Attention founders living outside of Silicon Valley! If you're navigating the complexities of securing Pre-seed or Seed venture funding, consider this your pulse check on the current entrepreneurial landscape. For those aspiring to go the venture-backed route, gain insights on raising early stage capital in 2024, anticipate what lies ahead, and discover optimal strategies to position your business for great success!
Last night, I attended the Panache Pre-seed event, "California Dreamin' - 4 California VCs on one stage" with Monique Woodard, Dana Oshiro, Ian Hathaway, Marvin Liao, and Chris Neumann to discuss startups, the investor landscape, and the opportunity for founders raising venture outside of the valley. A+ Event.
I've compiled insights from the event today that you can integrate into your fundraising and company-building endeavors in 2024
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- The venture landscape is evolving; VCs are deploying less capital. When meeting a VC, ask them when they last deployed. Most haven't deployed chq in 12+ months. Spend time wisely
- The drunken startup sailor 2021/2022 era is over. Many companies won't secure funding, and maybe 99% will sunset? This puts pressure on VCs to deploy capital more strategically, waiting for better opportunities and extending their deployment timeline from 3 to 5 years
- Securing capital is challenging right now, but the silver lining is that only genuine builders remain as the opportunistic wannabe crowd has faded. With reduced demand for high salary talent, it's an excellent time to recruit talent. Historically, large companies built during a recession
- Embrace the philosophy of doing more with less. Assume that your next round of venture capital might not materialize
- Focus your next funding round on sustaining and growing your business to 'default alive.' We'll see far more startups raising just 1 round ($250-$750k)
- "You are the average of the five people you surround yourself with," holds true. Spending time in the valley expands your network, inspires you, challenges you, and empowers you like nowhere else. The energy there is unparalleled.
- Just go to SV. Spend time there! Whether you decide to build there full-time or visit regularly, the key is to increase your surface area. That happens in real life. Even if you choose to return home to establish your venture, the experience + connections gained in the valley remain crucial.
- Founders outside the USA may have less polished presentations, yet often demonstrate robust sales, rich customer case studies, and a commendable sense of humility. These qualities are appealing to pre-seed and seed investors looking for deals in Canada, Europe, and LATAM
- In the fundraising process, investors seek insight into your unique background. A well-organized data room goes a long way, even in the early stages. Share your deck ahead of the meeting & be transparent in addressing all questions. Avoid unnecessary secrecy, as it can erode trust
- When developing AI (a wrapper), LLM, or a model, strive for a 10x improvement, not just 10%. You'll need a proprietary element, a distinctive dataset, valuable insight, a specific market segment, or GTM strategy. Something that's 10% better won't do it.
- Upon exit, redeploy capital strategically in your home market. Build your own local SV. Anchor companies, or those with big exits plant the local tech seeds for future growth.
- VCs are deploying less capital. Either bootstrap, or raise just enough to reach default alive.
- If you can, spend time in SV to increase surface area, blow up ambition levels, and get fully connected.
- Excellent time to be an early stage founder. Build a real business that's truly fundable.Focus on your customers.
That’s a wrap. Thanks Chris @ Panache Ventures for putting on this event. Let me know in the comments if actively raising or if you have any thoughts!
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