26:51launched yet you need to have a
26:52framework for understanding that monthly
26:56actives are important to you or weeklies
26:57or Daly's or hourly actives are
26:59important to you and talk about how
27:01you're thinking about those things and
27:02how you're gonna focus on them you need
27:04to be able to explain your progress up
27:06to now and remember that progress is in
27:09an absolute value progress is slope how
27:14long have you been working on what
27:15you're working on and how far have you
27:16gotten in that time if you've been
27:19working on something for five years and
27:21have yet to launch not great if you've
27:24been working on it for a month and have
27:26a prototype ready that's amazing so it's
27:30all relative and you want to be able to
27:34dig a little more deeply on your
27:35insights into why you're doing what
27:37you're doing then you did in that first
27:39introduction meeting remember that that
27:41introduction meeting can be 15 minutes
27:43it could be an hour but it's probably
27:45pretty short so this is your chance to
27:46show just how much you understand about
27:49what you're doing when you get to an
27:51actual decision meeting this is really
27:53when you need the deck again this is
27:55mostly for professional investors most
27:57angels don't need to see a deck it's not
27:59really that relevant I kind of think
28:02that some people spend more time on
28:03their deck than they do working on
28:05product which is usually a bad trade
28:07because customers don't generally buy
28:08decks some do but that's just weird so
28:13you need to have your deck and the deck
28:14doesn't have to be long actually the
28:16simpler the deck the better this deck is
28:18really really long that I'm running
28:20through today if you're a seed company
28:2410 your opportunity your team what
28:28you're gonna build or what you've
28:29already built and your early metrics
28:31that's it I actually put up a sample
28:34slide deck on though on the YC blog go
28:36check it out it's really short you can
28:38actually just use that deck and replace
28:39your name with the deck company I think
28:42is what it's called at this point if you
28:45have metrics you need to know them cold
28:48if someone asks you what six month or 12
28:50months retention is know it off the top
28:51of your head don't have to pull up your
28:53computer and look for it obviously there
28:55are levels and layers of metrics
28:57underneath that you don't need but any
28:59top-level metric that's important know
29:01that and for your most important metrics
29:03be able to dig in a couple layers the
29:08critical part of a decision meeting and
29:11again this is because this is for
29:12professional investors is that you need
29:14to take where you are now and project
29:17what the biggest future actually is I
29:19remember when I sat down and pitched
29:21Sequoia for my decision meeting like me
29:24and five partners in the room and the
29:26thing that they really dug in on was
29:29what my company could be in 10 or 15
29:33years and that was all they cared about
29:35at that point they were already sold on
29:37the basics of the business at that point
29:38they were sold mostly on me but the
29:41thing that they wanted to understand I
29:42think is how I thought about the future
29:44and whether or not they thought I could
29:46actually do that thing could we become a
29:47globe spanning company because again
29:49that's the only thing they care about
29:50and your ability to dig into that and
29:53explain it is the difference between
29:55whether or not you're just another
29:56company or something with huge vision
29:58that they think you can achieve after
30:01that comes the diligence meetings these
30:03meetings aren't usually that hard on you
30:06if you've done your homework ahead of
30:07time and again this is later the earlier
30:10in your life as a company the less
30:11diligence you have make sure you have
30:14your legal docs in order make sure your
30:15financials if you have them make sense
30:19we've seen some really insane things
30:22come up during diligence where a company
30:23has you know 50% less cash than they
30:26thought they did don't do that it's
30:28usually some other problems at work if
30:31that happens and have a metrics
30:33dashboard again if you have the metrics
30:35be able to bring up your full dashboard
30:37so that people can really do
30:38way down into everything that you're
30:40doing so if you walk through all of
30:44those things if you understand the
30:47framework for your meetings you'll get
30:51to the final step which is that fancy
30:53dinner there is food and you'll need
30:57another reasonably clean shirt but this
30:59is the end and doesn't even necessarily
31:01happen and honestly even if it doesn't
31:03the thing that you were trying to get to
31:05is actually money in the bank whether or
31:08not an investor takes you out for a meal
31:10or an investor seems fancy or other
31:14people think the investor is cool none
31:16of that matters right at the end of the
31:18day the thing that you need as a company
31:22if you need money to grow is just money
31:26and honestly all of these meetings are
31:30irrelevant if you can get that money
31:33without them so never put yourself in a
31:36position where an investor that you have
31:39researched is great you know they're
31:42great they email you and say hey I'm
31:45traveling this month but I really want
31:47to invest can I send you a quarter of a
31:49million dollars and we'll catch up
31:51afterwards don't say no because you
31:54haven't met for coffee right I'd
31:57recommend getting on the phone with them
31:58and chatting with them and trying to do
32:00your own diligence right check
32:01references but don't turn people down
32:03just because they haven't fit into
32:05whatever we believe or you believe is
32:07the perfect process a few things to
32:12remember about meetings about investors
32:14most importantly meetings do not equal
32:18progress I run into so many founders who
32:21tell me all about all of the different
32:24meetings that they're having and how
32:26they met with this person and that
32:27person in that famous person it's
32:29irrelevant the only thing that matters
32:32is building a big company and if you are
32:35meeting with investors when you don't
32:37need to raise money you are taking your
32:39time and focus away from the thing that
32:41matters which is building the big
32:43company so only start meeting with
32:46investors when you know that you need
32:48money when you are in a fundraising
32:51process the only thing that counts as a
32:55yes I will invest is yes I will invest
32:58signed documents and wired money
33:02investors hate saying no because every
33:07time they say no they closed off the
33:10opportunity to invest in something
33:12that's going to make them a lot of money
33:13and they risk looking stupid for having
33:16said no so they will do everything they
33:19can not to what I've actually found is
33:22the best investors are the ones who will
33:25say no fastest not say yes fastest who
33:31will say no fastest because they're the
33:34ones who understand what it is they're
33:36looking for and how to make decisions
33:38quickly and if you find yourself in a
33:41situation you're going on meeting after
33:44meeting after meeting after meeting
33:46after meeting after meeting after
33:47meeting after meeting nothing takes that
33:49long right this is a gamble and at some
33:52point someone has to make a decision and
33:54indecisive investors you usually don't
33:56make good decisions so when you're
33:59meeting with people push to a close the
34:05final piece is a warning for you to
34:07watch out for I hate having to talk
34:10about these things because I wish they
34:11didn't happen but they do the first
34:14piece of bad behavior is what I just
34:15mentioned investors who just waste your
34:18time this is honestly kind of harmless
34:21but just watch out for it the next thing
34:24is investors who are jerks
34:26this takes lots of different forms there
34:28are investors who will try to impress
34:30you with how much money they have who
34:33will try to impress you with the people
34:34they know who will talk down to you
34:37because you're new and they're old
34:40they're investors who will try to make
34:43you feel as if your idea is stupid
34:45without giving you any help or
34:48understanding of where their thought
34:50process is coming from don't take it if
34:54someone's a jerk leave or say hey you're
35:00I have a lot of people that I can talk
35:03to and I'd rather not talk to you thanks
35:06don't be a jerk yourself but be honest
35:08before thright and leave a meeting if
35:11you have to if someone's being a jerk
35:12don't take another meet with them then
35:13tell your friends that this person was a
35:16this behavior corrects itself pretty
35:19quickly now sometimes people are being
35:20jerks without realizing it they just
35:22think that's what they're supposed to do
35:23or they're not so good in social
35:25interactions try giving feedback if that
35:28happens and see what happens there
35:31investors who will meet with you just to
35:32do diligence on you for one of their
35:34portfolio companies this is usually
35:37pretty obvious because they'll just ask
35:39you question after question after
35:40question after question about like
35:41process and metrics and who your
35:43suppliers are and who your special
35:45relationships are and what are their
35:46phone numbers and when can they go see
35:47them and can they introduce you to
35:50someone else who seems to be working on
35:51a competitive product but no don't worry
35:52it's not really a competitive product oh
35:54wait wait wait a second so before you
35:56meet with someone just check to see if
35:58they are already invested in competitors
36:00and talk to them about it ahead of time
36:01for a lot of investors they explicitly
36:04say we're happy to invest in competitors
36:06over time and we compartmentalize
36:07information actually YC does this we are
36:10happy to invest in competitors we
36:11sometimes do it in the same batch we
36:13tell both companies were doing it but
36:14we'll do in the same batch and we'll do
36:16it across batches and we've developed a
36:18system whereby we're very careful about
36:20what information can or would be shared
36:22and violating that trust is something
36:24keeping that trust secret is something
36:26that we are very serious about the last
36:28thing and this has importantly become an
36:34this could be sexual harassment it could
36:36be racism it could be any kind of
36:41unfortunately wealth has absolutely no
36:46relationship to morality right and
36:49investors some of them are not good
36:53I'll say most of the investors that I
36:56interact with regularly are great but
36:59there are some bad apples and we just
37:01released a report this week talking
37:03about just how many YC founders have
37:06experienced sexual harassment the
37:07numbers were way higher than I would
37:09have possibly imagined so if you
37:12encounter anything like this
37:14this is absolutely grounds to walk right
37:17out no one should ever be allowed to
37:20make you feel as if you have to do
37:22anything for them to get their money
37:24other than build a big company no one
37:26should ever be allowed to violate your
37:28personal space or make you feel
37:30uncomfortable if it happens walk away
37:33and tell us we're starting to get better
37:36at dealing with this and we would much
37:38prefer a situation in which no investor
37:41meeting ever goes in a way where someone
37:43ends up feeling uncomfortable so that's
37:48how to think about investor meetings
37:49kind of think about when you need them
37:52how to get them who to do them with and
37:54how to do them I really think that if
37:57you follow these steps everything will
37:59always go perfectly for you at least I
38:01hope it does thank you all so much and I
38:03think we have time for questions
38:10yeah is it wise to approach if you see
38:21who has already invested in a competitor
38:23it's incredibly case dependent if they
38:26invested in a competitor ten years ago
38:27that company is public they might
38:30actually be a perfect investor for you
38:31because they know the playbook and
38:33they'll help you I Pio but you need to
38:36just look at the specific situation and
38:38decide whether or not it makes sense
38:54between the seed funds the angel funds
38:57and the micro VCS I don't even talk
38:58about micro VCS I'm never sure what they
39:00are what's the average check size and
39:03round size it's some dependent not just
39:06on its dependent there's so many
39:08variables the investors the market the
39:12geography the company and what it needs
39:15I mean there are seed rounds that get
39:17done for $50,000 and seed rounds that
39:20get done for ten million dollars so it's
39:23it's really dependent I think the way to
39:25think about it is more what do I need
39:27smaller funds or most smaller funds and
39:29angels are most likely to write small
39:31checks somewhere between I don't know
39:34ten and a hundred thousand dollars and
39:36larger funds are beyond that
39:39we gave you the garbage how do you
39:46figure out which angels are credible ask
39:50them for references look at their
39:53portfolios angel list usually if
39:55someone's an active angel angellist
39:57usually records what they do and what
39:59they've invested in and again angels who
40:02are really active tend to talk about it
40:04not for a bad reason actually by talking
40:06about it that's how they get deal flow
40:07right if you know someone's an active
40:09angel you're going to approach them so
40:10you should be able to do some amount of
40:11diligence obviously this is harder in
40:14emerging markets where there isn't as
40:18hell like as large of an investor
40:20ecosystem but you just have to do the
40:24footwork to figure it out
40:29can I talk about the mechanics of
40:32investor FOMO or fear of missing out
40:36that would be a whole hours worth of
40:41the basic idea though is investors
40:46investors want to invest in the largest
40:48companies they possibly can and get as
40:50much ownership as they possibly can but
40:52at the early stages of a start-up
40:54there's very little data to say whether
40:56or not this company is likely to succeed
40:58and so investors are always looking for
41:00other pieces of confirmatory data
41:03essentially one of the most powerful
41:06pieces of that data set is whether or
41:11not other smart people seem to think
41:13and so the reason FOMO exists is because
41:16if you see other smart investors getting
41:19in on something you infer that that
41:22company is good and likely to be big and
41:24you don't want to miss out on that and
41:26so that's why a lot of investors sit
41:28back and wait for someone else to make
41:29the move I think those are generally the
41:31less good investors again the best
41:32investors really are the ones who make
41:34their own decisions faster than anyone
41:36else and actually the best investors are
41:37the ones who have incredibly fast
41:39diligence processes so they are the ones
41:41way out ahead of everyone
41:43you can still pressure them a little bit
41:46by having other investors lined up
41:48behind so they know that they have to
41:49move quickly but that's the shortest
41:51possible answer I could give you on it
42:00mistakes that founders often make while
42:02communicating vision some go too big in
42:10a way that makes them seem scattered so
42:13if I were to pitch you on a company that
42:17is well or a search engine we also have
42:21self-driving cars we make phones
42:24speakers we built this crazy balloon
42:28that beams the internet down we have ads
42:32and display ads and artificial
42:35intelligence and a whole department that
42:39crazy ideas you'd say oh this is a lot
42:43right so that's kind of going too big
42:45it'll it'll make you seem scattered on
42:46the other side but sometimes people go
42:47too small and they say well if we're
42:50gonna conquer 10% of our market that's
42:53worth 50 million dollars and we're
42:54getting a hundred percent of it okay
42:57then what okay so there has to be there
43:00there that isn't too wild
43:05those are think are sort of the two
43:07extremes to think about how do you pitch
43:26family and friends who can't afford to
43:28lose money no I think that's very
43:31dependent on your relationship with
43:33those friends and family you know if I
43:35wanted Jeff to give me money I'd camp
43:38out outside of his house and show up
43:41every morning with doughnuts and coffee
43:42I think that would get to him pretty
43:43well that was seriously I think it
43:46really depends on who it is I'd
43:47recommend working on an elevator pitch
43:51maybe even a deck just for practice
43:54right that's the friendliest audience
43:56you're ever going to get now this is
43:58different by the way if your friends and
43:59family happen to be incredibly
44:00successful founders who know what
44:02they're doing or venture investors then
44:04you can use them as real practice and
44:07say hey here's how I'm planning on
44:10building my business you built a
44:11business does this make sense
44:13so as much ask for advice as much as
44:15you're asking for money in that case and
44:17and really just treat it like a
44:18professional interaction
44:21we have do we have to drop everything
44:29we're doing for fundraising and if so
44:32how long pretty much yes you're either
44:35fundraising or you're working on your
44:36company which is why you shouldn't try
44:38to fundraise unless you need it and for
44:40how long is however long it takes I mean
44:47I mean you should be prepared to take
44:55six months a year I mean it it really
44:59depends now if it's if you are a very
45:02early-stage company and it's taking you
45:04a year to fundraise and you're not
45:06working on your product for a year
45:07that's probably pretty bad right that
45:10means you're not making any progress so
45:12I wouldn't do that but again this is a
45:14question of figuring out whether or not
45:15you really need money if you're just
45:17starting out you try to raise money for
45:19a month or two no one's giving you money
45:22I'd say try to figure out how to grow
45:23without without raising anything and
45:25then come back later
45:35sorry some investors will only fund
45:37women founders what I think of that yeah
45:43I think that's great
45:48I think that if the way that I think
45:50about fundraising and company building
45:52in generals press every unfair advantage
45:54that you have this is like this is a
45:57corrective narrative where there's
46:01investors who are specifically trying to
46:02fund female founders because investors
46:06have been pretty bad at that in the past
46:07and if you can use that to your
46:08advantage you absolutely should I think
46:10it's great should all founders be
46:23focused on the fundraising process no
46:25this is the CEOs job if you are lucky
46:27enough to have co-founders who can do
46:29other things have them do other things
46:30again that will help you not completely
46:33stop progress on the business
46:34while you're while you're fundraising
46:36right if you can you want to keep
46:38pushing the business forward while the
46:39CEO goes and fundraisers with the
46:41professional investors with the venture
46:43investors for later larger later rounds
46:46they're eventually going to want to meet
46:48the entire team but they don't need it
46:49at the beginning and in fact you
46:51shouldn't bring the entire team to
46:53meetings for the following reason if you
46:55are in an investor meeting and someone
46:57makes you an offer if the entire team is
46:59there you have to make a decision on the
47:00spot but you're at a severe disadvantage
47:01there because professional investors
47:04professionally negotiate and make offers
47:06you've probably never done this before
47:08and the rest of your team is back home
47:10you can say thank you so much for that
47:11offer it's really interesting I need to
47:15talk about it with my co-founders and
47:16then you can go back and talk to your
47:17co-founders and buy yourself some time
47:19to really think through the plusses and
47:20minuses thank you all
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