Tag: fundraising

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Accelerators Bragging about Fundraising

This week I attended an information session by the founder institute. They have an accelerator program in Berlin for people in idea stage where they fund the company with 15000 Euros and get 3.5% in warrants.

The whole event the speakers were talking about the amounts of funds raised post graduation from the program, and the mentorship you get during the program.

The questions part was all about post program fudning. There were two graduates from the program and the audience questions were mostly on how much they raised and how long it took them to do so.

I don’t think accelerators key value proposition should be the amounts of funds raised post program, while this is the most post important, fastest to measure metric for the accelerator’s health given other metrics such as exits need a long time to measure, it shouldn’t be the key selling point to entrepreneurs.

I would trust an accelerator if they help founders focus to reach product market fit. Money is important for the company to live but building something people want that’s growing at a high rate is the most important thing for a startup to survive.

I think this is the best thing about YC. They talk about the financial value of their companies but they talk more about how they help entrepreneurs build something people want, and push them to go talk to users, iterate, and grow.

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Seed stage traction

A friend of mine based in Berlin attended a fundraising call between two colleagues of him and a Berlin based investor. They are trying to raise a 2M euros seed round at 10M post money.

The investor told them in order to invest he wants to see numbers.

This made me think that any numbers they will show at this stage will be so small to make any sense.

I am not pro pitching investors right after launching the MVP*. Any loser can build and launch MVP. The tough part is getting people to use what you built, tell their friends about it, and pay for it. Add to this as Mark Suster puts it, it is easier to invest in lines than dots. I see launching the MVP is a dot. Making progress is a line.

So I am wondering if an investor is valuing a seed stage startup based on traction, how much traction is a good traction?

 
* There are exceptions to this. Some might even need to pitch investors before building the MVP. Dropbox is an example of this. Even an MVP of Dropbox would’ve been so expensive to build without investment.