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A Summary of

A Fundraising Survival Guide

by
Paul Graham
Paul Graham
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Raising money is the second hardest part of building startup after finding product market fit. Investors are not sympathetics. Investors are skittish because they make large decisions with limited domain expertise.

Bootstrapping (= Consulting)

Some “bootstrapped” companies started out as consulting companies and used earnings to turn into product companies. Consulting route can take years for efforts to fruition.

How to Approach Fundraising

  • Have low expectations and understand that deals fall through.
  • Prioritize working on startup and then investors, especially with smaller founding team.
  • Be conservative and lock in eager investors quickly because of their skittish nature.
  • Be flexible with financing.
  • Demonstrate qualities that show founders can survive independent of investors.
  • Don’t take rejection personally because statistical odds are against every founder.
  • Be able to switch to consulting if necessary.
  • If possible, avoid novice investors.
  • Understand if investors are indecisive because waiting time could potentially destroy companies. Ultimately, startup founders need to be aware of dangers during fundraising, and venture capital investors need to also be aware of how their indecisiveness could destroy a company.
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