The Cost of Preemptive Deals
by Aaron Harris9/19/2019
Recently, while discussing a preemptive funding offer with a company, we noticedthat the offer was more dilutive than expected. Wondering if this was anoutlier, we looked at 120 US Series A rounds from our portfolio over the past 18months to see whether or not preemptive offers were generally more or lessdilutive than process driven rounds.1We were somewhat surprised to discover that, on average, founders takingpreemptive offers are taking ~1.4% more dilution for less money.
"Angels," Angels, and VCs
by Aaron Harris8/12/2019
I’ve recently noticed an uptick in the number of “angels” that aren’t actuallyangels. These investors are institutional funds (read, LP dollars), the detailsof which aren’t generally disclosed until the founder sees a strange entity nameon the signature lines in the docs.1This is different than investing through a trust or fund that represents aninvestor for legal reasons. This is investors pretending to be individual angelswhen, in reality, they are fronts for groups of investors.
Investor Funnels for Series As
by Aaron Harris5/29/2019
Our third batch of the YC Series A Program is wrapping up and the companies arekicking off fundraising. As we gear up for those raises, we wanted to share somethings we’ve learned.First, an update on Series As at YC.In the last year, YC companies raised over $1.1B across 111 Series As. Thatincludes two Series A batches. Our first batch included 12 companies, 11 ofwhich have either raised their As or are in post-term sheet diligence.
Don’t Over-Optimize Fundraising
by Aaron Harris3/15/2019
It seems to me that many founders approach fundraising as they would a mathproblem. They think that there’s a single correct answer. This usually leads toover-optimization, which is a mistake. Optimization presumes that incrementalchanges improve fundraising and/or company outcomes. It does not.Because fundraising is never the deciding factor in the success of a company,founders should instead look to use a regret minimization function whenfundraising.
A Guide to Preemptive Funding Offers
by Aaron Harris2/7/2019
Funding rounds happen in one of two ways. Either a founder asks for money andgets it, or an investor offers money and the founder accepts it. This may seemsimple, but the dynamics are complicated.I’ve written about how founders should fundraise. However, inrunning YC’s Series A Program, I’ve noticed how many companies raise moneywithout any process at all.
Things We’ve Learned About Series As
by Aaron Harris1/25/2019
One year ago, we announced the Series A program (YCA) to bring moretransparency and consistency to fundraising. Six months ago, we announced thefirst Series A Batch. Here’s how ithas been going, and a bit of what we learned.In the last year, YC companies raised over $945mm across 95 Series As.