What’s the best way to use crowfunding platforms?

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

There are now sites like AngelList, FundersClub, and WeFunder that can introduce you to investors. We recommend startups treat them as auxiliary sources of money. Raise money first from leads you get yourself. Those will on average be better investors. Plus you’ll have an easier time raising money on these sites once you can say you’ve already raised some from well-known investors.

What’s the best way to understand investor behavior?

Paul Graham (Co-Founder & Partner at Y Combinator)
Default Alive or Default Dead?

Kill-or-cure strategies are optimal for VCs because they’re protected by the portfolio effect. VCs want to blow you up, in one sense of the phrase or the other. But as a founder your incentives are different. You want above all to survive.

What’s the best way to survive?

Paul Graham (Co-Founder & Partner at Y Combinator)
The Fatal Pinch

You either have to fire good people, get some or all of the employees to take less salary for a while, or increase revenues. Getting people to take less salary is a weak solution that will only work when the problem isn’t too bad. Which leaves two options, firing good people and making more money. While trying to balance them, keep in mind the eventual goal: to be a successful product company in the sense of having a single thing lots of people u… (read more)

What’s the best way to survive?

Paul Graham (Co-Founder & Partner at Y Combinator)
The Fatal Pinch

It may seem facile to suggest a startup make more money, as if that could be done for the asking. Usually a startup is already trying as hard as it can to sell whatever it sells. What I’m suggesting here is not so much to try harder to make money but to try to make money in a different way. For example, if you have only one person selling while the rest are writing code, consider having everyone work on selling. What good will more code do you wh… (read more)

What’s the best way to survive?

Paul Graham (Co-Founder & Partner at Y Combinator)
The Fatal Pinch

There may be nothing founders are so prone to delude themselves about as how interested investors will be in giving them additional funding. It’s hard to convince investors the first time too, but founders expect that. What bites them the second time is a confluence of three forces: The company is spending more now than it did the first time it raised money. Investors have much higher standards for companies that have already raised money. The co… (read more)

What’s the best way to talk about business risks?

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

Sometimes a competitor will deliberately threaten you with a lawsuit just as you start fundraising, because they know you’ll have to disclose the threat to potential investors and they hope this will make it harder for you to raise money. If this happens it will probably frighten you more than investors. Experienced investors know about this trick, and know the actual lawsuits rarely happen. So if you’re attacked in this way, be forthright with i… (read more)

What’s the best way to sell your company?

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Make Wealth

For most people, the most powerful motivator is not the hope of gain, but the fear of loss. For potential acquirers, the most powerful motivator is the prospect that one of their competitors will buy you. This, as we found, causes CEOs to take red-eyes. The second biggest is the worry that, if they don’t buy you now, you’ll continue to grow rapidly and will cost more to acquire later, or even become a competitor.