What’s the best way to raise your series A?

Josh Kopelman (Partner at First Round)
What the Seed Funding Boom Means for Raising a Series A | First Round Review

When thinking about timing, remember, a good fundraising process will take between 4 and 8 weeks. Adding in preparation and time to close, you’re talking a few months. Remember this math when you’re thinking about timeline and proof points. Cutting things too close can be dangerous

What’s the best way to raise your seed round?

Josh Kopelman (Partner at First Round)
What the Seed Funding Boom Means for Raising a Series A | First Round Review

Why not raise $2.5M in seed money instead of $1.5M to give yourself the best shot at perfecting this data? You should target 18 to 24 months of runway post Series Seed. The best time to raise follow-on capital is when you don’t need it, and 2 years of runway gives you the best chance to land in that situation.

What’s the best way to navigate the fundraising climate?

Josh Kopelman (Partner at First Round)
What the Seed Funding Boom Means for Raising a Series A | First Round Review

The problem is that the number of A rounds hasn’t changed. That amount of Series A capital HAS NOT increased. So, if you have 4x the number of companies with seed funding, that’s 4x the players competing for the same money… making it 4x harder to raise an A round than it was five years ago.

What’s the best way to measure product usage?

Josh Kopelman (Partner at First Round)
Founder Office Hours With Chris Dixon And Josh Kopelman: Schedit | TechCrunch

“The real data is retention and repeat usage. ” Startups that focus on the real metrics can make their products better, attract more customers, and make them happier.

What’s the best way to choose good financial partners?

Josh Kopelman (Partner at First Round)
What the Seed Funding Boom Means for Raising a Series A | First Round Review

Rather than having a “party round” full of VC firm logos, I believe founders are better served by having investors who will roll up their sleeves and open doors, make introductions, help source and recruit great talent, give feedback on a Series A pitch, and call in favors to make things happen

What’s the best way to raise your series A?

Jason Calacanis (Founder & CEO @ Inside.com)
What is the current Series A market like (as of January 2016)? – Quora

In order to close a Series A you need 2-3m in ARR or 1m+ MAU growing at 20% m/o/m. There are too many startups with $100k a month in MRR and too many consumer products with 100-500k MAU and not enough VCs to invest in them.

Patrick Mathieson (Associate @ Toba Capital)
Patrick Mathieson’s answer to What are the metrics necessary for an enterprise SaaS startup to get a meeting with investors for a Series A? – Quora

Month-over-month MRR growth of 10% (15% is better / 20% is great).

Patrick Mathieson (Associate @ Toba Capital)
Patrick Mathieson’s answer to What are the metrics necessary for an enterprise SaaS startup to get a meeting with investors for a Series A? – Quora

A payback period of less than 12 months (9 is better / 6 is great). E.G.: “Our all-in customer acquisition cost averages about $1,000, and the average customer contributes a gross margin of $125 per month, so payback period averages 8 months.”

Ed Sim (Founder and Managing Partner @ Boldstart Ventures)
The 4 Kinds of Series A Rounds in Enterprise — Medium

The 4 kinds of A rounds:
No A round. Sucks. — self explanatory. Vision A round, super hard — raise on the promise and pre-launch, on the vision, huge market with the killer team that can build and scale. sometimes easier to raise on the promise and the expectations of amazing success than after the launch. Metrics A round, easier — killer metrics, repeatable growth and predictable sales model, used to be $80–$100k MRR/$1mm ARR, the bar is raisin… (read more)

Nnamdi Okike (Partner @ 645 Ventures)
Charting A Path From Seed To A Competitive Series A Round | TechCrunch

a top-quartile enterprise-focused VC firm may have a $1 million ARR hurdle for a SaaS deal, or that a top-quartile consumer investor may have a $2 million run-rate revenue hurdle for an e-commerce company. Also for revenue-generating businesses, future growth plans are created that articulate a clear path to becoming a large revenue company with attractive future profit margins.

Shriram Bhashyam (Founder @ EquityZen)
The Metrics Required for Raising a Series A Round

E-commerce. This is a dense market, with diminishing margins, and heavy-weight incumbents (see Amazon). Also, VCs are licking their wounds from companies like Fab and Gilt (wasn’t Gilt supposed to IPO for the last 4 years?). $1 million monthly recurring revenue (MRR) is the key metric here.

Shriram Bhashyam (Founder @ EquityZen)
The Metrics Required for Raising a Series A Round

Consumer Apps. Another crowded field and the shadow of King Digital looms.
50K daily active users.
25% month-over-month (MoM) user growth.

Shriram Bhashyam (Founder @ EquityZen)
The Metrics Required for Raising a Series A Round

SaaS. Jason Lemkin (the SaaStr himself, of Storm Ventures) has noted the following: $50-150K MRR. > 100% YoY growth on MRR or annual run rate (ARR) basis.

Shriram Bhashyam (Founder @ EquityZen)
The Metrics Required for Raising a Series A Round

Marketplace. Marketplaces are tricky (trust us, we know) because of the chicken/egg problem with supply and demand (buyers want to see good supply, and good sellers will list where there are buyers). It is understood that liquid marketplaces also take a while to build. $500K-$1 million in monthly gross market volume (GMV). 20-30% MoM growth in GMV. Liquidity: > 10% demand/supply ratio. Transaction velocity: the time it takes to have a transaction… (read more)

Ari Newman (Network Catalyst @ Techstars)
How to Get From Seed to Series A – Techstars

Responses included some of the market-standard metrics like $100K MRR and double digit monthly growth as common targets.

Ari Newman (Network Catalyst @ Techstars)
How to Get From Seed to Series A – Techstars

“Build relationships, not pitches,” was discussed as well. The panel debated whether this was true for seed rounds vs. Series A. The gist of the debate was that many Series A round investment decisions can happen when the investor is in “advice mode” and the light bulb goes off.

Tomasz Tunguz (Partner at Redpoint Ventures)
How Fast Must a SaaS Startup Grow to Raise a Series A?

To satisfy both the revenue and timing conditions, the SaaSCo founders should aim for a 15%+ monthly growth rate.

Anjula Bath (Partner @ Trinity Ventures)
Fundraising – From Seed To Series A by Techstars | Free Listening on SoundCloud

Don’t ever tell anybody you’re raising money. Because the moment you tell them you’re raising money they think you’re selling them and that always works against you. I didn’t tell anybody I was raising money. I went around saying that I had this amazing idea that was getting all this tgraction and I didn’t know what to do and in 24 hours I got two term-sheets from investors.

Josh Kopelman (Partner at First Round)
What the Seed Funding Boom Means for Raising a Series A | First Round Review

When thinking about timing, remember, a good fundraising process will take between 4 and 8 weeks. Adding in preparation and time to close, you’re talking a few months. Remember this math when you’re thinking about timeline and proof points. Cutting things too close can be dangerous

NextView Ventures (hands-on seed investor, focused on internet-enabled startups)
Winning Strategies Startups Use to Raise Series A [VC Portfolio Data]

The average time between raising seed capital and raising a Series A was 303 days (about 10 months)

Jenny Fielding (Managing Director @ Techstars)
Fundraising – From Seed To Series A by Techstars | Free Listening on SoundCloud

Don’t wait until you need money to start relationships with investors. People think that you start your company, you wait a few months, you raise your round. If you need to raise money in a year or two, you need to start those relationships now.

Lee Hower (General Partner of NextView Ventures)
What Milestones Are Needed to Raise a Series A? – AGILEVC

There’s no magic formula for a successful Series A unfortunately. But these five tenets can help internet / software entrepreneurs increase their prospects. (1) Core team ready to scale (2) Demonstrable market size (3) Repeatable, cost effective customer acquisition (4) Metric momentum (5) Plausible monetization

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Some Thoughts On Seed Investing – AVC

We like seed investments in teams and opportunities where they have built and launched a product already. We don’t like investing in a concept or participating in a round where the uses of the capital will be to build and launch a product. This means the vast majority of seed rounds are not a fit for us. We pass on a lot of seed stage opportunities because it is “too early” for us.

Nnamdi Okike (Partner @ 645 Ventures)
Charting A Path From Seed To A Competitive Series A Round | TechCrunch

Top teams gather evidence to prove that the market is large enough to sustain a multi-hundred-million-dollar exit or potentially a billion-dollar revenue company. These companies typically demonstrate this evidence through a bottoms-up market analysis, starting with evidence achieved by the company and concluding with reasonable scaling assumptions supported by accurate research and trends.

Nnamdi Okike (Partner @ 645 Ventures)
Charting A Path From Seed To A Competitive Series A Round | TechCrunch

The highest-potential seed companies marshal evidence to show that they can be at least No. 1 or No. 2 in the competitive market. This requires having a detailed awareness of competitors, and understanding their strengths and weaknesses. Intel’s Andy Grove famously stated that “Only the paranoid survive.” We find that a healthy level of competitive paranoia also characterizes the seed companies that reach highly competitive Series A rounds.

NextView Ventures (hands-on seed investor, focused on internet-enabled startups)
Winning Strategies Startups Use to Raise Series A [VC Portfolio Data]

There are four strategies to raising a Series A: show audience growth, show revenue growth, show attractive small-scale unit economics, sell a huge vision and an unstoppable promise.

Moisey Uretsky (Co-Founder / Chief Product Officer @
DigitalOcean)

Moisey Uretsky’s answer to How long is the due diligence process with Andreessen Horowitz? – Quora

With that in mind after we had the term sheet signed it was about 30-45 days of due diligence for the close, which is the standard and typical timeline.

Moisey Uretsky (Co-Founder / Chief Product Officer @
DigitalOcean)

Moisey Uretsky’s answer to How long is the due diligence process with Andreessen Horowitz? – Quora

Ensuring that our accounting and projections were on point, having their analysts review the market segment to review the competitors, and then of course dotting all of the legal i’s and t’s around articles of incorporation, employment agreements, and any other legal documents that while standard, are also incredibly important to have in other.

Raju Rishi (General Partner @ RRE Ventures)
When Revenue Isn’t The Answer

Too frequently, entrepreneurs and investors alike believe that the goal of a Seed Round is to get a startup to the Series A. It’s not. Seed Rounds are the only time in the lifecycle of a startup where you are allowed, expected, even encouraged to test your product in search of real product/ market fit.

NextView Ventures (hands-on seed investor, focused on internet-enabled startups)
Winning Strategies Startups Use to Raise Series A [VC Portfolio Data]

The average amount of money [raised in Series A] was 5.2M dollars

What’s the best way to raise your seed round?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Numbers Can Ruin A Good Story – AVC

You can raise a seed (or Series A) on a story. But at some point, you will have numbers; users, user growth, revenues, and revenue growth. You will also have a burn rate. And those numbers will become the thing you are judged on and your nice story will be “ruined” by the numbers. Now this is not always true. You might be one of the few entrepreneurs on a real rocket ship and your numbers will be your friend. If that is true, raise while the numb… (read more)

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
What Seed Financing Is For – AVC

I feel very strongly that seeds should not be as large as they are these days and they should not be used to fund anything other than building product and finding product market fit.

Josh Kopelman (Partner at First Round)
What the Seed Funding Boom Means for Raising a Series A | First Round Review

Why not raise $2.5M in seed money instead of $1.5M to give yourself the best shot at perfecting this data? You should target 18 to 24 months of runway post Series Seed. The best time to raise follow-on capital is when you don’t need it, and 2 years of runway gives you the best chance to land in that situation.

Mark Suster (Managing Partner at Upfront Ventures)
Revisiting Paul Graham’s “High Resolution” Financing | Bothsides of the Table

I often counsel the following: set a minimum amount of the round “X” (for example $500k) and put a clause in the term sheet that allows you to do a second closing of up to “X” + 50% ($250k in this example) in up to 90 days post closing at the same price. This gives you the ability to get the first money in the bank while giving you flexibility in size of round.

Paul Graham (Co-Founder & Partner at Y Combinator)
High Resolution Fundraising

The reason startups have been using more convertible notes in angel rounds is that they make deals close faster. By making it easier for startups to give different prices to different investors, they help them break the sort of deadlock that happens when investors all wait to see who else is going to invest.

What’s the best way to navigate the fundraising climate?

Sam Altman (President at Y Combinator)
What to do if a bubble is starting – Sam Altman

The only thing that is cheap during a startup bubble is capital. Make sure you have enough money in the bank, and treat this money as the last money you’ll ever raise. Focus on a path to profitability. Resist the urge to ramp up to a crazy burn rate.

Sam Altman (President at Y Combinator)
Valuations – Sam Altman

Definitely don’t start a company just because capital is available. Resist the urge to raise and spend too much money; if capital feels cheap, its psychologically easier to spend.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
When the going gets tough, the tough get going – AVC

The real reason I welcome the tougher environment is that it will make all of us better. We will have to make better decisions. The market won’t bail us out. We will have to earn our returns instead of being handed them. And I’m not just talking about investors. I’m talking about everyone working in tech startups. The going is getting tougher. Time for the tough to get going.

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
LinkedIn’s Series B Pitch to Greylock: Pitch Advice for Entrepreneurs

Understand the broader financing climate. In 2004, investors regained interest in the consumer internet again. Friendster raised a big round in 2003; MySpace started gaining traction. But with so many investors still licking their wounds from the dot-com bust, many focused on proven business models, such as advertising or e-commerce. As a result, we knew that our pitch would need to steer into investors’ biggest concern: the lack of revenue.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Reblogging An Old Post: The Word Bubble – AVC

That doesn’t mean we aren’t investing in this cycle. We are as active as we’ve ever been. But we are investing at this stage of the cycle with our eyes wide open. And I’m writing about it in the hopes that others do the same.

Josh Kopelman (Partner at First Round)
What the Seed Funding Boom Means for Raising a Series A | First Round Review

The problem is that the number of A rounds hasn’t changed. That amount of Series A capital HAS NOT increased. So, if you have 4x the number of companies with seed funding, that’s 4x the players competing for the same money… making it 4x harder to raise an A round than it was five years ago.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The First Law Of Internet Physics – AVC

I told him that when you are looking at financial manias, the amplitude of the mania is inversely correlated to its duration.
I like to think of these manias as waveforms. When they build slowly they last longer. When they develop overnight, they dissipate quickly as well. This rule also works pretty well for consumer internet services.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
What Has Changed – AVC

the momentum/late stage investors have moved from consumer to enterprise. there is a large pool of money in the venture capital asset class that is opportunistic, momentum driven, and thesis agnostic. the consumer web has matured. we are almost 20 years into the consumer web and we have large platforms that are starting to suck up a lot of the oxygen. google, facebook/instagram, amazon, microsoft, apple, twitter, ebay, yahoo, AOL, craigslist, wor… (read more)

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
LinkedIn’s Series B Pitch to Greylock: Pitch Advice for Entrepreneurs

For consumer internet properties in 2004, because we had just gone through the dot-com winter, investors’ principal concern was whether or not you could make money.

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
LinkedIn’s Series B Pitch to Greylock: Pitch Advice for Entrepreneurs

In 2013, it [was] whether you can break through the noise. [In 2013], there [were] probably a thousand consumer internet startups founded every quarter — how do you become one of the 1 to 3 that matter in a 7-year timeframe? Those are the kinds of objections you need to steer into at the beginning of your pitch.

Mark Suster (Managing Partner at Upfront Ventures)
What Do LPs Think of the Venture Capital Markets for 2016? | Bothsides of the Table

LPs remain staunch supporters of the venture capital industry, and their investment pace into VC seems likely to hold steady for the next one to two years (barring any unforeseen negative market events). This support will start to meet headwinds in the next three to four years if our industry doesn’t find a way to drive more exits and recycle capital back into the ecosystem. Without some cash distributions, eventually LPs will become stretched. … (read more)

Mark Suster (Managing Partner at Upfront Ventures)
So What is The Right Level of Burn Rate for a Startup These Days? | Bothsides of the Table

[In 2016] As I have pointed out in previous posts, 91% of VCs surveyed believe prices are declining (30% believe substantially) and 77% believe that funding will take longer than it has in the past.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Stop clinging to your (or anyone else’s) valuation: You know what somebody else’s fundraise metrics are to you? Irrelevant. You know what your own last round post was? Irrelevant.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Redefine what success looks like. In order to survive, it is critical to redefine what success is going to look like for you — and your employees, and your investors, and your other stakeholders.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Get to cash-flow positive on the capital you already have.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Understand whether your current investors are going to get you there. Go to [your] backers and get their commitment that they will see us through (or know that they won’t, because if they won’t, the sooner we know that, the sooner we can go out and do something about this. ) I know many VCs hate to be put on the spot about this, but I think entrepreneurs have the right to ask, and to know.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Stop worrying about morale. You know what hurts morale even more than cost- cutting and layoffs? Going out of business.

Jeff Haynie (CEO, co-founder at Appcelerator)
How to prepare for the coming startup storm — welcome to your startup life — Medium

1. Take a hard look at your finances. 2. Take a hard look at your priorities. 3. Take a hard look at your people.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Mobile Downturn – AVC

In tech investing, we get booms when a new cycle emerges and downturns as it matures and consolidation of economics happens (think Microsoft in the late 80s/early 90s). The downturn is always followed by something radical and new that starts on the fringe and becomes mainstream. Timing all of these things is hard. But it is what we have to do.

What’s the best way to measure product usage?

David Jackson (Founder, Seeking Alpha)
Chartbeat’s suggestion for how to measure content quality | A Founder’s Notebook

Sites that optimize for pageviews inevitably publish provocative headlines and populist content. But time on page isn’t a solution, because shorter articles aren’t necessarily lower quality or less valuable.

Ben Erez (Product at Breeze)
22 Mistakes I Made as a First Time Founder — Viabilify

In hindsight, seeking positive feedback was toxic. It was toxic because it was giving us the impression we were on the right track. I mean, we were on the right track, but we were moving at 1 mph on a track built for bullet trains. Now I know that shipping product, getting sales and not running out of money are the most important things for a B2B startup.

Danielle Morrill (Co-Founder & CEO at Mattermark)
Revenue vs. Value | Danielle Morrill

While revenue is a useful signal to founders, indicating they are creating something people want, it is also a lagging indicator of success. By the time a startup has a predictable and steadily growing revenue stream that means it has built a product and brought it to market successfully.

Brian Balfour (Co-Founder, CMO @ Boundless)
Avoiding The Wheel Of Meaningless Growth

There is a cycle that plagues a lot of companies. It typically works like this: 1. A startup wants some press, so they look for some bloated number to give the writer (downloads, registrations, visits, etc). 2. The startup then celebrates that press article, internally supporting the message that the bloated metric is worth pursuing. 3. In order to get additional press hits, the startup needs to increase that bloated number, so they focus on incr… (read more)

Alistair Croll (Founder of UEM, Author of Lean Analtyics)
The One Metric That Matters | Lean Analytics Book

Transactional sites are about shopping cart conversion, cart size, and abandonment.
Collaboration is about the amount of good content versus bad, and the percent of users that are lurkers versus creators.
SaaS is about time-to-complete-a-task, SLA, and recency of use; and maybe uptime and SLA refunds.
Media is about time on page, pages per visit, and clickthrough rates.
Game startups care about Average Revenue Per User Per Month and Lifetime … (read more)

Josh Kopelman (Partner at First Round)
Founder Office Hours With Chris Dixon And Josh Kopelman: Schedit | TechCrunch

“The real data is retention and repeat usage. ” Startups that focus on the real metrics can make their products better, attract more customers, and make them happier.

Brian Balfour (Co-Founder, CMO @ Boundless)
Avoiding The Wheel Of Meaningless Growth

The one metric that guides us like our north star is Weekly Active Users. We defined this as our authentic growth metric using a few criteria: 1. Retention. In the consumer world things like Daily Active User (DAU) and Weekly Active User (WAU) are most commonly used. Celebrating metrics such as total registrations or downloads over time tell you nothing about whether or not you are building real value. 2. Meaningful interaction. Qualifying events… (read more)

David Jackson (Founder, Seeking Alpha)
The key metric for your startup must satisfy these 4 criteria | A Founder’s Notebook

Reporting metrics as growth rates (or absolute growth) focuses the company on growth, and encourages everyone to think big.

Donald T. Campbell (American social scientist)
There’s a Name for the Big Flaw in Our Obsession With Assessment and Metrics

The more a given metric—say, a national college ranking—is used to evaluate performance in some domain, the less reliable it becomes as a measure of overall success. Why? The people whose performance is being measured will neglect other parts of their job just to focus on boosting the relevant numbers, sometimes to the point of cheating.

Josh Elman (Partner at Greylock Partners)
The only metric that matters — Medium

I always ask the same question: How many people are really using your product? You need a metric that specifically answers this. It can be “x people did 3 searches in the past week”. Or “y people visited my site 9 times in the past month”. Or “z people made at least one purchase in the last 90 days. ” But whatever it is, it should be a signal that they are using their product in the way you expected and that they use it enough so that you believe… (read more)

Mariya Yao (Founder at Xanadu)
The key success metric for mobile apps | A Founder’s Notebook

A popular metric for measuring retention in the mobile games industry is DAU / MAU, or daily active users divided by monthly active users, and I highly recommend that consumer-facing mobile app developers keep track of that metric as well.

David Jackson (Founder, Seeking Alpha)
The corrosive impact of pageviews as the target metric for content websites | A Founder’s Notebook

While quality positively impacts pageviews, there are cheaper levers that are far more powerful. This leads to volumes of low quality content, with no attempt to create or surface the “great stuff”.

David Jackson (Founder, Seeking Alpha)
Why websites shouldn’t optimize for page views | A Founder’s Notebook

Our key metric at Seeking Alpha is daily, direct users. “Daily” gives you credit for returning visitors, and “direct” only counts people who come for your product and brand, not people who came because they were enticed to click on a syndicated or shared headline.

David Jackson (Founder, Seeking Alpha)
The best startup metric: Share of habit? | A Founder’s Notebook

Tom Tunguz argues that share of habit is a better metric for startups to focus on than engagement. Share of habit, however, has disadvantages. You can’t measure it if you don’t have access to accurate market size data and who has that? And its not a good operating metric, as its impacted by external factors out of your control. In that respect, its a vanity metric.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
30/10/10 – AVC

I call this ratio 30/10/10 and so many services that we see exhibit it within a few percentage points here and there. Here’s how it works: 30% of the registered users or number of downloads (if its a mobile app) will use the service each month. 10% of the registered users or number of downloads (if its a mobile app) will use the service each day. The max number of concurrent users of a real-time service will be 10% of the number of daily users.

Paul Graham (Co-Founder & Partner at Y Combinator)
Do Things that Don’t Scale

We encourage every startup to measure their progress by weekly growth rate.

Paul Graham (Co-Founder & Partner at Y Combinator)
Do Things that Don’t Scale

Focusing on hitting a growth rate reduces the otherwise bewilderingly multifarious problem of starting a startup to a single problem. You can use that target growth rate to make all your decisions for you; anything that gets you the growth you need is ipso facto right.

Paul Graham (Co-Founder & Partner at Y Combinator)
Startup = Growth

A good growth rate during [Y Combinator] is 5-7% a week. If you can hit 10% a week you’re doing exceptionally well. If you can only manage 1%, it’s a sign you haven’t yet figured out what you’re doing. We usually advise startups to pick a growth rate they think they can hit, and then just try to hit it every week.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Social Commerce Is Commerce With A Social Layer – AVC

Conversion rates are critical. They tell you what systems perform best for the end user. When a system converts north of 5% of users visits to a transaction, it is working extremely well for the end user. When a system converts 0.1% of user visits to a transaction, it doesn’t work as well for the end user.

Anamitra Banerji (Partner @ Foundation Capital)
The Shape Of The Curve — Medium

Most consumer software products have a DAU:MAU of 20% or lower. Zero products get to 100% but some rare ones come close to this ceiling (like Facebook 65% and Whatsapp 72%) [i.e. you should be getting better than 20% DAU:MAU]

Eric Ries (Author, The Lean Startup)
The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to … – Eric Ries – Google Books

The most important thing to measure is behavior: would the early participants actively spread the word?

Paul Graham (Co-Founder & Partner at Y Combinator)
Do Things that Don’t Scale

That’s a reasonable proxy for revenue growth because whenever the startup does start trying to make money, their revenues will probably be a constant multiple of active users

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Having Empathy For Your Users – AVC

I feel like the companies we meet with and work with generally do a good job of instrumenting their products and collecting on data on what is working and what is not working. But they often don’t have good answers for why the behavior they are seeing is happening. It’s hard to fix something you know is broken unless you understand why it is broken.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Behavior Of Your Users Normally Doesn’t Change Overnight – AVC

I tell this story because we all encounter this sort of thing along the way of building and launching and growing a product. We make tweaks and something changes right away. That immediate change is usually related to something that brought traffic (google, twitter, rss, email, appstore) and not a design change. More gradual changes (up or down) are usually because of design changes. There’s a difference between these two kinds of effects and it … (read more)

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Growth vs Retention – AVC

Entrepreneurs always ask what the one number they should focus on for raising money. I always say “90 day retention numbers for your acquisition cohorts”. There’s a common view in silicon valley and around the tech sector that growth is the one thing you should focus on. But it’s hard to grow if you are churning your users. And if you are paying for user acquisition, as many startups do in search of growth, then retention/churn becomes even more … (read more)

Vasu Vadlamudi (Director of Product, Oscar Insurance)
Growth vs Retention – AVC

For early retention, if your product can be used by a normal user on a daily basis, the “40/20/10” bar is a solid goal. (Of 100 installs on D0, 40 return on D1, 20 on D7, and 10 on D28.)

What’s the best way to choose good financial partners?

Keith Rabois (Venture Partner @ Khosla Ventures)
Are strategic investors in startups more ‘dangerous’ than VCs, from a founder perspective?

Strategic/corp investors are notoriously slow and consume substantially more cycles in due diligence than your typical venture capital firm;
They will generally limit your (actual and perceived) exit options (competitors will not offer to acquire you and future investors will be dubious about whether an independent exit will be a viable option).

Robert Siegel (General Partner @ XSeed Capital)
Strategic investor: Friend or foe?

The broader economic interest of the larger corporation will always outweigh the small financial interest it has in the startup. It is not necessarily bad, per se, that a strategic investor owns stock in a startup, but don’t be mislead into the belief that this will “align incentives.”

Robert Siegel (General Partner @ XSeed Capital)
Strategic investor: Friend or foe?

I will posit that many (most?) Silicon Valley large companies have a more “enlightened” approach in these relationships as there is an ecosystem that encourages acquisitions and collaborations between large and small firms. Outside of Silicon Valley this is not always true — in fact, oftentimes there is no history of such strategic relationships in an industry.

Robert Siegel (General Partner @ XSeed Capital)
Strategic investor: Friend or foe?

a CEO should consider if there is a history of positive interactions in an industry between large and small companies when considering taking on a strategic investor. If there isn’t, be cautious.

Robert Siegel (General Partner @ XSeed Capital)
Strategic investor: Friend or foe?

In the earliest days of a company, a startup is at its most fragile state. As such, a strategic investor has the ability to have disproportionate influence to encourage a young entity to do things that may not be in the long-term best interest of the startup (but might be good for the strategic investor).

Mark Suster (Managing Partner at Upfront Ventures)
Is Strategic Money an Oxymoron? | Bothsides of the Table

The reality is that their core business is not venture capital. So push comes to shove they will be driven by their core business (as they should be) – not the $5 million they put into your company. You are the tail, not the dog.

Mark Suster (Managing Partner at Upfront Ventures)
Is Strategic Money an Oxymoron? | Bothsides of the Table

One of the problems in working with corporate entities is that the venture arm doesn’t always have an autonomous decision-making ability. Imagine your investor has to call the CEO of a $20 billion company for approval for your merger or sale. Fun.

Mark Suster (Managing Partner at Upfront Ventures)
Is Strategic Money an Oxymoron? | Bothsides of the Table

So you took money from the largest player in your industry. That’s awesome because you now have credibility. But guess what – number 2-10 in the sector now you view as an agent for the evil empire. It will be much harder to get deals done there and may drive people to your competitors.

Ron Conway (Founder & Co-Managing Partner @ SV Angel)
Ron Conway, Mike Maples Jr. – Angel Investing Revealed by Stanford eCorner | Free Listening on SoundCloud

[If you’re in Europe] go talk to Atomico, go talk to Baldwin, go talk to Index Ventures.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Global Venture Capital Distribution – AVC

Transportation convenience matters a lot. You can fly direct multiple times a day to and from all of the cities on Richard’s top ten list. Investors value their time and focus it on markets that they can get in and out of easily. I think that has a big impact on where money flows.

Bruce Gibney (Former Partner @ Founders Fund)
Peter Thiel’s CS183: Startup – Class 8 Notes Essay

You can’t really dump co-founders, unless you want to pay through the nose to do so. But hardest to get change is your VC; once they’re on your board, they’re there for good. So you have to choose very wisely.

Mark Suster (Managing Partner at Upfront Ventures)
What I Would Look for When Choosing a VC – Knowing What I Know Now? | Bothsides of the Table

You want a VC who will spar with you but then STFU and let you get on with things. Smart? Sure. But don’t over index on brains. In the end it will be up to you to figure out what to do.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Orphaned Investments – AVC

Of all the bad things that VCs do on a regular basis, and that list is long, orphaning their investments is at the top of my list of bad behavior. Orphaning an investment is when a VC firm decides that it doesn’t really care about an investment any more and stops paying attention. The primary cause is when a partner leaves a firm and nobody picks up coverage of his or her investments. The VC firm says that “so and so” is covering the investment n… (read more)

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Orphaned Investments – AVC

So how do you avoid being orphaned? Like most things, it comes down to picking your partners carefully. Ask around. Find out how they have acted in tough situations. Find out how solid the VC’s position is in their firm. You need to reference both the partner and the firm. The person is important but if they leave you will find out a lot about the firm.

Josh Kopelman (Partner at First Round)
What the Seed Funding Boom Means for Raising a Series A | First Round Review

Rather than having a “party round” full of VC firm logos, I believe founders are better served by having investors who will roll up their sleeves and open doors, make introductions, help source and recruit great talent, give feedback on a Series A pitch, and call in favors to make things happen

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
What VC Can Learn From Private Equity – AVC

The main thing I’ve come away with from this several week long rumination on private equity is the value of having very clear lines of responsibility, crisp decision making, clarity of who is calling the shots, and, mostly, a deep feeling of ownership and responsibility for the businesses we invest in. It’s not possible for one VC partner to do this for more than about eight to ten companies, and most VCs take on way more portfolio companies than… (read more)

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Product Idea: Reverse Engineering VC Investment Strategies – AVC

Venture capital firms don’t do a great job on their websites of explaining what they invest in and what they do not invest in. Some of that is most VC websites aren’t particularly great to begin with. Some of that is investment strategies change and evolve over time. Some of that is VC firms tell themselves they do one thing but actually do another.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
On Getting An Outside Lead – AVC

There is a lot of signaling risk in all of this. If you are known to be aggressive in offering to lead inside rounds, and you don’t make that offer, then that puts the entrepreneur in a tricky spot. Of course the entrepreneur can say that they don’t want an inside lead and they want to expand the investor base. But even so, smart investors may know.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Sticking With The Struggling Investments – AVC

One of the characteristics of USV that I am most proud of is that we stick with our struggling investments. And we have made a lot of them. We have way more of them than our successful ones that are always cited when we are talked about publicly. I think how you treat your struggling investments says more about you than how many billion dollar exits you have had. You need both to be successful in the VC business, of course. The latter metric defi… (read more)

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
On Corporate VCs – AVC

There are two kinds of corporate investments in startups; passive corporate VC arms and active strategic investments.
The former is made by well established investment groups like Google Ventures, Intel Ventures, SAP Ventures, Comcast Ventures, and many many more. For the most part, they don’t “suck”. They can be a good source of capital for your company, they can be supportive investors who follow on when the rest of the syndicate does, and the… (read more)

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Doing Business On A Handshake – AVC

But the most important thing in business is the understanding, the look in the eye, the handshake, and the personal trust that comes from those things. No piece of paper can beat that.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
MBA Mondays: Leveraging Your Partners To Grow And Develop Your Team – AVC

The best investors, the ones who have been at it for a while and have great reputations, will have a large network of people they have worked with over the years. Their network will also include people who they want to work with and who want to work with them. They can and do play matchmaker between their network and their portfolio companies. I suspect the partners at USV spend at least 25% of our time on things that would be considered “recruit… (read more)

Mitchell Harper (Co-Founder & Board Member @ Bigcommerce)
28 things I’d do differently next time around — Medium

Early on, raise money from investors who have “been there, done that” — don’t take money from “spreadsheet VCs” because they only understand numbers

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Leading vs Following – AVC

It’s hard to be a great lead investor and a completely different thing than being a well sought after angel investor who can get into someone else’s deals.

Ryan Howard (Founder @ Practice Fusion)
Transcript: Protecting yourself as the founder; Ryan Howard | VatorNews

Upfront, during the second meeting, you want to go, “Who in this room is actually likely going to come on our board?” to get that context so you can start building a relationship with them early on.

Ryan Howard (Founder @ Practice Fusion)
Transcript: Protecting yourself as the founder; Ryan Howard | VatorNews

You want to ask hard questions. You want to ask when the last time they fired a CEO and why. You want to basically get that context. You want to tell them upfront what your expectations of a board member are. If you don’t, they will tell you what their expectations are. Most of the board members are veteran investors and have dramatically more experience than you do, so that can be quite problematic.

Mark Suster (Managing Partner at Upfront Ventures)
Raising Angel Money | Bothsides of the Table

my advice is to stack the odds as much in your favor as possible by taking the experienced money from people who have a reputation for really helping entrepreneurs.

David Jackson (Founder, Seeking Alpha)
VC pitfalls to watch for: trying to fix companies | A Founder’s Notebook

How do great VCs add value? They (i) provide concrete help with hiring, fundraising, and intros; (ii) encourage you to figure things out without pressuring you to expand prematurely; (iii) share what’s working from their other startups; (iv) ask great questions that you wouldn’t otherwise have thought about; and (v) focus on real metrics rather than buzz among other VCs and the media.

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
What I Wish I Knew Before Pitching LinkedIn to VCs | Greylock Partners

Pay attention to whether they are being constructive during the pitch and financing process. Do they understand your market? Are their questions the same questions that keep you up at night? Are you learning from their feedback? Are they passionate about the problem you’re trying to solve?

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
LinkedIn’s Series B Pitch to Greylock: Pitch Advice for Entrepreneurs

How do you know if an investor will add value? Pay attention to whether they are being constructive during the financing process. Do they understand your market? Are their questions the same questions that keep you up at night? Are you learning from their feedback? Are they passionate about the problem you’re trying to solve?

David Jackson (Founder, Seeking Alpha)
Do great VCs need operating experience? | A Founder’s Notebook

In my experience, fantastic VCs have three characteristics: (1) They understand the company. (2) They believe in the company and the team, and express that. (3) They help in tangible ways (they don’t just express opinions)

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
LinkedIn’s Series B Pitch to Greylock: Pitch Advice for Entrepreneurs

The ideal financing partner is a financing cofounder. This is why already-wealthy entrepreneurs raise money from experienced investors for their next startup: they know partnering with angels and venture capitalists is about more than just the money.

Charlie O’Donnell (Partner Brooklyn Bridge Ventures)
VC Value add: Why it probably doesn’t matter, but I try anyway. — This is going to be BIG…

An experienced founder who had been through lots of rounds as both an entrepreneur and an angel investor told me the following: “There are maybe two or three VCs on the face of the earth that add any value to the eventual outcome of a company. So there are really just a few criteria that matter: They should do no harm. They should be able to close the round quickly and without too much distraction. You should like them enough to have them on your… (read more)

David Jackson (Founder, Seeking Alpha)
The most unrecognized and under-appreciated way VCs help startups | A Founder’s Notebook

My experience with Seeking Alpha’s investors: “I’ve got your back and I’m there with you along the way” makes a huge difference.