Fundraising: Words of Wisdom from Ron Conway and Marc Andreessen

by Scott Edward Walker on October 28th, 2014

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To Our Clients & Friends: Welcome to our weekly series “Helping Entrepreneurs Succeed.”  Each week, we share our favorite video of successful entrepreneurs, investors or business leaders on a variety of topics.

This week, we present legendary angel investor Ron Conway (commonly referred to as the “Godfather of Silicon Valley”) and Marc Andreessen, a brilliant entrepreneur and co-founder and general partner of the venture capital firm Andreessen Horowitz.

In this interesting Q&A from Sam Altman’s Stanford course “How to Start a Startup,” Ron and Marc provide some words of wisdom to founders with respect to fundraising, including the following:

  • “[W]hile you’re talking to me in the first minute I’m [asking myself]: ‘Is this person a leader?  Is this person rifle-focused and obsessed by the product?’” –Ron Conway (at 1:17)
  • “I’m hoping that [the founder’s inspiration] is based on a personal problem that the founder had, and this product is the solution to that personal problem.” –Ron Conway (at 1:37)
  • “The venture capital business is 100% a game of outliers; it’s extreme exceptions.” –Marc Andreessen (at 2:43)
  • “What we aspire to do is invest in the startups that have really, really extreme strengths along an important dimension…” –Marc Andreessen (at 4:26)
  • “When you first meet an investor, you’ve got to be able to say in one compelling sentence (that you should practice like crazy) what your product does.” –Ron Conway (at 4:48)
  • “You have to be decisive.  The only way to make progress is to make decisions.  Procrastination is the devil in startups” –Ron Conway (at 5:23)
  • “Bootstrap as long as you possibly can.” –Ron Conway (at 8:50)
  • “Be so good they can’t ignore you.  In other words, you’re almost always better off making your business better than you are making your pitch better.” –Marc Andreessen (at 10:12)
  • “The way I always think about running a startup is also the way I think about raising money, which is: it’s a process of peeling away layers of risk as you go.  So you raise seed money to peel away the first two or three risks.” –Marc Andreessen (at 12:40)
  • “In the process [of fundraising], when someone makes a commitment to you…, you [should immediately] type an email to them that confirms what they just said to you.” –Ron Conway (at 14:58)
  • “If you’re going to raise Series A, the first thing to do is raise seed because that’s generally the way the progression works…” –Marc Andreessen (at 19:00)
  • “By far the best way to get introductions to the A-stage venture firms is to work through the seed investors or to work through something like Y Combinator.” –Marc Andreessen (at 20:03)
  • “It’s important for the founder to say to themselves in the beginning, ‘at what point does my ownership start to de-motivate me?’  Because if there is like a 40% dilution in an angel round, I’ve actually said to the founder, ‘do you realize you have already doomed yourself?’” –Ron Conway (at 25:12)
  • “These guidelines are important – the 10% to 15% [for an angel round].  [I]f you keep giving away more than that, there’s not enough left for you and the team – and you’re the ones doing all the work.” –Ron Conway (at 25:12)
  • “We’ve seen a series of interesting companies in the last five years where we simply won’t bid on the basis that the cap table is already destroyed.” –Marc Andreessen (at 26:01)
  • “When you start a company, you have to go find somebody as good or better than you to be the co-founder.  If you do that, your chances for success grow astronomically” –Ron Conway (at 32:28)
  • “If you pick good investors who have good rolodexes and domain expertise in what your company does, they’re going to add a lot more value than the money – and those are the investors you should be looking for.” –Ron Conway (at 33:39)
  • “The more capital intensive the business the more intense and serious you have to be about what exactly will be required to make the business work and the staging of milestones and risks.” –Marc Andreessen (at 34:46)
  • “If everything just goes great, it kind of doesn’t matter who your investors are.  But almost never does everything just go great.” –Marc Andreessen (at 38:17)
  • “It really, really, really matters…who your [investor] partner is.  It really is like getting married, and it’s worth putting in the same amount of time…”  –Marc Andreessen (at 39:02)

I hope you enjoy it.  Cheers, Scott

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