"Video Lecture _ Lecture 9 How to Raise Money”
This post is about
Question & Answer panel 'How to Raise Money' by Marc Andreessen, Ron
Conway, and Parker Conrad. The lecturers
Marc Andreessen is a Founder of Netscape and Andreessen Horowitz, Ron Conway is
a Founder of SV Angel, and Parker Conrad is a Founder of Zenefits. In this discussion, the founders give answers
for several questions and discuss how to raise money.
The first question
was about how they decide to invest in a founder company. There exist some features that investors
notice. Therefore, when you meet a major
investor, you should be able to answer what your product does in one compelling
sentence. Be certain as the only way to make progress and develop is to make a
decision. Once you have a great product then it’s all about execution and
building a great team. Moreover, first, venture capital business is a game of
outliers. Second, invest in strength versus lack of weakness. It is needed to
try to invest in startups that have really extreme strength and dimension. Parker realized that you can’t count on there
being capital available to you and so, the business he started seemed like one
he could do without raising money. It occurs that, those are exactly the kind
of businesses investors love to invest in. You can build the business where
everything is moving in the right direction.
Ron added that it is beneficial to bootstrap for as long as you can.
Therefore, the core to success is to be so good they can’t ignore you. Build a
business that is going to be a gigantic success. Andy Rachleff’s onion theory
of risk says basically that you can think about a startup one day as having
every convincing kind of risk and you can basically make a list of the risks:
founding team, product, technical, launch risk, market acceptance, viral
growth. Thus, to succeed you should consider these points. The main way to impress and find an investor
is during the pitch. The best way to pitch to someone is to say which
milestones you achieved and which risks you eliminated.
The most important thing at seed stage is picking right seed
investors because they are the foundation of future fundraising events.
Moreover, relationships between investors and founders involve lots of trusts.
The best thing to do is find the right investors. This is the term which
founders care most. It is hard to find right investor; however, having right
introduction may be helpful. Moreover, there is also a type of investors from
which you should avoid. Lecturers brought some characteristics. For example,
those who have no domain expertise in your company and cannot help you with
introductions for business development. A good indicator of a good investor
would be if you want to have the person involved in the company even if they
don’t have the money. Consequently, finding an investor is one of the important
and the same time difficult task. Conclusively, the main points of the lecture were that you can start a startup without money and choosing right investor is hard but necessary.
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