Michael Seibel+ Your Authors @mwseibel CEO, Partner at Y Combinator #ycombinator [email protected] Feb. 27, 2020 1 min read + Your Authors

As a founder it was hard for me to understand and acknowledge the humanity of an investor. I always wanted to treat them like a SaaS product or API instead.

Provide the correct inputs, get cash as an output. I felt so overwhelmed with just my teammates and users that I didn’t want to take any time to build relationships with other people. In fact I lost my friendships during this time as a result.

With more experience I’ve come to understand that this isn’t the way things work and especially at the series A and afterwards and investor is commuting real portion of their life and reputation when they write the check.

Interestingly I was told this many times when I was younger. I wasn’t missing knowledge, I just didn’t the world to work that way.

I wanted it to work like school. Submit the right answers and get an A. You don’t need to have a real relationship with your teacher in order to get good grades.

Now I encounter many founders at YC who are like I was back then. What has changed is the process of raising $1-2m seed round after participating in YC is a bit like school. Be skilled, make progress, tell your story clearly, and often you’ll get funded.

This is a double edged sword though because when it becomes time to raise a Series A, the game is just like it was 10-15 years ago. This often catches our founders by surprise even though we constantly warm them.

It feels like once you are a growth stage company that is far enough along, often fundraising reverts back to this funding as a service model. Show a good data room, jump on some calls or quick 1 hr meetings and then consider the offers and take the one that is the right fit.

I wonder which of these models is better (both for the founder and for the investor). The relationship model or the money as a service model.

But regardless of this question, great founders tend to be good at both.

You can follow @mwseibel.


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